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Journal Cover Morfolia
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  This is an Open Access Journal Open Access journal
   ISSN (Print) 2011-9860
   Published by Universidad Nacional de Colombia Homepage  [23 journals]
  • Chapter 28 The theory of international environmental agreements

    • Abstract: Publication date: 2005
      Source:Handbook of Environmental Economics, Volume 3
      Author(s): Scott Barrett
      This chapter presents the theory of international environmental agreements (IEAs). It explains what treaties do (or should do); when and why they succeed or fail; and whether they can be designed better. It focuses on the main questions that the literature on this topic has tried to answer, discusses the different methodological approaches that have been used, and shows how these approaches relate to one another. The chapter pays greatest attention to the constraint of self-enforcement and to the institutional aspects of IEAs. Topics discussed include: the relationship between international environmental cooperation problems and other cooperation problems; the problems IEAs are meant to address; the non-cooperative and full cooperative benchmarks; IEAs as stage games; the empirical implications of the theory; alternative equilibrium concepts; minimum participation in a treaty; pollution abatement as a strategic substitute and as a strategic complement; the difference between compliance and participation enforcement; IEAs as repeated games; the trade-off between the depth and breadth of cooperation; the distributive and strategic roles of side payments; issue linkage; trade leakage; and enforcement relying on trade restrictions. The chapter also shows how the theory can illuminate real problems, including acid rain, ozone depletion, and global climate change. The chapter concludes with suggestions for future research.


      PubDate: 2016-06-27T11:29:11Z
       
  • Chapter 27 International Trade, Foreign Investment, and the Environment

    • Abstract: Publication date: 2005
      Source:Handbook of Environmental Economics, Volume 3
      Author(s): Michael Rauscher
      The 1990s produced a large literature on foreign trade and the environment, including both theoretical and empirical contributions. The paper surveys this literature. It starts by looking at the traditional Heckscher–Ohlin type models of international trade and then moves to noncompetitive models and the strategic use of environmental policy in open economies. A shorter section is devoted to public-choice approaches to environmental policy. Moreover, the paper deals with factor mobility and interjurisdictional competition, with intertemporal issues such as renewable resources and foreign indebtedness, with the empirical evidence, and with institutional issues related to the World Trade Organization and international environmental agreements. Basically three questions are addressed from different points of view: – Are trade liberalisation and increased factor mobility good or bad for the environment' – Are there larger incentives to relax environmental policies if economies are more open' – Do we have to expect a race towards the bottom in environmental regulation if trade and international factor movements are liberalised' The answers to all these questions are ambiguous. Since many of the recent contributions to the theoretical literature model second-best worlds, in which the environmental externality is only one of several distortions of the economy, the results depend crucially on the nature of the other distortions. This survey paper gives an overview of this literature and explains the contradictory results. On the empirical side, the results are inconclusive as well. The link between environmental policies on the one hand and international trade and factor movements on the other is much weaker than one might have expected given the intensity and controversy of the policy debate at the turn of the century. Based on the theoretical results and on the empirical evidence, the paper finally tries to identify promising areas of future research. In spite of much progress made in the last decade, much remains to be done.


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  • Chapter 26 Environmental implications of non-environmental policies

    • Abstract: Publication date: 2005
      Source:Handbook of Environmental Economics, Volume 3
      Author(s): Anil Markandya
      This chapter seeks to understand the linkages between non-environmental polices and the environment, with a particular focus on taxation and subsidies. In order to understand the quite complex literature on this subject, we draw on the theory of the second best and the theory of optimal taxation. The thrust of the chapter is that there are multiple objectives and interactions among the various policies employed to meet them. In retrospect, one can always ‘do better’ in, say, improving efficiency and environmental quality without worsening the income distribution. What is interesting is to understand what the environmental impacts of the non-environmental policies have been and what lessons one can learn about the formulation of similar policies in the future. That is the central purpose of the chapter. Section 2 examines subsidies in agriculture and transport, as well as policies relating to trade liberalization, privatization, and public infrastructure investment. Section 3 is devoted specifically to energy subsidies. It reviews the results of partial- and general-equilibrium studies on energy subsidies, including environmental impacts (in particular, carbon emissions). Section 4 presents a general-equilibrium model in which energy subsidies and other taxes in the economy are reduced in a revenue-neutral fashion. Two important general-equilibrium effects, the revenue-recycling effect and the tax-interaction effect, are introduced in this section. Sections 5 and 6 continue the discussion of revenue-neutral fiscal policy changes, focusing on the substitution of environmental taxes for other taxes, in particular taxes on labor. This is the “double dividend” debate. Section 5 presents the theory, while Section 6 presents empirical evidence for the European Union. The latter section focuses primarily on employment effects, not welfare effects (the “employment double dividend” vs. “gross welfare dividend”). Section 7 summarizes the main points of the chapter.


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  • Chapter 25 Calculating the Costs of Environmental Regulation

    • Abstract: Publication date: 2005
      Source:Handbook of Environmental Economics, Volume 3
      Author(s): William A. Pizer, Raymond Kopp
      Decisions concerning environmental protection hinge on estimates of economic burden. Over the past 30 years, economists have developed and applied various tools to measure this burden. In this chapter, we present a taxonomy of costs along with methods for measuring those costs. At the broadest level, we distinguish between partial and general equilibrium costs. Partial equilibrium costs represent the burden directly borne by the regulated entity (firms, households, government), including both pecuniary and nonpecuniary expenses, when prices are held constant. General equilibrium costs reflect the net burden once all good and factor markets have equilibrated. In addition to partial equilibrium costs, these general equilibrium costs include welfare losses or gains in markets with preexisting distortions, welfare losses or gains from rebalancing the government's budget constraint, and welfare gains from the added flexibility of meeting pollution constraints through reductions in the use of higher-priced, pollution-intensive products. In addition to both partial and general equilibrium costs, we also consider the distribution of costs across households, countries, sectors, subnational regions, and generations. Despite improvements in our understanding of cost measurement, we find considerable opportunity for further work and, especially, better application of existing methods.


