Environmental & Natural Resource Economics
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1 GLOBAL EDITION Environmental & Natural Resource Economics TENTH EDITION Tom Tietenberg Lynne Lewis
2 The Pearson Series in Economics Abel/Bernanke/Croushore Macroeconomics* Bade/Parkin Foundations of Economics* Berck/Helfand The Economics of the Environment Bierman/Fernandez Game Theory with Economic Applications Blanchard Macroeconomics* Blau/Ferber/Winkler The Economics of Women, Men, and Work Boardman/Greenberg/Vining/Weimer Cost-Benefit Analysis Boyer Principles of Transportation Economics Branson Macroeconomic Theory and Policy Bruce Public Finance and the American Economy Carlton/Perloff Modern Industrial Organization Case/Fair/Oster Principles of Economics* Chapman Environmental Economics: Theory, Application, and Policy Cooter/Ulen Law & Economics Daniels/VanHoose International Monetary & Financial Economics Downs An Economic Theory of Democracy Ehrenberg/Smith Modern Labor Economics Farnham Economics for Managers Folland/Goodman/Stano The Economics of Health and Health Care Fort Sports Economics Froyen Macroeconomics Fusfeld The Age of the Economist Gerber International Economics* González-Rivera Forecasting for Economics and Business Gordon Macroeconomics* Greene Econometric Analysis Gregory Essentials of Economics Gregory/Stuart Russian and Soviet Economic Performance and Structure Hartwick/Olewiler The Economics of Natural Resource Use Heilbroner/Milberg The Making of the Economic Society Heyne/Boettke/Prychitko The Economic Way of Thinking Holt Markets, Games, and Strategic Behavior Hubbard/O Brien Economics* Money, Banking, and the Financial System* Hubbard/O Brien/Rafferty Macroeconomics* Hughes/Cain American Economic History Husted/Melvin International Economics Jehle/Reny Advanced Microeconomic Theory Johnson-Lans A Health Economics Primer Keat/Young/Erfle Managerial Economics Klein Mathematical Methods for Economics Krugman/Obstfeld/Melitz International Economics: Theory & Policy* Laidler The Demand for Money Leeds/von Allmen The Economics of Sports Leeds/von Allmen/Schiming Economics* Lynn Economic Development: Theory and Practice for a Divided World Miller Economics Today* Understanding Modern Economics Miller/Benjamin The Economics of Macro Issues Miller/Benjamin/North The Economics of Public Issues Mills/Hamilton Urban Economics Mishkin The Economics of Money, Banking, and Financial Markets* The Economics of Money, Banking, and Financial Markets, Business School Edition* Macroeconomics: Policy and Practice* Murray Econometrics: A Modern O Sullivan/Sheffrin/Perez Economics: Principles, Applications and Tools* Parkin Economics* Perloff Microeconomics* Microeconomics: Theory and Applications with Calculus* Perloff/Brander Managerial Economics and Strategy* Phelps Health Economics Pindyck/Rubinfeld Microeconomics* Riddell/Shackelford/Stamos/Schneider Economics: A Tool for Critically Understanding Society Roberts The Choice: A Fable of Free Trade and Protection Rohlf to Economic Reasoning Roland Development Economics Scherer Industry Structure, Strategy, and Public Policy Schiller The Economics of Poverty and Discrimination Sherman Market Regulation Stock/Watson to Econometrics Studenmund Using Econometrics: A Practical Guide Tietenberg/Lewis Environmental and Natural Resource Economics Environmental Economics and Policy Todaro/Smith Economic Development Waldman/Jensen Industrial Organization: Theory and Practice Walters/Walters/Appel/Callahan/ Centanni/Maex/O Neill Econversations: Today s Students Discuss Today s Issues Weil Economic Growth Williamson Macroeconomics * denotes titles Visit to learn more.
