Environmental Law and Policy
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In this article, the authors provide an economic perspective of environmental law and policy with regard to both normative and positive dimensions, including a review of critiques of benefit-cost analysis, briefly examine alternative approaches to analyzing the goals of environmental policies, and survey the efforts of the Federal governmental to employ these analytical methods.Abstract:
The Regulatory Policy Program at the Center for Business and Government provides an environment in which to develop and test leading ideas on regulation and regulatory institutions. RPP's research aims to improve the global society and economy by understanding the impacts of regulation and creating better decisions about the design and implementation of regulatory strategies around the world. RPP's efforts are organized around the following three core areas: regulation, markets, and deregulation; regulatory instruments; and regulatory institutions and policymaking. ABSTRACT This chapter provides an economic perspective of environmental law and policy with regard to both normative and positive dimensions. It begins with an examination of the central problem in environmental regulation: the tendency of pollution generators in an unconstrained market economy to externalize some of the costs of their production, leading to an inefficiently large amount of pollution. We examine the ends of environmental policy, that is, the setting of goals and targets, beginning with normative issues, notably the Kaldor-Hicks criterion and the related method of assessment known as benefit-cost analysis. We examine this analytical method in detail, including its theoretical foundations and empirical methods of estimation of compliance costs and environmental benefits. We include a review of critiques of benefit-cost analysis, briefly examine alternative approaches to analyzing the goals of environmental policies, and survey the efforts of the Federal governmental to employ these analytical methods. The chapter also examines in detail the means of environmental policy, that is, the choice of specific policy instruments, beginning with an examination of potential criteria for assessing alternative instruments, with particular focus on cost-effectiveness. The theoretical foundations and experiential highlights of individual instruments are reviewed, including conventional, command-and-control mechanisms, economic incentive or market-based instruments, and liability rules. In the economic-incentive category, we consider pollution charges, tradeable permit systems, market friction reductions, and government subsidy reductions. Three cross-cutting issues receive attention: implications of uncertainty for instrument choice; effects of instrument choice on technological change; and distributional considerations. We identify a set of normative lessons in regard to design, implementation, and the identification of new applications, and we examine positive issues, including three phenomena: the historical dominance of command-and-control; the prevalence in new proposals of tradeable permits allocated without charge; and the relatively recent increase in attention given to market-based instruments. Finally, the chapter turns to the question of how environmental responsibility is and should be allocated among the various levels of government. We provide …read more
Citations
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The history of ecosystem services in economic theory and practice: From early notions to markets and payment schemes
TL;DR: This paper reviewed the historic development of the conceptualization of ecosystem services and examined critical landmarks in economic theory and practice with regard to the incorporation of ecosystem service into markets and payment schemes, concluding that the trend towards monetization and commodification of ecosystems is partly the result of a slow move from the original economic conception of nature's benefits as use values in Classical economics to their conceptualization in terms of exchange values in Neoclassical economics.
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Economic valuation and the commodification of ecosystem services
TL;DR: In the last decade, a growing number of environmental scientists have advocated economic valuation of ecosystem services as a pragmatic short-term strategy to communicate the value of biodiversity and the importance of ecosystems.
References
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TL;DR: In this article, a theory of hedonic prices is formulated as a problem in the economics of spatial equilibrium in which the entire set of implicit prices guides both consumer and producer locational decisions in characteristics space.
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TL;DR: This research aims to aid risk analysis and policy-making by providing a basis for understanding and anticipating public responses to hazards and improving the communication of risk information among lay people, technical experts, and decision-makers.
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Toward a New Conception of the Environment-Competitiveness Relationship
TL;DR: In this article, the authors argue that the trade-off between environmental regulation and competitiveness unnecessarily raises costs and slows down environmental progress, and that instead of simply adding to cost, properly crafted environmental standards can trigger innovation offsets, allowing companies to improve their resource productivity.
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TL;DR: In this article, the authors argue that regulation is acquired by the industry and is designed and operated primarily for its benefit, and that the state has one basic resource which in pure principle is not shared with even the mightiest of its citizens.
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TL;DR: Mitchell and Carson as discussed by the authors argue that at this time the contingent valuation (CV) method offers the most promising approach for determining public willingness to pay for many public goods, an approach likely to succeed, if used carefully, where other methods may fail.