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  • Chapter 24 CGE Modeling of Environmental Policy and Resource Management

    • Abstract: Publication date: 2005
      Source:Handbook of Environmental Economics, Volume 3
      Author(s): Lars Bergman
      Computable general equilibrium (CGE) modeling is an attempt to use general equilibrium theory as a tool for analysis of resource allocation and income distribution issues in market economies. Since the beginning of the 1990s, CGE modeling has been widely used for analysis of environmental policy and natural resource management issues. The purpose of this chapter is to review this branch of CGE modeling. Most existing CGE models are static, but as faster computers and more efficient software have become available, an increasing number of environmental CGE models are dynamic. In addition to the static–dynamic dimension, it is useful to distinguish between single-country, multi-country and global models. Some environmental CGE models are primarily focused on the external effects of production and consumption, while others are designed to elucidate various issues related to the management of natural resources. However, most existing CGE models are focused on externalities, primarily emissions of greenhouse gases. Global “externality” CGE models have been used to estimate the social cost of complying with the Kyoto Protocol, while single-country models, among many other things, have been used for evaluation of the efficiency of emission taxes and other environmental policy instruments. CGE modeling currently is both a field for specialists and an almost standard part of the toolbox of economists concerned with policy-oriented research. A major reason for the widespread use of CGE modeling probably is that a CGE model is an ideal bridge between economic theory and applied policy research. The “bridge” perspective, however, suggests that CGE modeling is a way of using rather than testing economic theory. Yet carefully designed and estimated CGE models have a lot to say about real world economies.


      PubDate: 2016-06-27T11:29:11Z
       
  • Chapter 23 Economic growth and the environment

    • Abstract: Publication date: 2005
      Source:Handbook of Environmental Economics, Volume 3
      Author(s): Anastasios Xepapadeas
      Environmental pollution is introduced both as a joint product and as a source of disutility in growth models. The purpose is to explore vital questions such as: is environmental protection compatible with economic growth; is it possible to have sustained growth in the long run without accumulation of pollution; what is the impact of environmental concerns on growth, and in particular, how are the levels, the paths or the growth rates of crucial variables such as capital, income, consumption or environmental pollution affected if we take into account the environment; what type of deviations do we observe between market outcomes and the social optimum; what are the policy implications of these deviations; what do data tell us about stylized facts relating environmental quality and economic development (the environmental Kuznets curve); and how can total factor productivity be decomposed into its sources once we account for the fact that an economy produces not only the desired output, but also undesirable output (environmental pollution)'


      PubDate: 2016-06-27T11:29:11Z
       
  • Chapter 21 Intertemporal Welfare Economics and the Environment

    • Abstract: Publication date: 2005
      Source:Handbook of Environmental Economics, Volume 3
      Author(s): Geoffrey Heal
      I review the complex welfare economic issues that arise in environmental decision-making over very long periods, as in cases relating to climate change and biodiversity loss. I also consider the issues that arise in choosing a discount rate to apply to very long-run projects and indicate how such rates should be chosen.


      PubDate: 2016-06-27T11:29:11Z
       
  • Chapter 22 National Income and the Environment⋆⋆July 2003. For
           updates on certain issues, see our paper “Income, wealth and
           sustainable welfare in representative-agent economies”, available at
           www.ssrn.com.

    • Abstract: Publication date: 2005
      Source:Handbook of Environmental Economics, Volume 3
      Author(s): Geoffrey Heal, Bengt Kriström
      In this chapter, we review the concept of national income and the economic theory of national income accounting. There are two building blocks – the ideas of Fisher, Lindahl, Hicks about income as an expenditure level that can be continued into the future, and the concept of income as a welfare measure that emerges from the welfare economics and general equilibrium of the 1950s and 1960s. The former have led to an extensive literature on the use of Hamiltonians or their first-order approximations as an income measure. After reviewing this body of theory and the connections between the concepts, we suggest extensions and then consider how various proposed green accounting systems match up to the theoretical desiderata. We also review a number of empirical applications. We devote considerable space to the United Nations' proposed System of Economic and Environmental Accounts, and to accounting reforms proposed by the statistical offices of various countries.


      PubDate: 2016-06-27T11:29:11Z
       
  • Preface to the Handbook

    • Abstract: Publication date: 2005
      Source:Handbook of Environmental Economics, Volume 3
      Author(s): Karl-Göran Mäler, Jeffrey R. Vincent
      Most environmental problems share the following two characteristics: they are intertemporal and they are local. Soil erosion may cause severe economic losses in the future, but a long time might pass before the soil is eroded enough for its productivity to be affected. And when its productivity is affected, the economic damage will fall primarily on the nearby village of farmers and might be barely felt on a national or international level. Thus, there will be no sign of economic damage until later, and because of the lack of appropriate information and the lack of appropriate property rights, there will be no immediate impacts on agricultural products and their prices. This handbook focuses on environmental goods and services that, because of the property rights failures stemming from externalities and public goods, are not allocated efficiently by markets. Indeed, these environmental resources often lack markets altogether. They include air and water quality, hydrological functions of forests and wetlands, soil stability and fertility, the genetic diversity of wild species, natural areas used for recreation, and numerous others. They are in principle renewable, but in practice they are often subject to excessive degradation and depletion, sometimes to an irreversible degree.