3 Environmental & Natural Resource Economics, Global Edition - PDF - PDF - PDF Table of Contents Cover Contents Preface Chapter 1: Visions of the Future The Self-Extinction Premise Example 1.1: A Tale of Two Cultures Future Environmental Challenges Climate Change Water Accessibility Meeting the Challenges How will Societies Respond? The Role of Economics Debate 1.1: Ecological Economics versus Environmental Economics The Use of Models Example 1.2: Experimental Economics: Studying Human Behavior in a Laboratory The Road Ahead The Issues Debate 1.2: What Does the Future Hold? An Overview of the Book Self-Test Exercise Chapter 2: The Economic Approach: Property Rights, Externalities, and Environmental Problems The HumanEnvironment Relationship The Environment as an Asset The Economic Approach Example 2.1: Economic Impacts of Reducing Hazardous Pollutant Emissions from Iron and Steel Foundries Environmental Problems and Economic Efficiency Static Efficiency Property Rights Property Rights and Efficient Market Allocations
4 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 Perverse Incentives Arising from Some Property Right Structures Public Goods Imperfect Market Structures Example 2.3: Public Goods Privately Provided: The Nature Conservancy Asymmetric Information Government Failure The Pursuit of Efficiency Private Resolution through Negotiation.Property, Liability and the Coase Theorem Legislative and Executive Regulation Example 2.4: Can Eco-Certification Make a Difference? Organic Costa Rican Coffee An Efficient Role for Government Chapter 3: Evaluating Trade-Offs: Benefit-Cost Analysis and Other Decision-Making Metrics 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 Estimating Benefits of Carbon Dioxide Emission Reductions Example 3.1: Does Reducing Pollution Make Economic Sense? Evidence from the Clean Air Act Example 3.2: Using the Social Cost of Capital: The DOE Microwave Oven Rule Issues in Benefit Estimation Approaches to Cost Estimation The Treatment of Risk
5 Distribution of Benefits and Costs Choosing the Discount Rate Example 3.3: The Importance of the Discount Rate Divergence of Social and Private Discount Rates Debate 3.1: Discounting over Long Time Horizons: Should Discount Rates Decline? A Critical Appraisal Cost-Effectiveness Analysis Impact Analysis Chapter 4: Valuing the Environment: Methods 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 Debate 4.2: Willingness to Pay versus Willingness to Accept: Why So Different? Example 4.1: Leave No Behavioral Trace: Using the Contingent Valuation Method to Measure Passive-Use Values Revealed Preference Methods Example 4.2: 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 Example 4.3: Using GIS to Inform Hedonic Property Values: Visualizing the Data Challenges Example 4.4: 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? : Nonmarket Valuation Today
6 Chapter 5: Dynamic Efficiency and Sustainable Development 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 Discussion Question Appendix: The Simple Mathematics of Dynamic Efficiency Chapter 6: Depletable Resource Allocation: The Role of Longer Time Horizons, Substitutes, and Extraction Cost A Resource Taxonomy 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 Market Allocations of Depletable Resources Appropriate Property Rights Structures Example 6.1: Historical Example of Technological Progress in the Iron Ore Industry Environmental Costs Example 6.2: The Green Paradox Discussion Question Appendix: Extensions of the Constant Extraction Cost Depletable Resource Model: Longer Time Horizons and the Role of an Abundant Substitute Chapter 7: Energy: The Transition from Depletable to Renewable Resources
