Environmental and Natural Resource Economics

Cover
Half Title
Title Page
Copyright Page
Table of Contents in Brief
Table of Contents in Full
Preface
	New to this Edition
	An Overview of the Book
Acknowledgments
Part I Introduction to the Field of Environmental and Natural Resource Economics
	Chapter 1 Visions of the Future
		Introduction
			The Self-Extinction Premise
				Example 1.1 A Tale of Two Cultures
		Future Environmental Challenges
			The Climate Change Challenge
			The Water Accessibility Challenge
				Example 1.2 Climate Change and Water Accessibility: The Linkage
			The Just Transition Challenge
		The Policy Context
		How Will Societies Respond?
			The Role of Economics
				Debate 1.1 Ecological Economics versus Environmental Economics
			The Use of Models
		The Road Ahead
			Example 1.3 Experimental Economics: Studying Human Behavior in a Laboratory and in the Field
			Some Overarching Questions to Guide our Investigation
			An Overview of the Book
		Summary
		Discussion Questions
		Self-Test Exercise
		Notes
		Further Reading
	Chapter 2 The Economic Approach: Property Rights, Externalities, and Environmental Problems
		Introduction
		The Human–Environment Relationship
			The Economic Approach
				Example 2.1 Economic Impacts of Reducing Hazardous Pollutant Emissions from Iron and Steel Foundries
		Economic Efficiency
			Static Efficiency
		Property Rights
			Property Rights and Efficient Market Allocations
			Efficient Property Rights Structures
			Producer’s Surplus, Scarcity Rent, and Long-Run Competitive Equilibrium
		Externalities as a Source of Market Failure
			The Concept Introduced
			Types of Externalities
				Example 2.2 Shrimp Farming Externalities in Thailand
			Alternative Property Right Structures and the Incentives They Create
			Public Goods
				Example 2.3 Public Goods Privately Provided: The Nature Conservancy
		Imperfect Market Structures
			Asymmetric Information
			Government Failure
		The Pursuit of Efficiency
			Judicial Liability Rules
			Legislative and Executive Regulation
				Example 2.4 Can Eco-Certification Make a Difference? Organic Costa Rican Coffee
		Summary
		Discussion Questions
		Self-Test Exercises
		Notes
		Further Reading
	Chapter 3 Evaluating Trade-Offs: Benefit-Cost Analysis and Other Decision-Making Metrics
		Introduction
		Normative Criteria for Decision Making
			Evaluating Predefined Options: Benefit-Cost Analysis
			Finding the Optimal Outcome
			Relating Optimality to Efficiency
			Comparing Benefits and Costs across Time
			Dynamic Efficiency
		Applying the Concepts
			Pollution Control
				Example 3.1 Does Reducing Pollution Make Economic Sense? Evidence from the Clean Air Act
			Estimating Benefits of Carbon Dioxide Emission Reductions
				Example 3.2 Using the Social Cost of Capital: The DOE Microwave Oven Rule
				Example 3.3 Revisiting the Social Cost of Carbon: Just How High Should it Be?
		Issues in Benefit Estimation
		Approaches to Cost Estimation
		The Treatment of Risk
		Distribution of Benefits and Costs
		Choosing the Discount Rate
			Example 3.4 The Importance of the Discount Rate
			Debate 3.2 Discounting over Long Time Horizons: Should Discount Rates Decline?
			Divergence of Social and Private Discount Rates
		A Critical Appraisal
			Example 3.5 Is the Two for One Rule a Good Way to Manage Regulatory Overreach?
		Other Decision-Making Metrics
			Cost-Effectiveness Analysis
			Impact Analysis
		Summary
		Discussion Questions
		Self-Test Exercises
		Notes
		Further Reading
	Chapter 4 Valuing the Environment: Methods
		Introduction
		Why Value the Environment?
			Debate 4.1 Should Humans Place an Economic Value on the Environment?
		Valuation
			Types of Values
			Classifying Valuation Methods
			Stated Preference Methods
			Contingent Valuation Method
				Debate 4.2 Willingness to Pay versus Willingness to Accept: Why So Different?