      PubDate: 2016-06-27T11:29:11Z
       
  • Contents of the Handbook

    • Abstract: Publication date: 2005
      Source:Handbook of Environmental Economics, Volume 3




      PubDate: 2016-06-27T11:29:11Z
       
  • Dedication

    • Abstract: Publication date: 2005
      Source:Handbook of Environmental Economics, Volume 3

      This chapter is a dedication to Allen Kneese for this volume. Allen was an editor of the North Holland Handbook of Natural Resource and Energy Economics.


      PubDate: 2016-06-27T11:29:11Z
       
  • Introduction to the Series

    • Abstract: Publication date: 2005
      Source:Handbook of Environmental Economics, Volume 3
      Author(s): Kenneth J. Arrow, Michael D. Intriligator
      The series Handbooks in Economics produces handbooks for various branches of economics, each of which is a definitive source, reference, and teaching supplement for the use by professional researchers and advanced graduate students. Each handbook provides self-contained surveys of the current state of a branch of economics in the form of chapters prepared by leading specialists on various aspects of this branch of economics. These surveys summarize not only received results but also newer developments, from current journal articles and discussion papers. Some original material is also included, but the main goal is to provide comprehensive and accessible surveys.


      PubDate: 2016-06-27T11:29:11Z
       
  • Chapter 29 The Economics of Biodiversity

    • Abstract: Publication date: 2005
      Source:Handbook of Environmental Economics, Volume 3
      Author(s): Stephen Polasky, Christopher Costello, Andrew Solow
      The conservation of biodiversity is a major environmental issue, one that promises to remain at or near the top of the environmental agenda for the foreseeable future. The loss of biodiversity affects human welfare as well as being lamentable for its own sake. Humans depend on natural systems to produce a wide variety of ecosystem goods and services, ranging from direct use of certain species for food or medicines to ecosystem functions that provide water purification, nutrient retention or climate regulation. Threats to biodiversity include habitat loss and fragmentation, the introduction of nonindigenous species, over-harvesting, pollution, changes in geochemical cycles and climate change. Sustaining biodiversity in the face of increasing human populations and increased human economic activity promises to be a major challenge. Economists have an important role to play in helping to develop and evaluate conservation strategies. Because biodiversity is at risk in large part because of human activity, finding ways to conserve biodiversity will come from better understanding and management of human affairs, not from better biology alone. Economists can help set priorities to allocate scarce conservation resources where they will do the most good. Economists can help design incentive schemes to make conservation policy both effective and efficient. Economic methods can shed light on what are the most valuable components of biodiversity, including analysis of species existence value, the value of bioprospecting and the value of ecosystem services.


      PubDate: 2016-06-27T11:29:11Z
       
  • Chapter 30 The Economics of Climate Policy

    • Abstract: Publication date: 2005
      Source:Handbook of Environmental Economics, Volume 3
      Author(s): Charles D. Kolstad, Michael Toman
      Economics has played an increasingly important role in shaping policy, in the United States and elsewhere. This chapter reviews some of the dimensions of the economic approach to analyzing, understanding, and developing solutions to the problem of climate change. We then turn to the issue of designing regulatory instruments to control the problem. The chapter concludes with a discussion of the political economy of greenhouse gas control in an international context.


      PubDate: 2016-06-27T11:29:11Z
       
  • Author Index

    • Abstract: Publication date: 2005
      Source:Handbook of Environmental Economics, Volume 3

      This chapter lists the names of the people who have contributed to the book Handbook of Environmental Economics, Volume 3, such as Abler, D., Atkinson, A.B., Aukrust, O., and others. Their names have been mentioned along with the page number in which their names appear in the book—for the ease of the reader.


      PubDate: 2016-06-27T11:29:11Z
       
  • Subject Index

    • Abstract: Publication date: 2005
      Source:Handbook of Environmental Economics, Volume 3

      This chapter lists the terms that have contributed to the book Handbook of Environmental Economics, Volume 3, such as abatement, abatement costs, adaptation, and others. These terms have been mentioned along with the page numbers in which they have appeared in the book—for the ease of the reader.


      PubDate: 2016-06-27T11:29:11Z
       
  • Introduction to the Series

    • Abstract: Publication date: 2005
      Source:Handbook of Environmental Economics, Volume 2
      Author(s): Kenneth J. Arrow, Michael D. Intriligator



      PubDate: 2016-06-27T11:29:11Z
       
  • Contents of the Handbook

    • Abstract: Publication date: 2005
      Source:Handbook of Environmental Economics, Volume 2




      PubDate: 2016-06-27T11:29:11Z
       
  • Dedication

    • Abstract: Publication date: 2005
      Source:Handbook of Environmental Economics, Volume 2




      PubDate: 2016-06-27T11:29:11Z
       
  • Preface to the Handbook

    • Abstract: Publication date: 2005
      Source:Handbook of Environmental Economics, Volume 2
      Author(s): Karl-Göran Mäler, Jeffrey R. Vincent



      PubDate: 2016-06-27T11:29:11Z
       
  • Contents of Volume 2

    • Abstract: Publication date: 2005
      Source:Handbook of Environmental Economics, Volume 2




