A clear grasp of economics is essential to understanding why environmental problems arise and how we can address them. So it is with good reason that Markets and the Environment has become a classic text in environmental studies since its first publication in 2007. Now thoroughly revised with updated information on current environmental policy and real-world examples of market-based instruments, the primer is more relevant than ever.
The authors provide a concise yet thorough introduction to the economic theory of environmental policy and natural resource management. They begin with an overview of environmental economics before exploring topics including cost-benefit analysis, market failures and successes, and economic growth and sustainability. Readers of the first edition will notice new analysis of cost estimation as well as specific market instruments, including municipal water pricing and waste disposal. Particular attention is paid to behavioral economics and cap-and-trade programs for carbon.
Throughout, Markets and the Environment is written in an accessible, student-friendly style. It includes study questions for each chapter, as well as clear figures and relatable text boxes. The authors have long understood the need for a book to bridge the gap between short articles on environmental economics and tomes filled with complex algebra. Markets and the Environment makes clear how economics influences policy, the world around us, and our own lives.
Chapter 1. Introduction
-Economics and the Environment
-Global Climate Change
-Organization and Content of This Book
-What We Hope Readers Will Take away from This Book
Chapter 2. Economic Efficiency and Environmental Protection
-Efficiency and Environmental Policy
-Equating Benefits and Costs on the Margin
-Dynamic Efficiency and Environmental Policy
Chapter 3. The Benefits and Costs of Environmental Protection
-Evaluating the Benefits
Chapter 4. The Efficiency of Markets
-Competitive Market Equilibrium
-The Efficiency of Competitive Markets
Chapter 5. Market Failures in the Environmental Realm
-The Tragedy of the Commons
Chapter 6. Managing Stocks: Natural Resources as Capital Assets
-Efficient Extraction in Two Periods
-A Closer Look at the Efficient Extraction Path
-What about Market Power?
-The Critical Role of Property Rights
Chapter 7. Stocks that Grow: The Economics of Renewable Resource Management
-Economics of Forest Resources
Chapter 8. Principles of Market-based Environmental Policy
-The Coase Theorem
-The Array of Policy Instruments
-How Market-Based Policies Can Overcome Market Failure
-Setting Prices versus Setting Quantities?
Chapter 9. The Case for Market-Based Instruments in the Real World
-Promoting Technological Change
-Market-Based Instruments for Managing Natural Resources
Chapter 10. Market-Based Instruments in Practice
-The U.S. Sulfur Dioxide Market
-Individual Tradable Quotas for Fishing in New Zealand
-Municipal Water Pricing
-The European Union's Emission Trading System
-Water Quality Trading
-Waste Management: "Pay As You Throw"
-Habitat and Land Management
Chapter 11. Sustainability and Economic Growth
-Limits to Growth?
-Sustainability, in Economic Terms
-Keeping Track: Green Accounting
-Are Economic Growth and Sustainability Compatible?
Chapter 12. Conclusion
-What Does Economics Imply for Environmental Policy?
-The Role of Firms, Consumers, and Governments
-Some Final Thoughts
Nathaniel O. Keohane is Vice President at Environmental Defense Fund, where he leads EDF's International Climate program. Sheila M. Olmstead is Associate Professor of Public Affairs at the University of Texas at Austin.