A Course in Environmental Economics: Theory, Policy, and Practice. Daniel J. Phaneuf and Till Requate

Transcription

1 1 A Course in Environmental Economics: Theory, Policy, and Practice PART I: ECONOMICS AND THE ENVIRONMENT Daniel J. Phaneuf and Till Requate 1. Introduction to the Theory of Externalities 1.1 Market failure 1.2 Descriptive explanation of market failure 1.3 A formal model of externalities Pareto optimality The competitive market Market intervention 1.4 Plan of the book 1.5 Summary 1.6 Further reading Exercise Working through functional form examples Model generalization 2. Environmental Problems, Policy, and Science 2.1. Major pollutants and pollution problems 2.2. Evolution of environmental policy Historical context Contemporary examples from US and Europe 2.3. Environmental sciences and economics Environmental conditions and services Integrated modeling 2.4. Summary 2.5. Further reading 3. Introduction to the Theory of Environmental Policy 3.1 A simple model of damages and costs Damage function Abatement costs Efficient allocation 3.2 Property rights and the Coase theorem Pollution ownership regimes Coase Theorem Comments on the polluter pays principle 3.3 Environmental policy instruments Command and control Emission taxes Pollution permits Subsidies 3.4 Aggregate marginal abatement cost curve 3.5 Summary 3.6 Further reading Analytical and numerical problems Policy oriented problems

2 2 PART II: THE DESIGN OF ENVIRONMENTAL POLICY 4. Imperfect Information 4.1. Prices versus quantities Damage function uncertainty Abatement cost function uncertainty Weitzman Theorem Contemporary policy and research relevance 4.2. Hybrid policies Safety valves Approximating the marginal damage curve 4.3. Mechanism design Kwerel s mechanism Montero s mechanism 4.4. Summary 4.5. Further reading Model generalization Literature-based summary of recent research 5. Competitive Output Markets 5.1. Model extension Technology and cost functions Market demand and social welfare Social optimum 5.2. Policy instruments reconsidered 5.3. Standards reconsidered Standards per unit of output Relative standards 5.4. Long run optimality 5.5. Abatement costs reconsidered 5.6. Summary 5.7. Further reading Analytical and numerical problems 6. Imperfectly Competitive Output Markets 6.1. Monopoly Taxation of monopoly with no abatement technology Taxation of a monopolist with abatement technology Emission standards Regulating emissions and output simultaneously 6.2. Oligopolies Emission taxes in oligopoly Emission permits 6.3. Oligopoly models of free entry and monopolistic competition Model extension Comparative statics Regulator s objective Regulation of emissions and output 6.4. Extensions Price competition

3 Monopolistic competition Market power in input markets 6.5. Summary 6.6. Further reading 7. General Equilibrium 7.1. Review of optimal taxation Dead weight loss Marginal cost of public funds 7.2. Environmental taxation with preexisting distortions Revenue recycling and tax interaction Double dividend hypothesis 7.3. Contemporary policy and research relevance Subsidies and freely distributed pollution permits Leisure time and environmental quality: substitutes or complements? 7.4. Summary 7.5. Further reading Literature-based summary of empirical and numerical studies 8. Topics in Emission Permit Markets 8.1. The Spatial Dimension A model with multiple sources and receptors Ambient permit schemes Emission permit schemes 8.2. The Temporal Dimension A model with banking and borrowing Optimality of temporal emission shifting 8.3. Allocation Rules Market power in the permit market 8.4. Empirical research related to permit trading 8.5. Summary 8.6. Further reading Review of existing applications using permit markets 9. International Topics 9.1. Is trade good or bad for the environment? A simple model Empirical evidence 9.2. Trans-boundary and global pollution problems Model setup Cooperative policy Non-cooperative policy Unilateral optimal environmental policy in small open economies Unilateral optimal environmental policy in large open economies Unilateral optimal environmental policy and mobile capital 9.3. Summery 9.4. Further reading

