This book grew out of discussions we had more than ten years ago, when we were both teaching graduate courses in environmental economics at our respective universities in Germany and the United States. Though our interests and skills were different – Requate is a theorist/experimentalist, and Phaneuf an empiricist – we both had the sense that there was something missing in the textbooks we used for our classes. Specifically, while there are a variety of excellent undergraduate and some master's-level textbooks, there was not a single obvious choice for instructors teaching at the advanced graduate level. For environmental policy design, the classic book by Baumol and Oates (1988), The Theory of Environmental Policy, had become dated. For non-market valuation, Freeman (2003) and Freeman et al. (2014), The Measurement of Environmental and Resource Values, was (and remains today) an authoritative and obvious choice, but its emphasis is on concepts rather than empirics. As such, there was no single volume suitable for advanced study that presented the theoretical, empirical, and policy aspects of the field as an integrated narrative. As a result, we felt that our students were seeing the trees but not the forest, i.e. they were learning environmental economics as a collection of disjointed topics, but failing to appreciate how the topics fit together into something greater than the sum of their parts. We felt that a textbook for graduate students was needed that: (a) presented the field's canon on environmental policy design and non-market valuation using a single notational convention; (b) included contemporary and advanced topics missing in other sources; (c) reflected the increasingly empirical nature of environmental economics; and (d) conveyed the excitement and dynamism of a growing field. This book is our attempt to meet that need.

Our vision for the book is best explained by discussing its organization. We have divided the material into four parts. In Part I, we set the stage by placing environmental economics in its historical context. This is accomplished by reviewing the field's roots in neoclassical welfare theory and the theory of externalities (Chapter 1), and its close relationship to environmental policy and environmental science (Chapter 2). In Chapter 3 we close Part I by laying out our basic modeling framework for the first half of the book.