      PubDate: 2016-06-27T11:29:11Z
       
  • Chapter 12 Welfare Theory and Valuation

    • Abstract: Publication date: 2005
      Source:Handbook of Environmental Economics, Volume 2
      Author(s): Nancy E. Bockstael, A. Myrick Freeman
      Public policies that lead to a reduction in the emissions of air and water pollutants or the protection of sensitive ecosystems presumably increase the well-being of many members of society. Applied welfare economists are accustomed to measuring the welfare effects of policies that invoke price changes. If it is granted that the public good attributes of most dimensions of environmental quality preclude the development of well functioning markets for these service flows, how are the monetary values of changes in environmental quality to be measured' The past twenty to thirty years have seen the rapid development of the economic theory and techniques for measuring the demands for nonmarketed goods, and in this chapter we attempt to sketch out the major results. We review the basic concept of economic welfare and derive measures of welfare change for both changes in prices of market goods and changes in quantities and qualities of nonmarket goods. We then describe the principal economic techniques for estimating the benefits of environmental quality improvements when these improvements either directly affect individuals' well-being or indirectly affect individuals through constraints they face. Perhaps the major class of measurement methods is based on the observation that changes in environmental quality may cause individuals to alter purchases of goods and services that are complements or substitutes for environmental quality in their preference orderings. These revealed preference methods are the primary focus of this chapter. A second major approach to obtaining estimates of the benefits and costs of environmental changes, stated preference methods, are addressed in detail in later chapters. Our treatment of welfare effects places special emphasis on the connection between the underlying economic theory and practical empirical models.


      PubDate: 2016-06-27T11:29:11Z
       
  • Chapter 13 Environment, Uncertainty, and Option Values

    • Abstract: Publication date: 2005
      Source:Handbook of Environmental Economics, Volume 2
      Author(s): Karl-Göran Mäler, Anthony Fisher
      We analyze in this chapter decision-making when costs and benefits of an action are uncertain, that is, when future preferences are uncertain. We begin, in Section 2, with the classical analysis by Krutilla et al. (1972) of whether the expected consumer's surplus is a correct measure of the net benefits from the action. It turns out that for one individual, the correct measure is the expected consumer's surplus corrected with one term representing the covariance between the state-contingent consumer's surplus and the state-contingent marginal utility of wealth and a second term representing risk aversion. This corrected measure is what Krutilla et al. (1972) called the option value. Thus the difference between option value and expected consumer's surplus is determined by the covariance between preferences and consumer's surplus and risk aversion. The sign of this difference will therefore depend on these factors. We apply this result to a number of cases in order to derive additional useful results. First we look at the aggregate (over a set of individuals) option value and establish a general result. We then apply this result to the allocation of risk in the context of both public and private goods. In Section 3, we introduce relevant dynamic elements to the general problem of decisions under uncertainty. We analyze actions that may have irreversible effects, but where the decision-maker can improve her information about the true future preferences. This problem was first studied by Arrow and Fisher (1974) and Henry (1974), who showed (as we do in Section 3.2) that when the decision-maker has to choose between two actions, of which one is irreversible, and future benefits are uncertain in the first time period, maximizing expected value will result in a biased result: the irreversible action will be chosen too often. However, this result is based on assumptions of linearity. In order to study the problem without this restriction, we rely on Epstein's (1980) framework, which we present in some detail. The result is that convexity (concavity) assumptions are essential to establish the direction of the bias. We also use Epstein's framework to look at issues such as uncertainty about cost of restoration and uncertainty about irreversibility. All of the results to this point are for models with just two time periods. In Section 4, we analyze the many-period case, adopting a somewhat different analytical framework: stochastic dynamic programming, as presented in Dixit and Pindyck (1994). Additional results in continuous time are developed, drawing on the theory of stochastic processes. We look in particular at the “optimal stopping problem,” a useful and important special case, and present an empirical application due to Conrad (1997): when, if ever, to cut an old-growth forest that also yields benefits in its natural state.


      PubDate: 2016-06-27T11:29:11Z
       
  • Chapter 14 Valuing the Environment as a Factor of Production

    • Abstract: Publication date: 2005
      Source:Handbook of Environmental Economics, Volume 2
      Author(s): Kenneth E. McConnell, Nancy E. Bockstael
      This chapter explores the theory and practice of measuring the economic costs and benefits of environmental changes that influence production, both in the context of firms and of households. The theory uses models of household and firm decision making to map the influence of environmental changes to changes in human welfare. The goal is to measure, by compensating or equivalent changes in incomes, the welfare effects on people, in their roles as owners of firms, owners of factors of production, and consumers. The developing country context is most common for valuing the environment as an input, because agriculture and natural resource extraction are so much more important than in industrialized countries. When households or firms produce goods for sale on the market, and the environment influences the costs of production, we show the circumstances when one can use information embodied in the supply curve of the marketed good or the demand curve for an input into the production of the good to extract welfare measures for environmental change. When the environment affects the cost of production of goods households produce and consume, we show the restrictions on production technology that will permit welfare measure for changes in the environment. We also look at circumstances that permit the calculations of bounds for the exact welfare measures. We explore welfare measurement under a variety of institutional structures, including government support for agricultural commodities and open-access fisheries. Exact welfare measurement makes extensive demands for data. Because these demands are not often met in practice, researchers resort to a variety of approximations of welfare measures. We assess these approximations, comparing them with the more exact measures.


