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Economics of the Environment: Theory and Policy / Edition 6

Economics of the Environment: Theory and Policy / Edition 6

by Horst Siebert

ISBN-10: 3540220615

ISBN-13: 9783540220619

Pub. Date: 10/28/2004

Publisher: Springer-Verlag New York, LLC

The book interprets nature and the environment as a scare resource. It offers a theoretical study of the allocation problem and describes different policy approaches to the environmental problem. The entire spectrum of the allocation issue is studied: the use of the environment in a static context, international and trade aspects of environmental allocation, regional


The book interprets nature and the environment as a scare resource. It offers a theoretical study of the allocation problem and describes different policy approaches to the environmental problem. The entire spectrum of the allocation issue is studied: the use of the environment in a static context, international and trade aspects of environmental allocation, regional dimensions, global environmental media, environmental use over time and under uncertainty. The book incorporates a variety of economic approaches, including neoclassical analysis, the public-goods approach, benefit-cost analysis, property-rights ideas, economic policy and public-finance reasoning, international trade theory, regional science, optimization theory, and risk analysis. The different aspects of environmental allocation are studied in the context of a single model that is used through the book.

Product Details

Springer-Verlag New York, LLC
Publication date:
Edition description:
Product dimensions:
6.36(w) x 9.38(h) x 0.93(d)

