Economics and the Environment

Cover......Page 1
Title Page......Page 5
Copyright......Page 6
Contents......Page 7
Preface......Page 13
INTRODUCTION......Page 17
1.0 Introduction......Page 19
1.1 Four Questions......Page 20
1.2 How Much Pollution Is Too Much?......Page 24
1.3 Is Government Up to the Job?......Page 29
1.4 How Can We Do Better?......Page 30
1.5 Can We Resolve Global Issues?......Page 32
1.6 Summary......Page 34
PART I: HOW MUCH POLLUTION IS TOO MUCH?......Page 39
2.0 Introduction......Page 41
2.1 Utility and Utilitarianism......Page 42
2.2 Social Welfare......Page 44
2.3 Summary......Page 47
3.0 Introduction......Page 50
3.1 The Open Access Problem......Page 52
3.2 The Public Goods Problem......Page 57
3.3 Summary......Page 60
Appendix 3A: Overfishing, ITQs, and Aquaculture......Page 64
4.1 Efficiency Defined......Page 69
4.2 Efficient Pollution Levels......Page 72
4.3 Marginals and Totals......Page 76
4.4 The Coase Theorem Introduced......Page 78
4.5 Air Pollution Control in Baltimore: Calculating the Efficient Standard......Page 79
4.6 The Ethical Basis of the Efficiency Standard......Page 80
4.7 Summary......Page 81
5.0 Introduction......Page 88
5.1 Defining the Right to Safety......Page 89
5.2 The Safety Standard: Inefficient......Page 91
5.3 The Safety Standard: Not Cost-Effective......Page 92
5.4 The Safety Standard: Regressive?......Page 94
5.5 Siting Hazardous Waste Facilities: Safety versus Efficiency......Page 96
5.6 Summary......Page 99
6.0 Introduction......Page 104
6.1 Measuring Sustainability: Net National Welfare......Page 106
6.2 Natural Capital Depreciation......Page 109
6.3 Future Benefits, Costs, and Discounting......Page 112
6.4 An Example of Discounting: Lightbulbs......Page 114
6.5 Choosing the ‘‘Right’’ Discount Rate for Pollution Control......Page 115
6.6 Social Discounting versus Market Discounting......Page 118
6.7 Summary......Page 122
Appendix 6A: Nonrenewable Resource Economics......Page 127
7.0 Introduction......Page 133
7.1 Malthus and Ecological Economics......Page 135
7.2 Measuring Sustainability......Page 138
7.3 The Precautionary Principle......Page 140
7.4 Markets, Governments, and the Environmental Impact Statement......Page 146
7.5 The Ecological-Neoclassical Debate in Context......Page 148
7.6 Summary......Page 150
Appendix 7A: Game Theory and the Safe Minimum Standard......Page 154
8.0 Introduction......Page 158
8.1 Use, Option, and Existence Value: Types of Nonmarket Benefits......Page 159
8.2 Consumer Surplus, WTP, and WTA: Measuring Benefits......Page 160
8.3 Risk: Assessment and Perception......Page 163
8.4 Measuring Benefits I: Contingent Valuation......Page 166
8.5 Measuring Benefits II: Travel Cost......Page 170
8.7 The Value of Human Life......Page 172
8.8 Summary......Page 175
Appendix 8A: WTA and WTP Redux......Page 180
9.0 Introduction......Page 184
9.1 Engineering Costs......Page 185
9.2 Productivity Impacts of Regulation......Page 187
9.3 Employment Impacts of Regulation......Page 190
9.4 Monopoly Costs......Page 196
9.5 General Equilibrium Effects......Page 197
9.6 Summary......Page 202
10.0 Introduction......Page 207
10.1 Doing Benefit-Cost: Lead Standards......Page 209
10.2 Doing Benefit-Cost: Landfill Regulation......Page 216
10.3 Political Influence in Benefit-Cost......Page 219
10.4 Is Benefit-Cost Up to the Job?......Page 221
10.5 Summary......Page 222
11.0 Introduction......Page 228
11.1 Money and Happiness......Page 229
11.2 Social Norms and the Rat Race......Page 230
11.3 Positional Goods and Consumption Externalities......Page 234
11.4 Welfare with Social Consumption......Page 236
11.5 Controlling the Impact of Consumption......Page 238
11.6 Summary......Page 241
PART II: IS GOVERNMENT UP TO THE JOB?......Page 247
12.0 Introduction......Page 249
12.1 The Process of Environmental Regulation......Page 250
12.2 Regulation under Imperfect Information......Page 252
12.3 Bureaucratic Discretion and Political Influence......Page 254
