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• Cover
• Half-Title
• Title
• Copyright
• Contents
• Preface
• New to this Edition
• An Overview of the Book
• Acknowledgments
• PART I INTRODUCTION TO THE FIELD OF ENVIRONMENTAL AND NATURAL RESOURCE ECONOMICS
• 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
• 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
• 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
• Debate 3.1 What Is the Proper Geographic Scope for the Social Cost of Carbon?
• 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
• 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
• 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
• 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
• 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
• 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
• 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
• 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
• 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
• 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
• 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
• 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
• 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
• 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
• 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
• 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
• 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
• 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