Applying Economics to the Environment

Applying Economics to the Environment is distinguished from other books on environmental economics by its breadth of coverage and its in-depth discussions of several key topics. The book's broad scope includes a chapter on how models of the natural world interact with economic models in ways that are central to the conclusions economists reach. It devotes a chapter to contingent valuation, currently the hottest topic in the field. It also contains a chapter on monitoring and enforcement, a topic often completely ignored but central to considerations of instrument choice. In addition, the final four chapters deal with the special problems of developing countries and the environment, both their own and our shared global systems. In terms of depth, the book's discussion of contingent valuation and related "direct" damage or benefit estimation techniques is unmatched outside the specialist literature. Its coverage of the choices available among policy instruments goes far beyond the usual simple discussions contrasting what is misleadingly known as "command control" with so-called economic or market-based instruments. This coverage reveals the complexity of the choice and the range of alternatives available. It also presents several of the newer ideas, in particular the use of publicly available information as a tool of environmental policy. Applying Economics to the Environment is intended to serve a dual market of upper-level college course programs in environmental economics as well as engineering and public policy courses that focus on the environment. The book can also provide an enlightening perspective for practicing professionals. Because the text includes a relatively sophisticated presentation of economic analysis, the author includes a full-chapter review of relevant microeconomic concepts. Some other features that further distinguish this book from currently available titles on the subject are: an introduction to the history of environmental policy and legislation; a comparison of approaches to the uncertain choice between development and preservation; and an example of regional cost benefit analysis.

Table of Contents:
Foreword 1: What Does Environmental Economics Have to Do With the Environment? Some Historical Problems Analyses of Causes and Solutions Getting Closer to Specifics A Sketch of Environmental Policy Choices Development and the Environment A Concluding Theme 2: Background on Actual Policy Choices A Little History Efforts to Deal Legislatively with the Environment in the United States The 1970s -- A Decade of Environmental Legislation Summarizing the Place of Economics in Environmental Legislation in the U.S. A Few Comments on International Comparisons and Global Concerns Things to Keep in Mind 3: Microeconomics: Review and Extensions Demand, Willingness to Pay, and Surpluses Optimization in Microeconomics Supply/Marginal Cost Social Welfare Notions: Prices and Optimality Notes on Optimization and the Choice of Environmental Policy Optimization in Microeconomics Reminders Appendix I: Chapter 3 Rationality Demand Functions and Willingness to Pay Time and Uncertainty Ignorance of the Future Risk and Uncertainty Appendix II: Chapter 3 Correcting Market Failures: Is Partial Correction Better Than Nothing? Optimizing with Inconveniently Shaped Functions When Available Future Decisions are Changed by Present Decisions 4: An Introduction to the "Environmental" Part of Environmental Economics Functions of the Environment Relevant to Environmental Economics Models of the Natural World More About Space, Time, and Randomness Ignorance Concluding Comments and Reminders 5: Cost-Benefit Analysis and the Management of the Environment Going Beyond the Simplest Optimizing Problem A More Formal and Complex Model of the Optimizing Problem Doing Less Than Basin-Wide Net Benefit Maximization 6: Damage and Benefit Estimation: Background and Introduction Practical Arguments Ethical Objections and Counter Considerations Some Important Misunderstandings about Econmics Some Possible Bases for Valuing Environmental Goods and Services The Heart of the Econmic Approach Benefit "Routes" -- A Brief Review Conclusions and Reminders 7: Indirect Benefit Estimation Demand Shifts: Complementarity Cost Shifts: Averting, Replacing, or Curing Expenditure Travel Cost and Its Relation to Environmental Quality Comments on Indirect Methods of Benefit Estimation More Generally Conclusions and Reminders 8: Direct Methods of Benefit Estimation Strategic Responses Cognitive Difficulties and Lack of Knowledge Some Other Challenges for Direct Questioning Methods Conjoint Analysis Three Final, Practical Problems An Attempt at a Bottom Line on Direct Questioning Techniques 9: Policy Instruments I: Some Basic Results and Confusions Narrowing Down Bases for Judging Among Instruments Static Efficiency Contrasting the Static and Dynamic Cases A Word About Subsidies A Summary to This Point 10: Policy Instruments II: Other Considerations and More Exotic Instruments Comparing Instruments: Other Considerations General Institutional Demands Prices, Ethics and Politics in Environmental Policy Other Dimensions of Judgment Beyond Administered Prices and Straightforward Regulations Liability Provisions The Provision of Information Challenge Regulation Concluding Comments and Reminders 11: Monitoring and Enforcement Characteristics of Various M & E Settings Elements of a Monitoring and Enforcement System Some Simple Economics of Monitoring and Enforcement Monitoring and Complicance as a Decision Under Uncertainty Conclusions and Reminders 12: Dealing with Risk: The Normative Model and Some Limitations Rational Models for Dealing with Risk Cognitive Problems with Risky Decisions Some Conclusions 13: Risk Analysis and Risky Decisions: Some Applications Risk Analysis and Risk Management Irreversible Decisions, Ignorance, and the Techniques for Informing Decisions Concluding Comments 14: Development and Environment: Descriptive Statistics and Special Challenges Trying to Understand Economic Growth and Sustainability Describing Countries and Their Health and Environmental Problems Back to the Question of Special Challenges Does Rising Income Lead to Better Environment and Thus to Sustainability? Concluding Comments 15: Estimating Environmental Quality Benefit or Damages in Developing Countries Introduction Benefit Estimation Methods for the Developing Country Setting Direct, Hypothetical or "Stated Preference" Methods Some Evidence on Contrasts Between Developing and Developed Countries Conclusion 16: Choosing Instruments of Environmental Policy in the Developing Country Context The Institutional Setting in Developing Countries Are Market-based Environmental Policy Instruments the Best Answer for Developing Countries? Observations and Suggestions Some Evidence on the Actual Choices of Environmental Policy Instruments Being Made in Latin America Concluding Comments Appendix I: Chapter 16 Some Detail on Institutional Capabilities and Market Configurations in Latin America 17: Developing Country Environments and OECD Country Tastes: An Asymmetric Relation Some Possibilities for Cross-Border Influence Where Does That Leave Us?