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  • Chapter 15 Recreation Demand Models

    • Abstract: Publication date: 2005
      Source:Handbook of Environmental Economics, Volume 2
      Author(s): Daniel J. Phaneuf, V. Kerry Smith
      Travel cost recreation demand models stem from a simple, but penetrating, insight. Consumption of an outdoor recreation site's services requires the user to incur the costs of a trip to that site. Travel costs serve as implicit prices. These costs reflect both people's distances from recreation sites visited and their specific opportunity costs of time. Today, economic analyses of recreation choices are among the most advanced examples of microeconometric modeling of consumer behavior in economics. The primary focus of this chapter is on the methods used to describe individuals' recreation choices. We are interested in the economic assumptions made in descriptions of behavior and measures of the economic value of amenities. Before developing this summary, in Section 2 we discuss how outdoor recreation fits within consumers' overall expenditures. Section 3 describes how we might ideally like to estimate consumers' preferences for recreation resources and the compromises implied by the models currently being used. Econometric details are deferred until Section 5, after a discussion of the features of recreation data in Section 4. In Section 6 we turn to conceptual issues in welfare measurement. We close in Section 7 with a discussion of a few research opportunities that seem especially important for the future.


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  • Chapter 16 Property Value Models

    • Abstract: Publication date: 2005
      Source:Handbook of Environmental Economics, Volume 2
      Author(s): Raymond B. Palmquist
      One of the only places where environmental quality is traded on explicit markets is real estate. There are several techniques that can be used to study the effects of environmental quality on property values and infer willingness to pay for improvements. The most commonly used method is the hedonic model. In environmental economics the hedonic model has mainly been applied to the prices of real property and to wages. It assumes that there is a schedule of prices for the differentiated product (i.e., houses) that can be estimated. An alternative set of models postulates that consumers' choices are discrete between houses rather than continuous in characteristics as in the hedonic model. Discrete choice models are applied to estimate consumer preferences. Recently a model has been developed that mixes discrete and continuous decisions and emphasizes the locational equilibrium. This chapter reviews these techniques, with an emphasis on methodological issues and recent developments. Section 2 describes the theoretical models that underlie these techniques. The theoretical hedonic model is developed first, and then the theoretical modifications that are necessary for the discrete choice models are described. The main models are developed for residential properties, but differentiated factors of production are discussed briefly. Section 3 is devoted to the empirical issues involved in estimating a hedonic price schedule. This is the most common type of estimation in property value models. Section 4 discusses the empirical application of the second stage of the hedonic model, the estimation of the underlying preferences. Section 5 covers the two types of discrete choice models that are used in environmental economics, random utility models and random bidding models. Section 6 briefly discusses the new locational equilibrium models, and the final section is devoted to conclusions and directions for further research.


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  • Chapter 17 Contingent Valuation

    • Abstract: Publication date: 2005
      Source:Handbook of Environmental Economics, Volume 2
      Author(s): Richard T. Carson, W. Michael Hanemann
      Value estimates for environmental goods can be obtained by either estimating preference parameters as “revealed” through behavior related to some aspect of the amenity or using “stated” information concerning preferences for the good. In the environmental economics literature the stated preference approach has come to be known as “contingent valuation” as the “valuation” estimated obtained from preference information given the respondent is said to be “contingent” on the details of the “constructed market” for the environmental good put forth in the survey. Work on contingent valuation now typically comprises the largest single group of papers at major environmental economics conferences and in several of the leading journals in the field. As such, it is impossible to “review” the literature per se or even cover all of the major papers in the area in some detail. Instead, in this chapter we seek to provide a coherent overview of the main issues and how they fit together. The organization of the chapter is as follows. First, we provide an overview of the history of contingent valuation starting with its antecedents and foundational papers and then trace its subsequent development using several broad themes. Second, we put forth the theoretical foundations of contingent valuation with particular emphasis on ties to standard measures of economic welfare. Third, we look at the issue of existence/passive use considerations. Fourth, we consider the relationship of contingent valuation to information on preferences that can be obtained by observing revealed behavior and how the two sources of information might be combined. Fifth, we look at different ways in which preference information can be elicited in a CV survey, paying particular attention to the incentive structure posed by different elicitation formats. Sixth, we turn to econometric issues associated with these different elicitation formats. Seventh, we briefly consider survey design issues. Eighth, we look at issues related to survey administration and extrapolating the results obtained to the population of interest. Ninth, we describe the major controversies related to the use of contingent valuation and summarize the evidence. Finally, we provide some thoughts on where we think contingent valuation is headed in the future.


      PubDate: 2016-06-27T11:29:11Z
       
  • Chapter 18 Cognitive Processes in Stated Preference Methods

    • Abstract: Publication date: 2005
      Source:Handbook of Environmental Economics, Volume 2
      Author(s): Baruch Fischhoff
      Cognitive psychology is best known, to many environmental economists, through the filter of acrimonious debates over the validity of contingent valuation methods (CVM). Psychologists' views on CVM reflect concerns that are deeply rooted in their profession's history and theories. Although psychologists have participated in some CVM studies, their roles have rarely allowed them to present a comprehensive design philosophy, illustrated in actual studies. This chapter sets psychologists' critiques and alternatives within a general cognitive perspective on value elicitation, including stated preferences for environmental goods. It begins with a historical review, organized around two converging streams of psychological research. One stream leads from psychophysics to attitude research. The second leads from decision theory to decision analysis and behavioral decision research. The next section reports some environmental valuation studies arising from each tradition. These studies do not directly monetize environmental goods. However, they can still directly inform policies that do not require monetization and indirectly inform policies that do, by shaping studies with that ambition. The following section considers the role of cognitive studies in helping investigators to know what issues matter to people and present them comprehensibly. The concluding section of the chapter presents a cognitive approach to stated preference methods for environmental values – one that could be developed most fully in collaboration with economists. It is built around a cognitive task analysis of the four main elements in any evaluation process: (a) specifying the valuation question, (b) understanding its terms, (c) articulating a value for that specific question (from more general basic values), and (d) expressing that value in a public form.


