Applying Economics to the Environment

• Author covers environmental valuation, uncertainty, and enforcement in an innovative and rigorous manner
• Includes a review of relevant microeconomic topics (chapter 3)
• Includes a chapter on the physical "science" of the environment; author believes that models of the natural world must be understood before the application of economic models (chapter 4)
• Most thorough coverage of benefits and damages from environmental policies, including 'real-world' example of regional cost benefit analysis
• Covers contemporary market (e.g. subsidies and transfer licenses) and non-market (regulation) solutions to environmental problems (chapters 9 and 10) after introducing history of environmental policy and legislation (chapter 2)
• Best text coverage of monitoring and enforcement of policy (chapter 11)
• Two chapters on risk point out real-world uncertainty of environmental policies (chapters 12 and 13)
• Because developed countries have come further in dealing with the environment, the author spends the last 4 chapters on the unique problems facing less developed countries created by rapid industrialization and lax government enforcement
• Includes history of environmental policy and legislation and comparisons of varying approaches to developement dilemmas

Readership: Undergraduate/graduate course in environmental economics.

Clifford S. Russell, Professor of Economics, and Director, Vanderbilt Institute for Public Policy Studies, Vanderbilt University

FOREWORD
CHAPTER 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
CHAPTER 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 US; A Few Comments on International Comparisons and Global Concerns; Things to Keep in Mind
CHAPTER 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
CHAPTER 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
CHAPTER 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
CHAPTER 6: Damage and Benefit Estimation: Background and Introduction:- Practical Arguments; Ethical Objections and Counter Considerations; Some Important Misunderstandings about Economics; Some Possible Bases for Valuing Environmental Goods and Services; The Heart of the Economic Approach; Benefit "Routes" - A Brief Review; Conclusions and Reminders
CHAPTER 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
CHAPTER 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
CHAPTER 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
CHAPTER 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 Judgement; Beyond Administered Prices and Straightforward Regulations; Liability Provisions; The Provision of Information; Challenge Regulation; Concluding Comments and Reminders
CHAPTER 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 Compliance as a decision Under Uncertainty; Conclusions and Reminders
CHAPTER 12: Dealing with Risk: The Normative Model and Some Limitations:- Rational Models for Dealing with Risk; Cognitive Problems with Risky Decisions; Some Conclusions
CHAPTER 13: Risk Analysis and Risky Decisions: Some Applications:- Risk Analysis and Risk Management; Irreversible Decisions, Ignorance, and the Techniques for Informing Decisions; Concluding Comments
CHAPTER 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
CHAPTER 15: Estimating Environmental Quality Benefits 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
CHAPTER 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
CHAPTER 17: Developing Country Environments and OECD Country Tastes: An Asymmetric Relation:- Some Possibilities for Cross-Border Influence; Where does That Leave Us?