7 Example 7.1: Hubbert's Peak Natural Gas: From Price Controls to Fracking The Role of Price Controls in the History of Natural Gas Fracking Debate 7.1: Does the Advent of Fracking Increase Net Benefits? Oil: The Cartel Problem Price Elasticity of Demand Income Elasticity of Demand Non-Member Suppliers Compatibility of Member Interests Fossil Fuels: National Security Considerations Debate 7.2: How Should Countries Deal with the Vulnerability of Imported Oil? Example 7.2: Strategic Petroleum Reserve Example 7.3: Fuel from Shale: The Bakken Formation Electricity: Coal and Nuclear Energy Coal Uranium Electricity: Transitioning to Renewables Debate 7.3: Dueling Externalities: Should the United States Promote Wind Power? Example 7.4: The Relative Cost-Effectiveness of Renewable Energy Policies in the United States Energy Efficiency Example 7.5: Energy Efficiency in Rental Housing Markets Chapter 8: Recyclable Resources: Minerals, Paper, Bottles, and E-Waste Minerals An Efficient Allocation of Recyclable Resources Extraction and Disposal Cost Recycling: A Closer Look Recycling and Ore Depletion Example 8.1: Lead Recycling Factors Mitigating Resource Scarcity Exploration and Discovery Technological Progress Substitution Example 8.2: The Bet
8 Market Imperfections Disposal Cost and Efficiency The Disposal Decision Disposal Costs and the Scrap Market Subsidies on Raw Materials Corrective Public Policies Example 8.3: An Early Example: Pricing Trash in Marietta, Georgia Example 8.4: Does Packaging Curbside Recyling with Incentives Promote Efficiency? Debate 8.1: "Bottle Bills": Economic Incentives at Work? Example 8.5: Implementing the "Take-Back" Principle Markets for Recycled Materials E-Waste Pollution Damage Chapter 9: Water: A Confluence of Renewable and Depletable Resources The Potential for Water Scarcity The Efficient Allocation of Scarce Water Surface Water Groundwater The Current Allocation System Riparian and Prior Appropriation Doctrines Sources of Inefficiency Debate 9.1: What is the Value of Water? Potential Remedies Water Transfers, Water Markets, and Water Banks Example 9.1: Using Economic Principles to Conserve Water in California Example 9.2: Water Transfers in Colorado: What Makes a Market for Water Work? Example 9.3: Water Market Assessment: Australia, Chile, South Africa, and the United States Instream Flow Protection Water Prices Example 9.4: Reserving Instream Rights for Endangered Species Example 9.5: Water Pricing in Canada Desalination Example 9.6: Moving Rivers or Desalting the Sea? Costly Remedies for Water
9 Shortages Privatization Debate 9.2: Should Water Systems Be Privatized? Gis and Water Resources Chapter 10: A Locationally Fixed, Multipurpose Resource: Land The Economics of Land Allocation Land Use Land-Use Conversion Sources of Inefficient Use and Conversion Sprawl and Leapfrogging Incompatible Land Uses Undervaluing Environmental Amenities The Influence of Taxes on Land-Use Conversion Debate 10.1: Should Landowners Be Compensated for "Regulatory Takings"? Market Power Special Problems in Developing Countries Debate 10.2: What is a "Public Purpose"? Innovative Market-Based Policy Remedies Establishing Property Rights Transferable Development Rights Grazing Rights Example 10.1: Controlling Land Development with TDRs Conservation Easements Land Trusts Development Impact Fees Property Tax Adjustments Chapter 11: Storable, Renewable Resources: Forests Characterizing Forest Harvesting Decisions Special Attributes of the Timber Resource The Biological Dimension
10 The Economics of Forest Harvesting Extending the Basic Model Sources of Inefficiency Perverse Incentives for the Landowner Perverse Incentives for Nations Poverty and Debt Sustainable Forestry Public Policy Example 11.1: Producing Sustainable Forestry through Certification DebtNature Swaps Extractive Reserves Conservation Easements and Land Trusts Example 11.2: Conservation Easements in Action: The Blackfoot Community Project The World Heritage Convention Royalty Payments Example 11.3: Does Pharmaceutical Demand Offer Sufficient Protection to Biodiversity? Example 11.4: Trust Funds for Habitat Preservation Appendix: The Harvesting Decision: Forests Chapter 12: Common-Pool Resources: Commercially Valuable Fisheries Efficient Allocations The Biological Dimension Static Efficient Sustainable Yield Dynamic Efficient Sustainable Yield Appropriability and Market Solutions Example 12.1: Harbor Gangs of Maine and Other Informal Arrangements Public Policy Toward Fisheries Raising the Real Cost of Fishing Taxes Catch Share Programs Example 12.2: The Relative Effectiveness of Transferable Quotas and Traditional Size and Effort Restrictions in the Atlantic Sea Scallop Fishery Debate 12.1: ITQs or TURFs? Species, Space, or Both? Aquaculture Debate 12.2: Aquaculture: Does Privatization Cause More Problems Than It