			Choice Experiments
				Example 4.1 Leave No Behavioral Trace: Using the Contingent Valuation Method to Measure Passive-Use Values
				Example 4.2 Careful Design in Contingent Valuation: An Example of WTP to Protect Brown Bears
				Example 4.3 The Value of U.S. National Parks
			Revealed Preference Methods
				Example 4.4 Using the Travel-Cost Method to Estimate Recreational Value: Beaches in Minorca, Spain
		Benefit Transfer and Meta-Analysis
		Using Geographic Information Systems to Enhance Valuation
		Challenges
			Example 4.5 Using GIS to Inform Hedonic Property Values: Visualizing the Data
			Example 4.6 Valuing the Reliability of Water Supplies: Coping Expenditures in Kathmandu Valley, Nepal
			Debate 4.3 Distance Decay in Willingness to Pay: When and How Much Does Location Matter?
		Valuing Human Life
			Debate 4.4 What Is the Value of a Polar Bear?
			Debate 4.5 Is Valuing Human Life Immoral?
			Example 4.7 Using the Value of Statistical Life to Inform Policy: COVID-19
		Damage Assessments: Loss of Ecosystem Services
		Summary: Nonmarket Valuation Today
		Discussion Question
		Self-Test Exercises
		Notes
		Further Reading
	Chapter 5 Dynamic Efficiency and Sustainable Development
		Introduction
		A Two-Period Model
		Defining Intertemporal Fairness
		Are Efficient Allocations Fair?
			Example 5.1 The Alaska Permanent Fund
		Applying the Sustainability Criterion
			Example 5.2 Nauru: Weak Sustainability in the Extreme
		Implications for Environmental Policy
		Summary
		Discussion Question
		Self-Test Exercises
		Notes
		Further Reading
		Appendix: The Simple Mathematics of Dynamic Efficiency
	Chapter 6 Depletable Resource Allocation: The Role of Longer Time Horizons, Substitutes, and Extraction Cost
		Introduction
		A Resource Taxonomy
			Terms
		Efficient Intertemporal Allocations
			The Two-Period Model Revisited
			The N-Period Constant-Cost Case
			Transition to a Renewable Substitute
			Increasing Marginal Extraction Cost
			Exploration and Technological Progress
				Example 6.1 Historical Example of Technological Progress in the Iron Ore Industry
		Market Allocations of Depletable Resources
			Appropriate Property Rights Structures
			Environmental Costs
				Example 6.2 The Green Paradox
		Summary
		Discussion Question
		Self-Test Exercises
		Notes
		Further Reading
		Appendix: Extensions of the Constant-Extraction-Cost Depletable Resource Model: Longer Time Horizons and the Role of an Abundant Substitute
			The N-Period, Constant-Cost, No-Substitute Case
			Constant Marginal Cost with an Abundant Renewable Substitute
Part II Economics of Pollution Control
	Chapter 7 Economics of Pollution Control: An Overview
		Introduction
		A Pollutant Taxonomy
		Defining the Efficient Allocation of Pollution
			Stock Pollutants
			Fund Pollutants
		Market Allocation of Pollution
		Efficient Policy Responses
		Cost-Effective Policies for Uniformly Mixed Fund Pollutants
			Defining a Cost-Effective Allocation
		Cost-Effective Pollution Control Policies
			Debate 7.1 Should Developing Countries Rely on Market-Based Instruments to Control Pollution?
		Cost-Effective Policies for Nonuniformly Mixed Surface Pollutants
			The Single-Receptor Case
			Policy Approaches for Nonuniformly Mixed Pollutants
			The Many-Receptors Case
		Other Policy Dimensions
			The Revenue Effect
				Example 7.1 The Swedish Nitrogen Oxide Charge
				Example 7.2 RGGI Revenue: The Maine Example
			Responses to Changes in the Regulatory Environment
			Instrument Choice under Uncertainty
		Summary
		Discussion Questions
		Self-Test Exercises
		Notes
		Further Reading
		Appendix: The Simple Mathematics of Cost-Effective Pollution Control
			Policy Instruments
	Chapter 8 Stationary-Source Local and Regional Air Pollution
		Introduction
			Conventional Pollutants
			The Regulatory Policy Framework
		The Efficiency of the Command-and-Control Approach
			Debate 8.1 Does Sound Policy Require Targeting New Sources via the New Source Review?
