Book contents
- Frontmatter
- Contents
- List of Tables
- List of Figures
- Preface
- Acknowledgments
- 1 Introduction and Plan of the Book
- Part 1 The Basics
- Note to Part 1
- 2 Interactions and Trade-Offs
- 3 The Roots of Environmental Degradation
- 4 Issues of Time
- 5 How Clean Is Clean Enough?
- 6 The Government's Tool Kit
- Part 2 Trade and Environment
- Part 3 Transnational Pollution and Management of International Resources
- Part 4 Sustainable Development
- References
- Index
3 - The Roots of Environmental Degradation
Published online by Cambridge University Press: 06 December 2010
- Frontmatter
- Contents
- List of Tables
- List of Figures
- Preface
- Acknowledgments
- 1 Introduction and Plan of the Book
- Part 1 The Basics
- Note to Part 1
- 2 Interactions and Trade-Offs
- 3 The Roots of Environmental Degradation
- 4 Issues of Time
- 5 How Clean Is Clean Enough?
- 6 The Government's Tool Kit
- Part 2 Trade and Environment
- Part 3 Transnational Pollution and Management of International Resources
- Part 4 Sustainable Development
- References
- Index
Summary
Introduction
This chapter explains the causes of environmental degradation, using the analytical tools of microeconomics, especially environmental economics. Before investigating the root causes, however, it is useful to develop a monetary measure of welfare using the concepts of consumer surplus and producer surplus and to relate welfare to the concepts of efficiency and equity. Section 2 introduces consumer and producer surplus. For marketed goods, consumer surplus and producer surplus are convenient to estimate but are not exact measures of welfare, and the appendix to this chapter explores more precise measures. Section 3 uses these concepts to illustrate efficient and inefficient allocations of resources and to relate efficiency to equity. Section 4 analyzes three interrelated sources of inefficiency in the allocation of environmental resources, collectively known as market failures. They are public goods, externalities, and open-access common property resources. The common thread to the three is defective or nonexistent property rights. Section 4 also examines so-called government failures, which also frequently contribute to environmental degradation. Finally, Section 5 presents the influential Coase Theorem, which concludes that in some situations a private “market” might be developed between those who generate environmental externalities (in short, polluters) and those who bear the cost of externalities (victims). Under certain conditions such a market can be shown to allocate resources efficiently regardless of the initial system of property rights, and this strategy has been proposed as an alternative to more direct government regulation of the environment.
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- Economics and the Global Environment , pp. 42 - 76Publisher: Cambridge University PressPrint publication year: 2000