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  • Chapter 19 Experimental Methods and Valuation

    • Abstract: Publication date: 2005
      Source:Handbook of Environmental Economics, Volume 2
      Author(s): Jason F. Shogren
      This chapter explores how economists use experimental methods to understand better the behavioral underpinnings of environmental valuation. Economic experiments, in the lab or field, are an attractive tool to address intricate incentive and contextual questions that arise in assessing values through direct statements of preferences. By combining empirical observation with theoretical insight, researchers use the experimental method and mindset to help explain how economic and social contexts matter to valuation. Herein we consider three themes in applying the experimental method to valuation – rational choice theory and stated values, direct value elicitation in the field and lab, and “testbedding” survey designs prior to field application. First, experimental tests of rational valuation are discussed. This lab work examines whether respondents make choices and state values in a manner consistent with standard rational choice theory. The circumstances of rational valuation are illustrated by the malleability of two classic anomalies – the WTP–WTA divergence and the preference reversal phenomenon. Second, direct experimental methods to measure actual values for public and private goods are examined. These experiments ask people to buy and sell actual goods to elicit real values, in which researchers test how alternative exchange institutions affect these values. Third, we survey testbed experiments designed to identify potential incentive problems caused by hypothetical valuation questions. Four topics are discussed: testing for hypothetical bias, calibrating real and hypothetical values, examining surrogate values (or scoping) for specific environmental preferences, and evaluating the incentive (in)compatibility of alternative elicitation mechanisms.


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  • Chapter 20 Quantifying and Valuing Environmental Health Risks

    • Abstract: Publication date: 2005
      Source:Handbook of Environmental Economics, Volume 2
      Author(s): W. Kip Viscusi, Ted Gayer
      This chapter provides an overview of the current methodology for assessing environmental health risks. Our primary focus is on the practices that U.S. regulatory agencies use for assessing cancer risk, although we also provide a brief comparison to the methodology used in Western Europe. We then discuss the potential biases that may be inherent in the various components of the assessment methodology, and we discuss the implications of these biases towards regulatory policy. This chapter also provides an overview of the current methodology for valuing risks of both mortality and morbidity, placing particular emphasis on ex ante measurements of individuals' willingness to pay for risk reductions. We present the underlying theory, the estimation concerns, and the policy implications of labor market, housing market, and survey studies of estimating the value of risk reductions. Once we have established the economic framework of efficient regulatory policies, we then provide an overview of the extent to which U.S. regulatory performance meets these efficiency goals and offer suggestions for better achieving these goals.


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  • Author Index

    • Abstract: Publication date: 2005
      Source:Handbook of Environmental Economics, Volume 2




      PubDate: 2016-06-27T11:29:11Z
       
  • Subject Index

    • Abstract: Publication date: 2005
      Source:Handbook of Environmental Economics, Volume 2




      PubDate: 2016-06-27T11:29:11Z
       
  • Series Page

    • Abstract: Publication date: 2003
      Source:Handbook of Environmental Economics, Volume 1




      PubDate: 2016-06-27T11:29:11Z
       
  • Copyright

    • Abstract: Publication date: 2003
      Source:Handbook of Environmental Economics, Volume 1




      PubDate: 2016-06-27T11:29:11Z
       
  • Introduction to the series

    • Abstract: Publication date: 2003
      Source:Handbook of Environmental Economics, Volume 1




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  • Contents of the handbook

    • Abstract: Publication date: 2003
      Source:Handbook of Environmental Economics, Volume 1




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  • Dedication

    • Abstract: Publication date: 2003
      Source:Handbook of Environmental Economics, Volume 1




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  • Preface to the Handbook

    • Abstract: Publication date: 2003
      Source:Handbook of Environmental Economics, Volume 1
      Author(s): Karl-Göran Mäler, Jeffrey R. Vincent



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  • Perspectives on Environmental Economics

    • Abstract: Publication date: 2003
      Source:Handbook of Environmental Economics, Volume 1




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  • Chapter 1 Geophysical and Geochemical Aspects of Environmental Degradation

    • Abstract: Publication date: 2003
      Source:Handbook of Environmental Economics, Volume 1
      Author(s): Bert Bolin
      The environmental system is characterized by an interplay of geophysical and geochemical processes that provide a setting for life. Now that human interventions are affecting the global system as a whole, it is important to distinguish between changes of natural origin and changes brought about by human activities. Major difficulties arise in doing this because of the nonlinear and chaotic nature of the interactions between the environmental and human systems. Following an initial review of basic earth science principles, this chapter focuses on five fundamental issues that are important in all quarters of the world. Two sections deal with purely atmospheric issues, air pollution near the earth’s surface and depletion of ozone in the stratosphere. These sections are followed by a closer look at water pollution and water management. A specific issue, acidification of freshwaters and soils, is next dealt with in more detail. The final issue addressed in the chapter, global climate change, requires an analysis of the total environmental system. All of these environmental issues have a bearing on how humankind might be able to secure sustainable development for the future, which is touched upon in the concluding section.