			Example 8.1 Do Uniform Ambient Air Quality Standards Provide Just Protection for all U.S. Residents?
			Debate 8.2 The Particulate and Smog Ambient Standards Controversy
		Cost-Effectiveness of the Traditional Regulatory Approach
		Air Quality
		Market-Based Approaches
			Example 8.2 Japan’s Pollution-related Health Damage Compensation System
			Example 8.3 The U.S. Sulfur Allowance Program in Retrospect
			Example 8.4 Controlling SO2 Emissions in the United States and Germany: A Comparison
			Co-Benefits and Co-Costs
		Summary
			Example 8.5 Technology Diffusion in the Chlorine-Manufacturing Sector
		Discussion Questions
		Self-Test Exercises
		Notes
		Further Reading
	Chapter 9 Water Pollution: Managing Water Quality for Rivers, Lakes, and Oceans
		Introduction
		Nature of Water Pollution Problems
			Types of Waste-Receiving Water
			Sources of Contamination
			Types of Pollutants
				Debate 9.1 Toxics in Fish Tissue: Do Fish Consumption Advisories Change Behavior?
			Traditional Water Pollution Control Policy
		The U.S. Experience
			Early Legislation
			Subsequent Legislation
				Example 9.1 The Challenges of Estimating the Benefits of Water Pollution Policy
				Example 9.2 Effluent Trading for Nitrogen in Long Island Sound
			The Clean Water Rule
		The European Experience
			European Water Framework Directive
		The Developing Country Experience
			Example 9.3 Economic Incentives for Water Pollution Control: The Case of Colombia
		Ocean Pollution
			Oil Spills
			Ocean Dumping
			Ocean Trash
				Debate 9.2 To Ban or Not to Ban: The Unintended Consequences of Plastic Bag Policies
			Oil Spills—Tankers and Offshore Drilling
		An Overall Assessment
			Example 9.4 Deepwater Horizon BP Oil Spill—Estimating the Damages
		Summary
		Discussion Questions
		Self-Test Exercises
		Notes
		Further Reading
	Chapter 10 Toxic Substances and Environmental Justice
		Introduction
		Nature of Toxic Substance Pollution
			Toxic Substance Health Effects
		Policy Issues
			Example 10.1 The Arduous Path to Managing Toxic Risk: Bisphenol A
		Market Allocations and Toxic Substances
			Occupational Hazards
				Example 10.2 Susceptible Populations in the Hazardous Workplace: An Historical Example
			Product Safety
			Third Parties
				Example 10.3 Private Judicial Remedies for Managing Toxic Risk: The Case of PFAS
		Environmental Justice and the Siting of Hazardous Waste Plants
			History
		Environmental Justice Research and the Emerging Role of GIS
		The Economics of Site Location
			Example 10.4 Which Came First—The Toxic Facility or the Minority Neighborhood?