Table of Contents

Preface     V
List of Figures and Tables     XIII
Introduction     1
The Problem     3
Using the Environment - An Allocation Problem     7
Externalities     7
Relationship Between the Environment and the Economic System     8
Material Flows Between the Environment and the Economic System     12
Competing Uses     13
Zero Price of Environmental Use     16
Environmental Effects of Government Decisions     18
How Much Environmental Quality?     19
A Taxonomy of the Environmental Problem     19
Input-Output Analysis and the Environment     20
Applied General Equilibrium Models     23
Static Allocation Aspect     25
Production Theory and Transformation Space     27
Production Theory     27
Variables Affecting the Transformation Space     33
An Alternative Approach of Production Theory     36
Properties of the Transformation Space     37
Transformation Space with Negative Productivity Effect     41
Optimal Environmental Use     43
Criteria for Optimality     43
Optimization Problem     45
A Shadow Price forPollutants     46
Implications for the Shadow-Price System of the Economy     49
Optimum and Competitive Equilibrium     50
Nonlinear Optimization     54
Implications of the Allocation Problem     55
Implications of the Profit Maximum     56
Environmental Quality as a Public Good     59
Characteristics of a Public Good     59
Allocation of Public Goods     62
Social-Welfare Function     63
Benefit-Cost Analysis     65
Costs of Environmental Quality     66
Evaluation of Environmental Quality     70
Individual Preferences and the Pareto-Optimal Provision of Environmental Quality     74
Thesis of Market Failure     77
Lindahl Solution     77
Mechanisms of Social Choice     84
Ethical Aspects of Environmental Evaluation     91
An Example: Ambient Quality Standards     95
Property-Rights Approach to the Environmental Problem     97
Property-Rights Approach     97
Property Rights and Environmental Allocation     98
Coase Theorem     99
Coase Theorem and Transaction Costs     101
Can Property Rights Be Specified?      102
Environmental-Policy Instruments     105
Incidence of an Emission Tax     107
Standard-Price Approach     107
Reaction of Producers     109
Emission Taxes in Monopoly     110
General Equilibrium Approach     111
Allocation in a General Equilibrium Model     114
Pollution Intensities, Factor Intensities, and Allocation Effects     118
Overshooting of the Emission Tax     120
Is there a Double Dividend of Emission Taxes?     120
Instruments in a Second-Best Setting     124
Reaction of the Individual Firm     124
General Equilibrium Model     124
Policy Instruments     127
Transforming Quality Targets into Individual Behavior     127
The Principal-Agent Problem     128
Available Policy Instruments     129
Criteria for Evaluating Instruments     130
Moral Suasion     131
Government Financing and Subsidies     132
Regulatory Approach     132
Voluntary Agreements     136
Emission Taxes     136
Pollution Licenses     140
The Bubble Concept     145
Success of Emission Trading      147
Institutional Arrangements for Cost Sharing     148
Combining Standards and an Emission Tax     150
Liability     150
Policy Instruments and the Casuistics of Pollution     153
Solid Waste     153
Optimal Waste Reduction     155
Establishing Scarcity Prices for Waste with Collection Costs     157
Waste Management and Spatial Structure     157
Closed Substance Cycle and Product Responsibility     158
The German System of Waste Management     158
Emissions from Mobile Sources     160
Accidental Emissions     161
Vintage Damages     161
Pollutants in Consumption Goods     161
Pollutants in New Products     162
Externalities in Land Use     162
The Political Economy of Environmental Scarcity     163
The Opportunity Cost Principle     163
The Polluter-Pays Principle     164
The Pollutee-Pays Principle     166
The Precautionary Principle     166
The Principle of Interdependence     167
Major Environmental Legislation     168
Environmental Allocation in Space     171
Environmental Endowment, Competitiveness and Trade      173
Environmental Systems in Space     173
Environmental Endowment     174
National Environmental Policy and Comparative Advantage     175
Environmental Policy and Trade Flows     177
Environmental Policy, Imperfect Competition and Trade     179
Location Advantage     180
International Specialization and Environmental Quality     180
The Equalization of Prices for Emissions     181
Environmental Policy and Gains from Trade     182
Environmental Pollution: A Race to the Bottom?     183
Empirical Studies of the Impact of Environmental Policy on Trade     184
Trade Policy as a Means for Environmental Protection?     185
Environmental Concerns - A Pretext for Protection     187
Environmental Policy and World Trade Order     187
Trade Policy to Solve Transfrontier and Global Pollution Problems?     190
Elements of a Multilateral Environmental Order     192
Environmental Policy in the Single Market     193
Transfrontier Pollution     195
Transfrontier Diffusion Function Versus International Public Good     195
Distortions from Transfrontier Pollution     196
The Noncooperative Solution to Transfrontier Pollution      196
The Cooperative Solution to Transfrontier Pollution     200
Side Payments     201
The Bargaining Approach to Transfrontier Pollution     203
Policy Instruments for Transfrontier Pollution     204
Positive International Spillovers: The Equatorial Rain Forest     206
Biodiversity     206
Global Environmental Media     209
Global Warming     209
The Noncooperative Solution to Global Media     210
Side Payments and Global Goods     215
Controlling the Free Rider     216
Sanctions     216
Self-enforcing Contracts     217
Coalitions     217
The Unilateral First Mover     218
Uniform Reduction     219
A Workable System of Transferable Discharge Permits     219
Reneging the Contract     220
An International Order for the Global Environment     221
The Kyoto Protocol and Beyond     223
EU Emission Trading     226
Regional Aspects of Environmental Allocation     229
The Problem     229
Spatial-Allocation Model     232
Regional Implications of a National Environmental Policy     233
Regional Differentiation of the Emission Tax     233
Location Advantage     235
Diagrammatic Explanations     236
Resource Mobility and Adjustment of Emission Taxes     239
Differences in Environmental Quality     240
Siting Issues and the National Interest     241
Regional Versus National Authorities     241
Some Restraints on Regional Authorities     243
Regional Autonomy and Environmental Media     244
Environmental Equity and Specialization of Space     245
Environmental Policy and Regional Planning     246
A Regional Allocation Model     247
Environmental Allocation in Time and Under Uncertainty     249
Long-Term Aspects of Environmental Quality     251
The Problem     251
Dynamic Model     253
Implications     253
Three Strategies for Dynamic Environmental Use     255
Social Discount Rate and Environmental Allocation     259
Further Determining Factors of the Shadow Price of Emissions     260
Control Theory     262
A Dynamic Allocation Model     265
Economic Growth, Sustainability, and Environmental Quality     267
Interdependencies Between Environmental Quality, Growth, and Resources      267
Growth and Environmental Degradation     268
The Survival Issue     274
Environmental Quality as a Normative Restriction for Growth     274
Optimal Growth     276
Growth with Finite Resources     276
Weak or Strong Substitutability     277
Growth with Human Capital     277
Endogenous Growth     277
Sustainable Development     278
Zero Economic Growth     281
An Optimistic Note: The Environmental Kuznets Curve     283
Risk and Environmental Allocation     285
Environmental Risks     285
Risk and Environmental Quality     287
A Simple Static Model     289
Risk in an Intertemporal Context     290
Preventive Environmental Policy     292
Irreversibilities and Option Values     293
Allocating Environmental Risks?     294
Risk Reduction     295
Allocating the Costs of Risk Reduction     295
The Response of the Polluter Under Uncertainty     297
About the Author     299
Bibliography     301
Subject Index     329

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