11 Solves? Subsidies and Buybacks Marine Protected Areas and Marine Reserves The 200-Mile Limit Preventing Poaching Debate 12.3: Bluefin Tuna: Is Its High Price Part of the Problem or Part of the Solution? Appendix: The Harvesting Decision: Fisheries Chapter 13: Ecosystem Goods and Services: Nature's Threatened Bounty The State of Ecosystem Services Economic Analysis of Ecosystem Services Demonstrating the Value of Ecosystem Services The Value of Reefs Damage Assessments: Loss of Ecosystem Services Example 13.1: The Value of Coral Reefs in the US Virgin Islands Valuing Supporting Services: Pollination Example 13.2: 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 Debate 13.1: Paying for Ecosystem Services or Extortion?: The Case of Yasuni National Park Tradable Entitlement Systems Wetlands Banking Example 13.3: Trading Water for Beehives and Barbed Wire in Bolivia Carbon Sequestration Credits Conflict Resolution in Open-Access Resources via Transferable Entitlements Example 13.4: Reducing Emissions from Deforestation and Forest Degradation (REDD): A Twofer? Debate 13.2: Tradable Quotas for Whales? Ecotourism Debate 13.3: Does Ecotourism Provide a Pathway to Sustainability? Example 13.5: Local Approaches to Wildlife Protection: Zimbabwe The Special Problem of Protecting Endangered Species
12 Conservation Banking Example 13.6: Conservation Banking: The Gopher Tortoise Conservation Bank The Agglomeration Bonus Safe Harbor Agreements Moving Forward Chapter 14: Economics of Pollution Control: An Overview 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 14.1: Should Developing Countries Rely on Market-Based Instruments to Control Pollution? Cost-Effective Policies for Nonuniformly Mixed Surface Pollutants The Single-Receptor Case The Many-Receptors Case Other Policy Dimensions The Revenue Effect Example 14.1: The Swedish Nitrogen Charge Example 14.2: RGGI Revenue: The Maine Example Responses to Changes in the Regulatory Environment Price Volatility Instrument Choice under Uncertainty Product Charges: An Indirect Form of Environmental Taxation Discussion Question Appendix: The Simple Mathematics of Cost-Effective Pollution Control Chapter 15: Stationary-Source Local and Regional Air Pollution
13 Conventional Pollutants The Command-and-Control Policy Framework The Efficiency of the Command-and-Control Approach Debate 15.1: Does Sound Policy Require Targeting New Sources via the New Source Review? Debate 15.2: The Particulate and Smog Ambient Standards Controversy Cost-Effectiveness of the Command-and-Control Approach Example 15.1: Controlling SO2 Emissions by Command-and-Control in Germany Air Quality Market-Based Approaches Smog Trading (RECLAIM) Emissions Charges Regional Pollutants Example 15.2: The Economics of Adirondack Acidification Control Crafting a Policy Example 15.3: The Sulfur Allowance Program after 20 Years Example 15.4: Technology Diffusion in the Chlorine-Manufacturing Sector Chapter 16: Climate Change The Science of Climate Change Negotiations over Climate Change Policy Characterizing the Broad Strategies Debate 16.1: Should Carbon Sequestration in the Terrestrial Biosphere Be Credited? Game Theory as a Window on Climate Negotiations The Precedent: Reducing Ozone-Depleting Gases Economics and the Mitigation Policy Choice Providing Context: A Brief Look at Three Illustrative Carbon Pricing Programs Carbon Markets and Taxes: How Have These Approaches Worked in Practice? Two Carbon Pricing Program Design Issues: Offsets and Price Volatility Controversy: The Morality of Emissions Trading Debate 16.2: Is Global Greenhouse Gas Trading Immoral? Policy Timing Discussion Question