		Environmental Justice in Canada and Europe
		Programs to Improve Information
			Proposition 65
				Example 10.5 Regulating through Mandatory Disclosure: The Case of Lead
		Europe’s Approach to Toxic Substance Management
		Summary
		Discussion Questions
		Self-Test Exercises
		Notes
		Further Reading
Part III Climate Section
	Chapter 11 Climate Change I: The Nature of the Challenge
		Introduction
			The Science of Climate Change: The Basics
		Quantifying the Intensity of the Threats
			Tipping Points and Fat Tails
				Example 11.1 The Permafrost Thaw Tipping Point
			Dealing with Uncertainty
		Broad Strategies
		The Evolution of Targets
		Economic Insights on Targets and Timing
		Getting There: The Economics of International Climate Agreements
		The Precedent: Reducing Ozone-Depleting Gases
		Summary
		Discussion Question
		Self-Test Exercise
		Notes
		Further Reading
	Chapter 12 Climate Change II: The Role of Energy Policy
		Introduction
		Future Pathways
			Energy Efficiency
				Example 12.1 On-Bill Financing in Hawai‘i: Solving the Up-Front Cost Problem
				Example 12.2 Energy Efficiency: Rebound and Backfire Effects
			Fuel Switching
			Beneficial Electrification
			The Potential Role for Nuclear Energy
		The Role of Policy in Transitioning to Renewables
			Policy Design Issues
				Example 12.3 The Relative Cost-Effectiveness of Renewable Energy Policies in the United States
		Transition Complexities
			Example 12.4 Negative Prices in the Energy Industry
			Dealing with Intermittent Sources
			Integrating Distributed Energy Sources
				Example 12.5 Thinking Outside of the Box: The Boothbay Pilot Project
				Example 12.6 The Economics of Solar Microgrids in Kenya
		Access to Critical Resources
		Summary
		Discussion Questions
		Self-Test Exercises
		Note
		Further Reading
	Chapter 13 Climate Change III: Carbon Pricing
		Introduction
		Carbon Pricing and Emissions Mitigation Policy
			Forms of Carbon Pricing
			Carbon Offset Markets
				Example 13.1 Air Capture and Storage as an Offset
				Debate 13.1 Are Offsets Helpful or Harmful in Efforts to Reduce the Climate Threat?
		Carbon Markets and Taxes: How have these Approaches Worked in Practice?
			Cost Savings
			Economic Impacts
		The Sufficiency of Carbon Pricing: Meeting the Goals?
			Protecting Trade-Vulnerable Industries
			Using the Revenue: Possibilities and Experience
		Uncertainty-Decreasing Hybrid Carbon Pricing Designs
			Emissions Trading Program Hybrids
			Carbon Tax Hybrids
		Providing Context: A Brief Look at Four Illustrative Carbon Pricing Programs
			Output-Based Carbon Pricing Systems
		Policy Design and the Just Transition
		Controversy: The Morality of Emissions Trading
			Debate 13.2 Is Global Greenhouse Gas Trading Immoral?
		Summary
		Discussion Questions
		Self-Test Exercises
		Notes
		Further Reading
	Chapter 14 Climate Change IV: Adaptation: Floods, Wildfires, and Water Scarcity
		Introduction—The Role of Adaptation Policy
			Adaptation and Mitigation—Complements or Substitutes?
		Climate Adaptation: Flood Risks—Storms, Sea Level Rise, and Storm Surges
			Flood Insurance in the United States
				Example 14.1 Enhancing Resilience against Natural Disasters with Flood Insurance
			Proactive versus Reactive Adaptation Strategies
			Flood Insurance around the World
			Rethinking Flood Insurance
				Example 14.2 Shoreline Stabilization and Beach Renourishment: Buying Time
			Managed Retreat: Buyouts
			Prioritizing among Adaptation Options in the Presence of Ethical Boundaries
			Information as an Adaptive Strategy
				Example 14.3 What to Expect when you Are Expecting a Hurricane: Hurricane Exposure and Birth Outcomes
		Climate Adaptation: Wildfire Risk and Management
			Example 14.4 Mandatory Adaptation Benefits Homeowners AND their Neighbors?