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  • Chapter 2 Ecosystem Dynamics

    • Abstract: Publication date: 2003
      Source:Handbook of Environmental Economics, Volume 1
      Author(s): Simon A. Levin, Stephen W. Pacala
      From ecosystems we derive food and fiber, fuel and pharmaceuticals. Ecosystems mediate local and regional climates, stabilize soils, purify water, and in general provide a nearly endless list of services essential to life as we know it. To understand how to manage these services it is essential to understand how ecological communities are organized and how to measure the biological diversity they contain. Ecological communities are comprised of many species, which are in turn made up of large numbers of individuals, each with their own separate ecological and evolutionary agendas. Not all species are equal as regards their role in maintaining the functioning of ecosystems or their resiliency in the face of stress. This chapter explains how ecosystems evolve and function as complex adaptive systems. It examines ecological systems at scales from the small to the large, from the individual to the collective to the community, from the leaf to the plant to the biosphere (including the global carbon cycle). It reviews theoretical and empirical models of ecosystem dynamics, which are highly nonlinear and contain the potential for qualitative and irreversible shifts. It considers applications to forests, fisheries, grasslands, and freshwater lakes.


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  • Chapter 3 Property Rights, Public Goods and the Environment

    • Abstract: Publication date: 2003
      Source:Handbook of Environmental Economics, Volume 1
      Author(s): David A. Starrett
      We delineate the various ways in which rights to environmental and other resources can be assigned to individuals or groups. We then examine models of individual and group interactions, drawing out their implications for the ways in which resources will be utilized and managed under various rights assignments. Resources are classified into various groups (such as “collective” and “private”) depending on the type of rights assignment that is most appropriate, and we critically examine situations in which it is claimed that certain combinations of rights and rules of behavior will lead to an “ideal” allocation of the associated resources. We argue that in all but a very limited set of circumstances, efficient allocations will require at the least some form of social intervention, and we discuss both formal and informal models of social organization toward this end. Various distortions are identified that may arise when incorrect assignments of rights are utilized. We discuss various practical ways of correcting for these distortions using instruments such as taxes, quotas, and markets for pollution permits.


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  • Chapter 4 Economics of Common Property Management Regimes

    • Abstract: Publication date: 2003
      Source:Handbook of Environmental Economics, Volume 1
      Author(s): Jean-Marie Baland, Jean-Philippe Platteau
      The purpose of this chapter is to identify the reasons for collective action failures and successes in natural resource management, and to understand, in the light of economic theory, the mode of operation of the factors involved whenever possible. In the first section, we clarify the notion of a common property management regime and provide cautionary remarks about estimation methodologies commonly used. In Section 2, we focus on the general case where common property regulation is feasible yet only if governance costs are kept to a reasonable level. Emphasis is placed on such factors as the size of the user group, income or wealth inequality, and availability of exit opportunities. Special attention is paid to the aspect of inequality since this has remained a rather confused issue in much of the empirical literature. Economic theory can contribute significantly to improving our understanding of the manner in which it bears upon collective action. In Section 3, we discuss cognitive problems as an important impediment to the design and implementation of efficient common property management systems. We also present evidence of the deleterious effects resulting from the absence or inappropriateness of state interventions, particularly where they are motivated by private interests. In Section 4, the importance, under a co-management approach, of appropriate incentive systems at both the village and state levels is underlined and illustrated.


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  • Chapter 5 Population, Poverty, and the Natural Environment

    • Abstract: Publication date: 2003
      Source:Handbook of Environmental Economics, Volume 1
      Author(s): Partha Dasgupta
      This chapter studies the interface in poor countries of population growth, rural poverty, and deterioration of the local natural-resource base, a subject that has been much neglected by modern demographers and development economists. The motivations for procreation in rural communities of the poorest regions of the world are analyzed, and recent work on the relevance of gender relationships to such motivations is summarized. Four potentially significant social externalities associated with fertility behavior and use of the local natural-resource base are identified. Three are shown to be pronatalist in their effects, while the fourth is shown to be ambiguous, in that it can be either pro-or anti-natalist. It is shown that one of the externalities may even provide an invidious link between fertility decisions and the use of the local natural-resource base. The fourth type of externality is used to develop a theory of fertility transitions in the contemporary world. The theory views such transitions as disequilibrium phenomena.


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  • Chapter 6 The Theory of Pollution Policy

    • Abstract: Publication date: 2003
      Source:Handbook of Environmental Economics, Volume 1
      Author(s): Gloria E. Helfand, Peter Berck, Tim Maull
      Physically, pollution occurs because it is virtually impossible to have a productive process that involves no waste; economically, pollution occurs because polluting is less expensive than operating cleanly. This chapter explores the sources and consequences of, and remedies for, pollution and associated environmental damages. If all goods had well-defined property rights and could be traded in markets, environmental goods would be no different than other goods; however, markets fail for these goods because property rights cannot or do not exist and because of the nonexclusive, nonrival nature of these goods. Thus, environmental goods provide the classic case where government intervention can increase efficiency. Achieving efficient levels of pollution involves charging per unit of pollution based on damages caused by that unit. In practice, this policy can be difficult to achieve, due to difficulties in measuring and differentiating damages by source, difficulties in monitoring and enforcing pollution policies, and the financial and political costs of pollution taxes. Additionally, pre-existing market distortions influence the nature of efficient pollution abatement strategies. Thus, many regulatory approaches that do not achieve first-best outcomes may be used because their technological or political feasibility is superior. Market-based instruments provide flexibility to polluters, while command-and-control (standards-based) approaches limit choice, often through an emissions limit or a technology requirement. Market-based approaches typically achieve a specified level of emissions with lower abatement costs than standards, but their greater efficiency may not hold in the presence of the problems mentioned above. Non-regulatory approaches to pollution control include the use of liability law to define and enforce property rights and some voluntary pollution control initiatives by polluters. While these approaches can play an important role, they are unlikely to achieve adequate provision of environmental goods.