14 Chapter 17: Mobile-Source Air Pollution Subsidies and Externalities Implicit Subsidies Externalities Consequences Policy toward Mobile Sources History The US Approach Lead Phaseout Program Example 17.1: Getting the Lead Out: The Lead Phaseout Program CAFE Standards Debate 17.1: CAFE Standards or Fuel Taxes? Fuel Economy Standards in Other Countries External Benefits of Fuel Economy Standards Example 17.2: Car-Sharing: Better Use of Automotive Capital? Alternative Fuels and Vehicles Road Pricing Example 17.3: Zonal Mobile-Source Pollution-Control Strategies: Singapore Parking Cash-Outs Pricing Public Transport Feebates Tax Credits for Electric Vehicles Pay-as-You-Drive (PAYD) Insurance Accelerated Retirement Strategies Example 17.4: Modifying Car Insurance as an Environmental Strategy Example 17.5: The Cash-for-Clunkers Program: Did it Work? Example 17.6: Counterproductive Policy Design Chapter 18: Water Pollution Nature of Water Pollution Problems Types of Waste-Receiving Water Sources of Contamination Types of Pollutants
15 Debate 18.1: Toxics in Fish Tissue: Do Fish Consumption Advisories Change Behavior? Traditional Water Pollution Control Policy Early Legislation Subsequent Legislation The TMDL Program The Safe Drinking Water Act Ocean Pollution Efficiency and Cost-Effectiveness Ambient Standards and the Zero-Discharge Goal National Effluent Standards Watershed-Based Trading Example 18.1: Effluent Trading for Nitrogen in Long Island Sound Municipal Wastewater Treatment Subsidies Pretreatment Standards Nonpoint Source Pollution Atmospheric Deposition of Pollution The European Experience Developing Country Experience Example 18.2: The Irish Bag Levy Example 18.3: Economic Incentives for Water Pollution Control: The Case of Colombia Oil Spills from Tankers An Overall Assessment Chapter 19: Toxic Substances and Environmental Justice Nature of Toxic Substance Pollution Health Effects Policy Issues Example 19.1: The Arduous Path to Managing Risk: Bisphenol A Market Allocations and Toxic Substances Occupational Hazards Example 19.2: Susceptible Populations in the Hazardous Workplace Product Safety Third Parties The Incidence of Hazardous Waste Siting Decisions History
16 Environmental Justice Research and the Emerging Role of GIS Example 19.3: Do New Polluting Facilities Affect Housing Values and Incomes? Evidence in New England The Economics of Site Location Example 19.4: Which Came First.The Toxic Facility or the Minority Neighborhood? The Policy Response Debate 19.1: Does Offering Compensation for Accepting an Environmental Risk Always Increase the Willingness to Accept the Risk? Creating Incentives through Common Law Statutory Law The Toxic Release Inventory Proposition 65 International Agreements Example 19.5: Regulating through Mandatory Disclosure: The Case of Lead Chapter 20: The Quest for Sustainable Development Sustainability of Development Market Allocations Efficiency and Sustainability Trade and the Environment Example 20.1: Has NAFTA Improved the Environment in Mexico? Trade Rules under GATT and the WTO Debate 20.1: Should an Importing Country Be Able to Use Trade Restrictions to Influence Harmful Fishing Practices in an Exporting Nation? The Natural Resource Curse The GrowthDevelopment Relationship Example 20.2: The "Natural Resource Curse" Hypothesis Conventional Measures Alternative Measures Example 20.3: Happiness Economics: Does Money Buy Happiness? Chapter 21: Visions of the Future Revisited
17 Addressing the Issues Conceptualizing the Problem Institutional Responses Example 21.1: Private Incentives for Sustainable Development: Can Adopting Sustainable Practices Be Profitable? Sustainable Development Example 21.2: Public-Private Partnerships: The Kalundborg Experience A Concluding Comment Answers to Glossary Name Index Subject Index
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