		Climate Adaptation: Managing Water Shortages
			The Efficient Allocation of Scarce Water
			Municipal Water Pricing
				Example 14.5 The Cost of Conservation: Revenue Stability versus Equitable Pricing
			Full Cost Recovery Pricing
			Desalination and Wastewater Recycling
				Example 14.6 Moving Rivers or Desalting the Sea? Costly Remedies for Water Shortages
		Roles for Public and Private Institutions
		Summary
		Discussion Questions
		Self-Test Exercises
		Notes
		Further Reading
	Chapter 15 Transportation: Managing Congestion and Pollution
		Introduction
		Subsidies and Externalities
			Implicit Subsidies
			Externalities
		Consequences
		The U.S. and E.U. Policy Approaches
			Example 15.1 Monitoring and Enforcement: The Volkswagen Experience
		Transportation Pricing
			Fuel Taxes
			Congestion Pricing
				Example 15.2 Zonal Mobile-Source Pollution-Control Strategies: Singapore
				Example 15.3 Sacrificing Efficiency for Acceptability? Congestion Charges in Practice
				Example 15.4 New York City’s Congestion Pricing Plan: Will it Really Reduce Congestion?
			Fuel-Economy Standards: The U.S. Approach
				Debate 15.1 CAFE Standards or Fuel Taxes?
				Example 15.5 Fuel-Economy Standards When Fuel Prices Are Falling vs. Rising
			Gas Guzzler Tax
			Fuel-Economy Standards in the European Union
				Example 15.6 Car-Sharing: Better Use of Automotive Capital?
			Fuel-Economy Standards in Other Countries
			External Benefits of Fuel-Economy Standards
		Other Transportation Policies
			Private Toll Roads
			Parking Cash-Outs
			Bike-Sharing Programs
			Pricing Public Transport
			Feebates
			Zero-Emission Vehicles and Tax Credits for Electric Vehicles
				Example 15.7 Modifying Car Insurance as an Environmental Strategy
			Accelerated Retirement Strategies
				Example 15.8 The Cash-for-Clunkers Program: Did it Work?
				Example 15.9 Counterproductive Policy Design
		Summary
		Discussion Question
		Self-Test Exercises
		Notes
		Further Reading
Part IV Natural Resource Economics
	Chapter 16 Ecosystem Services: Nature’s Threatened Bounty
		Introduction
		The State of Ecosystem Services
		Economic Analysis of Ecosystem Services
		Demonstrating the Value of Ecosystem Services
		The Value of Coral Reefs
			Example 16.1 The Value of Protecting Coral Reefs in the Coral Triangle and Mesoamerica
		Valuing Supporting Services: Pollination
			Example 16.2 Valuing Pollination Services: Two Illustrations
		Valuing Supporting Services: Forests and Coastal Ecosystems
		Challenges and Innovation in Ecosystem Valuation
		Institutional Arrangements and Mechanisms for Protecting Nature’s Services
			Payments for Environmental Services (PES)
				Debate 16.1 Paying for Ecosystem Services or Extortion? The Case of Yasuni National Park
				Example 16.3 Trading Water for Beehives and Barbed Wire in Bolivia
			Tradable Entitlement Systems
				Example 16.4 Reducing Emissions from Deforestation and Forest Degradation (REDD): A Twofer?
				Debate 16.2 Tradable Quotas for Whales?
			Ecotourism
				Debate 16.3 Does Ecotourism Provide a Pathway to Sustainability?
				Example 16.5 Payments for Ecosystem Services—Wildlife Protection in Zimbabwe
				Example 16.6 On the Error of Ignoring Ecosystem Services: The Case of Wolf Recovery in the United States
		Poverty and Debt
			Debt-for-Nature Swaps
			Extractive Reserves
			The World Heritage Convention
			Royalty Payments
				Example 16.7 Does Pharmaceutical Demand Offer Sufficient Protection to Biodiversity?