Review :
"This text is perfect for economics majors, while an excellent microeconomics review can bring others up to speed. It] combines rigorous economics with actual policy problems and choices. I especially like the treatment of pollution dispersion (with lots of helpful diagrams), pollution monitoring, and risk analysis. The chapters on environmental protection in developing countries fill an important gap in existing texts."--Donald N. Dewees, University of Toronto "An easy--and pleasurable--read in environmental economics and policy."--Peter Bohm, Stockholm University "Engineers, scientists, attorneys, and policymakers working on environmental issues will find useful insights into the arcane world of economics, and discover new ways of communicating economic ideas in multi disciplinary contexts. Practitioners in international development institutions and analysts in the developing world will find their concerns addressed through a fresh look at the conventional wisdom about environmental policy and sustain ability. Lawmakers and regulators will see a much-needed treatment of environmental monitoring and enforcement, a facet of environmental policy which is too often neglected in most texts. In short, this book is not just for students.] For working professionals in the private and public sectors who are interested in learning more about environmental economics, or for economists who just need to refresh their knowledge in a specific area, it will become an invaluable resource."--William J. Vaughan, Senior Economist, Inter-American Development Bank "Finally, someone has written an environmental economics textbook that is technically accurate but still intellectually accessible to those other than the professional economist. In addition, it includes topics that are essential to a full understanding of environmental problems including risk analysis, monitoring and enforcement, the difficulties in benefit and cost estimation, and the special problems of developing countries. It is just the book we have needed for environmental engineers to become familiar with the concepts therein so that their work is not dominated by technical efficiency nor economic efficiency interpreted in a narrow sense."--Frank L. Parker, Distinguished Professor of Environmental Engineering and Member, National Academy of Engineering