12.4 Who Wins the Influence Game?......Page 256
12.5 Political Reform of Regulation......Page 259
12.6 Better Information, More Democracy......Page 261
12.7 Summary......Page 263
13.0 Introduction......Page 268
13.1 Cleaning the Air......Page 269
13.2 Fishable and Swimmable Waters......Page 273
13.3 Hazardous Waste Disposal on Land......Page 275
13.4 Chemicals and Pesticides......Page 279
13.5 Endangered Species Protection......Page 282
13.6 Summary......Page 283
14.1 Accomplishments of Environmental Regulation......Page 287
14.2 Normative Criticisms of Regulation......Page 291
14.3 Cost-Effectiveness Criticisms of Regulation......Page 292
14.4 Beyond Regulation? Promoting Clean Technology......Page 294
14.5 Summary......Page 297
15.1 The Economics of Crime......Page 300
15.2 The Economics of Punishment......Page 303
15.3 The Compliance Record......Page 306
15.4 The Political Economy of Enforcement......Page 307
15.5 Citizen Enforcement......Page 310
15.7 Summary......Page 311
PART III: HOW CAN WE DO BETTER?......Page 317
16.0 Introduction......Page 319
16.1 The Cost-Effectiveness Rule......Page 320
16.2 IB Regulation and Cost-Effectiveness......Page 324
16.3 IB Regulation and Technological Progress......Page 327
16.4 Potential Problems with IB Regulation......Page 329
16.5 Summary......Page 336
Appendix 16A: Imperfect Regulation in an Uncertain World......Page 340
Appendix 16B: Incentive-Compatible Regulation......Page 346
17.0 Introduction......Page 352
17.1 Lead and Chlorofluorocarbons......Page 353
17.2 Trading Urban Air Pollutants......Page 354
17.3 Marketable Permits and Acid Rain......Page 358
17.4 Recent U.S. Cap-and-Trade Moves: Mercury and Carbon Dioxide?......Page 362
17.5 Carbon Trading in the United States......Page 365
17.6 The European Emissions Trading System......Page 367
17.7 Pollution Taxes and Their Relatives......Page 369
17.8 Summary......Page 373
18.0 Introduction......Page 378
18.1 Path Dependence and Clean Technology......Page 379
18.2 Clean Technology Defined......Page 381
18.3 If You’re So Smart, Why Aren’t You Rich?......Page 384
18.4 Picking the Winning Path......Page 388
18.5 Promoting Early-Stage Clean Technologies......Page 389
18.6 Promoting Late-Stage Clean Technologies......Page 392
18.7 Clean Technology: Two Case Studies......Page 396
18.8 Summary......Page 400
19.0 Introduction......Page 407
19.1 Technology Options: Electricity and Heat......Page 408
19.2 Policy Options: Electricity and Heat......Page 416
19.3 Technology Options: Transport......Page 421
19.4 Policy Options: Transport......Page 426
19.5 Slowing Global Warming at a Profit?......Page 430
19.6 Summary......Page 433
PART IV: CAN WE RESOLVE GLOBAL ISSUES?......Page 437
20.0 Introduction......Page 439
20.1 Poverty and the Environment......Page 441
20.2 The Population Picture in Perspective......Page 445
20.3 An Economic Approach to Family Size......Page 448
20.4 Controlling Population Growth......Page 449
20.5 Consumption and the Global Environment......Page 454
20.6 Envisioning a Sustainable Future......Page 457
20.7 Summary......Page 460
21.0 Introduction......Page 464
21.1 The Political Economy of Sustainable Development......Page 465
21.2 Ending Environmentally Damaging Subsidies......Page 467
21.3 Establishing and Enforcing Property Rights......Page 469
21.4 Regulatory Approaches......Page 472
21.5 Sustainable Technology: Development and Transfer......Page 477
21.6 Resource Conservation and Debt Relief......Page 480
21.7 Trade and the Environment......Page 485
21.8 Summary......Page 490
22.0 Introduction......Page 496
22.1 Agreements as Public Goods......Page 497
22.2 Monitoring and Enforcement......Page 498
22.3 The Ozone Layer and Biodiversity......Page 500
22.4 Stopping Global Warming: Theory......Page 505
22.5 Stopping Global Warming: Reality......Page 509
22.6 Summary......Page 511
Selected Web Sites......Page 516
Author Index......Page 519
Subject Index......Page 522