				Example 16.8 Trust Funds for Habitat Preservation
		The Special Problem of Protecting Endangered Species
			Conservation Banking
				Example 16.9 Conservation Banking: The Gopher Tortoise Conservation Bank
			The Agglomeration Bonus
			Safe Harbor Agreements
			Preventing Invasive Species
				Example 16.10 The Changing Economics of Monitoring and its Role in Invasive Species Management
		Moving Forward
		Summary
		Discussion Questions
		Self-Test Exercises
		Notes
		Further Reading
	Chapter 17 Common-Pool Resources: Commercially Valuable Fisheries
		Introduction
		Efficient Allocations—Bioeconomics Theory
			The Biological Dimension
			Static Efficient Sustainable Yield
			Dynamic Efficient Sustainable Yield
		Appropriability and Market Solutions
		Public Policy toward Fisheries
			Example 17.1 Harbor Gangs of Maine and Other Informal Arrangements
			Raising the Real Cost of Fishing
			Taxes
			Perverse Incentives? Subsidies
			Catch Share Programs
				Example 17.2 The Relative Effectiveness of Transferable Quotas and Traditional Size and Effort Restrictions in the Atlantic Sea Scallop Fishery
				Debate 17.1 ITQs or TURFs? Species, Space, or Both?
		Aquaculture
		Subsidies and Buybacks
			Debate 17.2 Aquaculture: Does Privatization Cause More Problems Than it Solves?
		Exclusive Economic Zones—The 200-Mile Limit
		Marine Protected Areas and Marine Reserves
		Enforcement—Illegal, Unreported, and Unregulated Fish Stocks
			Debate 17.3 Bluefin Tuna: Difficulties in Enforcing Quotas for High-Value Species
		Summary
		Discussion Questions
		Self-Test Exercises
		Notes
		Further Reading
		Appendix: The Harvesting Decision: Fisheries
	Chapter 18 Forests: Storable, Renewable Resources
		Introduction
		Characterizing Forest Harvesting Decisions
			Special Attributes of the Timber Resource
			The Biological Dimension
			The Economics of Forest Harvesting
			Extending the Basic Model
		Sources of Inefficiency
			Perverse Incentives for the Landowner
			Perverse Incentives for Nations
				Debate 18.1 Is Firewood a Carbon-Neutral Fuel?
		Sustainable Forestry
			Public Policy
				Example 18.1 Producing Sustainable Forestry through Certification: Is it Working?
			Forestry Offsets (Credits)
		Summary
		Discussion Questions
		Self-Test Exercises
		Notes
		Further Reading
		Appendix: The Harvesting Decision: Forests
	Chapter 19 Land: A Locationally Fixed, Multipurpose Resource
		Introduction
		The Economics of Land Allocation
			Land Use
			Land-Use Conversion
			The Ethanol Story
			The Role of Irrigation
			The Rise of Organic Food
		Sources of Inefficient Use and Conversion
			Sprawl and Leapfrogging
			Incompatible Land Uses
			Undervaluing Environmental Amenities
				Debate 19.1 Should Landowners Be Compensated for “Regulatory Takings”?
			The Influence of Taxes on Land-Use Conversion
			Market Power
				Debate 19.2 What Is a “Public Purpose”?
			Special Problems in Developing Countries
		Innovative Market-Based Policy Remedies
			Establishing Property Rights
			Transferable Development Rights
				Example 19.1 Controlling Land Development with TDRs in Practice
			Conservation Easements
			Development Impact Fees
			Real Estate Tax Adjustments
		Summary
		Discussion Question
		Self-Test Exercises
		Notes
		Further Reading
Part V Sustainable Development
	Chapter 20 Sustainable Development: Meeting the Challenge
		Introduction
		The Basic Elements of Sustainable Development
		The Sufficiency of Market Allocations in Attaining Just, Sustainable Outcomes
			Market Imperfections
		The Evolution of the Sustainable Development Concept
		The Current Sustainable Development Vision in Practice
			Debate 20.1 What Role Should Nuclear Power Play in our Energy Future?
		The Evolution of Sustainable Development Metrics
		Enter Donut Economics
		Meeting the Challenges
			The Intergenerational Challenge
				Example 20.1 Metropolitan Tokyo’s Cap-and-Trade Program for Buildings
			The Intragenerational Challenge
		The Evolving Roles of Technology, the Business Community, and Nongovernmental Organizations
			Example 20.2 The Effects of an Unconditional Cash Transfer System in Kenya
		Summary
		Discussion Questions
		Self-Test Exercise
		Notes
		Further Reading
Answers to Self‑Test Exercises
Glossary
Index