HANDBOOK OF ENVIRONMENTAL ECONOMICS VOLUME This Page Intentionally Left Blank HANDBOOK OF ENVIRONMENTAL ECONOMICS VOLUME ENVIRONMENTAL DEGRADATION AND INSTITUTIONAL RESPONSES Edited by KARL-GÖRAN MÄLER Swedish Academy of Sciences and JEFFREY R VINCENT University of California 2003 ELSEVIER • • AMSTERDAM BOSTON LONDON • NEW YORK • OXFORD • PARIS SAN DIEGO • SAN FRANCISCO • SINGAPORE • SYDNEY • TOKYO ELSEVIER SCIENCE B.V Sara Burgerhartstraat 25 P.O Box 211, 1000 AE Amsterdam, The Netherlands © 2003 Elsevier Science B.V All rights reserved This work is protected under copyright by Elsevier Science, and the following terms and conditions apply to its use: Photocopying Single photocopies of single chapters may be made for personal use as allowed by national copyright laws Permission of the Publisher and payment of a fee is required for all other photocopying, including multiple or systematic copying, copying for advertising or promotional purposes, resale, and all forms of document delivery Special rates are available for educational institutions that wish to make photocopies for non-profit educational classroom use Permissions may be sought directly from Elsevier Science via their homepage (http://www.elsevier.com) by selecting ‘Customer support’ and then ‘Permissions’ Alternatively you can send an e-mail to: permissions@elsevier.com, or fax to: (+44) 1865 853333 In the USA, users may clear permissions and make payments through the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, USA; phone: (+1) (978) 7508400, fax: (+1) (978) 7504744, and in the UK through the Copyright Licensing Agency Rapid Clearance Service (CLARCS), 90 Tottenham Court Road, London W1P 0LP, UK; phone: (+44) 207 631 5555; fax: (+44) 207 631 5500 Other countries may have a local reprographic rights agency for payments Derivative Works Tables of contents may be reproduced for internal circulation, but permission of Elsevier Science is required for external resale or distribution of such material Permission of the Publisher is required for all other derivative works, including compilations and translations Electronic Storage or Usage Permission of the Publisher is required to store or use electronically any material contained in this work, including any chapter or part of a chapter Except as outlined above, no part of this work may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without prior written permission of the Publisher Address permissions requests to: Elsevier Science Global Rights Department, at the mail, fax and e-mail addresses noted above Notice No responsibility is assumed by the Publisher for any injury and/or damage to persons or property as a matter of products liability, negligence or otherwise, or from any use or operation of any methods, products, instructions or ideas contained in the material herein Because of rapid advances in the medical sciences, in particular, independent verification of diagnoses and drug dosages should be made First edition 2003 British Library Cataloguing in Publication Data Handbook of environmental economics Vol 1: Environmental degradation and institutional responses - (Handbook in economics; 20) Environmental economics I Mäler, Karl-Göran II Vincent, Jeffrey R 333.7 ISBN 0444500634 Library of Congress Cataloguing in Publication Data A catalog record from the Library of Congress has been applied for ISBN: 0-444-50063-4 ISSN: 0169-7218 (Handbooks in Economics Series) ∞ The paper used in this publication meets the requirements of ANSI/NISO Z39.48-1992 (Permanence of Paper)
Printed in The Netherlands INTRODUCTION TO THE SERIES The aim of the Handbooks in Economics series is to produce Handbooks for various branches of economics, each of which is a definitive source, reference, and teaching supplement for 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 recent journal articles and discussion papers Some original material is also included, but the main goal is to provide comprehensive and accessible surveys The Handbooks are intended to provide not only useful reference volumes for professional collections but also possible supplementary readings for advanced courses for graduate students in economics KENNETH J ARROW and MICHAEL D INTRILIGATOR PUBLISHER’S NOTE For a complete overview of the Handbooks in Economics Series, please refer to the listing at the end of this volume v This Page Intentionally Left Blank CONTENTS OF THE HANDBOOK VOLUME Perspectives on Environmental Economics Chapter Geophysical and Geochemical Aspects of Environmental Degradation BERT BOLIN Chapter Ecosystem Dynamics SIMON A LEVIN and STEPHEN W PACALA Chapter Property Rights, Public Goods and the Environment DAVID A STARRETT Chapter Economics of Common Property Management Regimes JEAN-MARIE BALAND and JEAN-PHILIPPE PLATTEAU Chapter Population, Poverty, and the Natural Environment PARTHA DASGUPTA Chapter The Theory of Pollution Policy GLORIA E HELFAND, PETER BERCK and TIM MAULL Chapter Mechanism Design for the Environment SANDEEP BALIGA and ERIC MASKIN Chapter The Political Economy of Environmental Policy WALLACE E OATES and PAUL R PORTNEY vii viii Contents of the Handbook Chapter Experience with Market-Based Environmental Policy Instruments ROBERT N STAVINS Chapter 10 Experimental Evaluations of Policy Instruments PETER BOHM Chapter 11 Technological Change and the Environment ADAM B JAFFE, RICHARD G NEWELL and ROBERT N STAVINS DEDICATION Allen Kneese If anyone should be called the founding father of environmental economics, it must be Allen Kneese He was a pioneer as a researcher, and he was a pioneer as a research organizer He inspired a vast number of younger environmental economists His studies of water issues in the 1960s induced many, including one of the editors of this handbook, to look at environmental problems through the eyes of an economist His enduring fight for the use of economic instruments in environmental policy had impacts even outside his own country He was the first to recognize the need for economists to learn from other disciplines – physics, hydrology, ecology, political science – in order to enable us to produce good and relevant policy recommendations Allen was an editor of the NorthHolland Handbook of Natural Resource and Energy Economics He had promised to write an essay describing his personal perspective on the evolution of environmental economics for this handbook Unfortunately for all of us, he passed away after a long illness We dedicate these volumes to his memory ix ... of the third model 2.5 Some lessons of the non-cooperative framework for collective regulation xix 97 98 98 99 99 10 0 10 1 10 3 10 4 10 6 10 7 10 9 11 3 11 4 11 5 11 8 11 9 12 0 12 1 12 3 12 3 12 7 12 9 12 9 13 0... THE HANDBOOK Elsevier published a 3 -volume Handbook of Natural Resource and Energy Economics in 19 85 (the first two volumes) and 19 93 (the third volume) Why is it now publishing a 3 -volume Handbook. .. the change in title: the Handbook of Environmental Economics, not volumes 4–6 of the Handbook of Natural Resource and Energy Economics Unlike the earlier handbook, this handbook does not include