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Environmental Economics: Can Economics Help Mother Earth?

Published online by Cambridge University Press:  24 August 2009

W. Douglass Shaw
W. Douglass Shaw
Affiliation:
Senior Associate, Environment and Science Policy Division, RCG/Hagler, Bailly & Co. Inc., PO Drawer 0, Boulder, Colorado 80306, USA.
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Extract

Ecologists and environmentalists have long been at odds with economists over whether economic theory and practice helps or hinders environmental protection and improvement. This paper suggests that the specific field of environmental economics has contributed a great deal to the potential for environmental improvement, particularly with recent improvements in techniques which attempt to value environmental goods. The basic tenets of environmental economics are reviewed, including the tradable emissions-permits approach, and then specific recent applications of the permit system in the United States of America are presented.

The two basic valuation techniques, travel cost and the contingent valuation method (CVM), are briefly discussed, along with the shortcoming of the travel cost approach in obtaining ‘intrinsic’ values for environmental goods. This paper describes results from experimental economics which support the use of the CVM in estimating intrinsic values for environmental resources. In a new study, subjects in a laboratory experiment pay to prevent the destruction of a plant. This finding should appeal to the environmentalist and ecologist. Lastly, recent developments in macroeconomics and general equilibrium models which incorporate pollution and resource degradation variables, are shown to contribute positively to the goal of global environmental improvement.

Type
Main Papers
Information
Environmental Conservation , Volume 18 , Issue 3 , Autumn 1991 , pp. 237 - 242
Copyright
Copyright © Foundation for Environmental Conservation 1991

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