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  • Chapter 7 Mechanism Design for the Environment

    • Abstract: Publication date: 2003
      Source:Handbook of Environmental Economics, Volume 1
      Author(s): Sandeep Baliga, Eric Maskin
      We argue that when externalities such as pollution are nonexcludable, agents must be compelled to participate in a “mechanism” to ensure a Pareto-efficient outcome. We survey some of the main findings of the mechanism-design (implementation-theory) literature – such as the Nash implementation theorem, the Gibbard–Satterthwaite theorem, the Vickrey–Clarke–Groves mechanism, and the Arrow/d’Aspremont–Gerard–Varet mechanism – and consider their implications for the environment, in particular the reduction of aggregate emissions of pollution. We consider the cases of both complete and incomplete information.


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  • Chapter 8 The Political Economy of Environmental Policy

    • Abstract: Publication date: 2003
      Source:Handbook of Environmental Economics, Volume 1
      Author(s): Wallace E. Oates, Paul R. Portney
      This chapter provides a review and assessment of the extensive literature on the political determination of environmental regulation. A promising theoretical literature has emerged relatively recently that provides models of the political interaction of government with various interest groups in the setting of environmental standards and the choice of regulatory instruments. A large empirical literature supports such models, finding evidence of the influence of interest groups but also evidence that net social benefits are often an important determinant of environmental policy choices. A later section of the paper takes up the issue of environmental federalism and the large and growing theoretical literature that addresses the so-called competitive “race to the bottom” as various jurisdictions attempt to use environmental policy as an instrument of economic competition. The evidence on all this is sparse, although some recent work in the U.S. is unable to find any support for the race-to-the-bottom hypothesis. The paper concludes with a brief look at the evolution of environmental policy and finds that economics has come to play a growing role both in the setting of standards for environmental quality and in the design of regulatory measures. There seems to be a discernible trend toward more efficient decision-making for environmental protection.


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  • Chapter 9 Experience with Market-Based Environmental Policy Instruments

    • Abstract: Publication date: 2003
      Source:Handbook of Environmental Economics, Volume 1
      Author(s): Robert N. Stavins
      Environmental policies typically combine the identification of a goal with some means to achieve that goal. This chapter focuses exclusively on the second component, the means – the “instruments” – of environmental policy, and considers, in particular, experience around the world with the relatively new breed of economic-incentive or market-based policy instruments. I define these instruments broadly, and consider them within four categories: charge systems; tradable permits; market friction reductions; and government subsidy reductions. Within charge systems, I consider effluent charges, deposit-refund systems, user charges, insurance premium taxes, sales taxes, administrative charges, and tax differentiation. Within tradeable permit systems, I consider both credit programs and cap-and-trade systems. Under the heading of reducing market frictions, I examine market creation, liability rules, and information programs. Finally, under reducing government subsidies, I review a number of specific examples from around the world. By defining market-based instruments broadly, I cast a large net for this review of applications. As a consequence, the review is extensive. But this should not leave the impression that market-based instruments have replaced, or have come anywhere close to replacing, the conventional, command-and-control approach to environmental protection. Further, even where these approaches have been used in their purest form and with some success, such as in the case of tradeable-permit systems in the United States, they have not always performed as anticipated. In the final part of the chapter, I ask what lessons can be learned from our experiences. In particular, I consider normative lessons for design and implementation, analysis of prospective and adopted systems, and identification of new applications.


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  • Chapter 10 Experimental Evaluations of Policy Instruments

    • Abstract: Publication date: 2003
      Source:Handbook of Environmental Economics, Volume 1
      Author(s): Peter Bohm
      Experimental methods have recently been used to evaluate environmental policy instruments, in particular – and most suitably, it seems – emissions trading programs of various designs. Some studies have focused on domestic emissions trading programs, while others have focused on international programs, in particular ones related to greenhouse gases. Much emphasis has been put on investigating the implications of market power in emissions trading. Other topics of the experimental studies reviewed here include the relative merits of different policy instruments (permits, taxes, standards), and the possibility of eliminating the need for conventional environmental policy through application of the Coase theorem.


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  • Chapter 11 Technological change and the Environment

    • Abstract: Publication date: 2003
      Source:Handbook of Environmental Economics, Volume 1
      Author(s): Adam B. Jaffe, Richard G. Newell, Robert N. Stavins
      Environmental policy discussions increasingly focus on issues related to technological change. This is partly because the environmental consequences of social activity are frequently affected by the rate and direction of technological change, and partly because environmental policy interventions can themselves create constraints and incentives that have significant effects on the path of technological progress. This chapter summarizes current thinking on technological change in the broader economics literature, surveys the growing economic literature on the interaction between technology and the environment, and explores the normative implications of these analyses. We begin with a brief overview of the economics of technological change, and then examine theory and empirical evidence on invention, innovation, and diffusion and the related literature on the effects of environmental policy on the creation of new, environmentally friendly technology. We conclude with suggestions for further research on technological change and the environment.


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