4 4 10. Non-Point Source Pollution Non-point source pollution defined Imperfect observation of pollution emissions and abatement effort (moral hazard and adverse selection) First Best Ambient Regulation Schemes Segerson model Generalizations to the Segerson model Experimental evidence Second Best Schemes Standards Input-based incentives Empirical research Summary Further reading Literature-based summary of empirical and experimental studies 11. Liability The basic model Strict liability rule Negligence rule Extensions: output and scale of damage Alternative causality Extension of the model Proportional liability Collective liability Voluntarily monitoring Multiple polluters Liability rules under bankruptcy risk Model extension Liability rules, lender liability, and wealth Lender liability and environmental insurance Summary Further reading 12. Innovation, Adoption of New Technology and R&D Technology adoption Model extension Myopic policy Emission taxes, permits, standards Policy comparison Ex ante optimal policy Emission taxes, permits, standards Policy comparison Ex post optimal policy R&D Private R&D R&D and Technology Adoption Emission taxes and permits Policy implications Investment incentives and option value theory

5 Extensions Summery Further reading 13. Accumulating Pollutants A dynamic model of stock pollution First best dynamic pollution/abatement paths Environmental policy Multiple polluants Extensions Dynamic games Pollution and growth Summary Further reading Appendix: Optimal control theory/concepts PART III: VALUING THE ENVIRONMENT 14. Introduction to non-market valuation General setup Price change welfare measures Compensating and equivalent variation Consumer surplus Towards measurement Quantity change welfare measures Compensating and equivalent variation The fundamental challenge of welfare measurement WTP and WTA Welfare analysis under uncertainty Summary Further reading Analytical/numerical problem Literature based summary of WTP and WTP explanations 15. Revealed Preference Methods The fundamental challenge of welfare measurement A brief introduction to stated preference The revealed preference tradition Use and non-use value Complementary private and environmental goods Weak complementarity Welfare measurement using weak complementarity Substitutable private and environmental goods Averting behavior model Production technology and welfare bounds Models for bundled attributes goods The hedonic model of differentiated commodities Discrete choice model of differentiated commodities Discrete choice econometrics

6 Logit-type models Simulation-based models Welfare measurement The environment as a factor input Summary Further reading Discrete choice econometric exercise 16. Discrete choice models 17. Recreation demand Conceptual model Empirical models Recreation data Discrete choice models Demand system models Perennial and contemporary issues Time constraints and the value of time Agent and recreation site heterogeneity Current research and policy Summary Further reading Empirical exercises with generated or real data 18. Property Value Models Hedonic property value models: theory Consumer s choice problem A running example Welfare measurement Hedonic property value models: estimation First stage estimation Second stage estimation Structural models Discrete choice models Sorting models Advantages and disadvantages of a structural approach Quasi-experimental approaches Background and motivation Alternative identification strategies Structural versus quasi-experimental analysis? Summary Further reading Empirical exercises with generated or real data 19. Stated Preference Methods Stated preference data Contingent valuation Contingent behavior Choice experiments

7 Models for stated preference data Contingent valuation econometrics Discrete choice models for SP data Combining stated and revealed preference data Understanding sources of variability Models for combined data Validity of stated preference data Validity concepts Validity methods and studies Current research and policy Summary Further reading Empirical exercises with generated or real data on validity analysis 20. Morbidity and Mortality Risk Valuation Policy context Risk assessment and the environment Measurement needs Conceptual models A health production model Endogenous mortality risk Generalizations Measuring the value of a statistical life Wage hedonics Stated preference approaches Current research and policy issues Valuing health changes Defensive expenditures and cost of illness Summary Further reading Exercise Empirical exercise measuring VSL Study design exercise PART IV: THE PRACTICE OF ENVIRONMENTAL ECONOMICS 21. Cost/Benefit Analysis Measuring the cost of environmental policy Estimation of abatement cost functions Damage function assessment Quantifiable versus unquantifiable components Discounting Why is cost/benefit analysis controversial? Summary Further reading Exercise Literature-based summary of competing perspectives on cost/benefit analysis 22. Benefits Transfer Art, Science, or Noise?

8 Methods Structural benefit transfer Meta analysis Research and policy relevance Summary Further Reading Exercise A benefit transfer problem 23. Empirical Questions in Environmental Economics Do voluntary pollution reduction programs improve the environment? Applications of program evaluation and natural experiments Does the US Endangered Species Act protect endangered species? Other examples Summary Further reading References Index