Applying Economics to the Environment
Clifford S. Russell
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?