Hostname: page-component-cd9895bd7-gbm5v Total loading time: 0 Render date: 2024-12-25T08:10:10.815Z Has data issue: false hasContentIssue false
  • English
  • Français

The economics of the environment*

Published online by Cambridge University Press:  31 July 2008

Partha Dasgupta
Partha Dasgupta
Affiliation:
Faculty of Economics, University of Cambridge, Sidgwick Avenue, Cambridge CB3 9DD, UK; and Beijer International Institute of Ecological Economics, Royal Swedish Academy of Sciences, Box 50005, S-104 05 Stockholm, Sweden
Get access Rights & Permissions [Opens in a new window]

Abstract

This article offers an account of the economics of the environment. I sketch the subject's motivation and scope, and try to identify what we know and what we don't as yet know about matters of concern. This demands brazen selection, and I haven't avoided it: for the most part, the article explores the interface of rural poverty and the environmental resource-base in poor countries. A contrast is drawn between geographically localized resources and the global commons. The role of property rights, both private and collective, and their implied resource allocation mechanisms are studied. Criteria for social cost–benefit analysis of projects and policies are derived, and their link with the concept of net national product is drawn.

Type
Article
Information
Environment and Development Economics , Volume 1 , Issue 4 , October 1996 , pp. 387 - 428
Copyright
Copyright © 1996, Cambridge University Press

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Agarwal, A. and Narain, S. (1989), Towards Green Villages: A Strategy for Environmentally Sound and Participatory Rural Development, New Delhi: Centre for Science and Environment.Google Scholar
Allot, P. (1983), ‘Power sharing and the law of the sea’, American Journal of International Law 77:1–30.CrossRefGoogle Scholar
Anderson, D. (1987), The Economics of Afforestation, Baltimore: Johns Hopkins University Press.Google Scholar
Arrow, K.J. (1971), ‘Political and economic evaluation of social effects of externalities’, in Intriligator, M., ed., Frontiers of Quantitative Economics, vol. I, Amsterdam: North Holland.Google Scholar
Arrow, K.J. and Fisher, A. (1974), ‘Preservation, uncertainty and irreversibility’, Quarterly Journal of Economics 87: 312–319.CrossRefGoogle Scholar
Arrow, K.J. et al. (1995a), ‘Economic growth, carrying capacity, and the environment’, Science, 268(5210). Reprinted in Environment and Development Economics (1996), 1(1): 104–110.CrossRefGoogle ScholarPubMed
Arrow, K.J. et al. (1995b), ‘Intertemporal equity, discounting and economic efficiency’, in Munasinghe, M., ed., Global Climate Change: Economic and Policy Issues, World Bank Environmental Paper No. 12, Washington, DC: World Bank.Google Scholar
Aumann, R. (1987), ‘Game theory’, in Eatwell, J., Milgate, M. and Newman, P., eds., The New Palgrave, London: Macmillan.Google Scholar
Baland, J.-M. and Platteau, J.-P. (1996), Halting Degradation of Natural Resources: Is There a Role for Rural Communities?, Oxford: Clarendon Press.Google Scholar
Barraclough, S. (1977), ‘Agricultural production prospects in Latin America’, World Development 5: 459–476.CrossRefGoogle Scholar
Barrett, S. (1990), ‘The problem of global environmental protection’, Oxford Review of Economic Policy 6: 68–79.CrossRefGoogle Scholar
Barrett, S. (1996), ‘Comments on the 1995 Keynes Lecture’, Proceedings of the British Academy: 1995 Lectures and Memoirs.Google Scholar
Barrett, S., Dasgupta, P. and Mäler, K.-G. (1996), ‘Intergenerational equity, global warming, and social discount rates’, Discussion Paper, Beijer International Institute of Ecological Economics, Stockholm.Google Scholar
Barro, R. and Sala-i-Martin, X. (1995), Economic Growth, New York: McGraw-Hill.Google Scholar
Baumol, W.M. and Bradford, D. (1972), ‘Detrimental externalities and nonconvexity of the production set’, Economica 39:160–176.CrossRefGoogle Scholar
Baumol, W.M. and Oates, W. (1975), The Theory of Environmental Policy, Englewood Cliffs, NJ: Prentice-Hall.Google Scholar
Beteille, A., ed. (1983), Equality and Inequality: Theory and Practice, Delhi: Oxford University Press.Google Scholar
Binmore, K. and Dasgupta, P., eds. (1987), The Economics of Bargaining, Oxford: Basil Blackwell.Google Scholar
Binswanger, H. (1991), ‘Brazilian policies that encourage deforestation in the Amazon’, World Development 19(7): 821–829.CrossRefGoogle Scholar
Bohm, P. (1996), ‘Environmental taxation and the double-dividend: fact or fallacy?’, GEC Working Paper Series No. 96–01, University College, London.Google Scholar
Bovenberg, A.L. and Goulder, L. (1996), ‘Optional environmental taxation in the presence of other taxes: general equilibrium analyses’, American Economic Review 86(4): 766–788.Google Scholar
Bovenberg, A.L. and van der Ploeg, F. (1994), ‘Environmental policy, public finance, and the labour market in a second-best world’, Journal of Public Economics 55(3): 349–390.CrossRefGoogle Scholar
Brown, G. and McGuire, C.B. (1967), ‘A socially optimal pricing policy for a public water agency’, Water Resources Research 3: 33–44.CrossRefGoogle Scholar
Carraro, C. and Siniscalco, D. (1993), ‘Strategies for the international protection of the environment’, Journal of Public Economics 52(3): 309–328.CrossRefGoogle Scholar
Carraro, C. and Siniscalco, D., eds. (1996), Environmental Fiscal Reform and Unemployment, Dordrecht: Kluwer.CrossRefGoogle Scholar
Chichilnisky, G. (1994), ‘North–South trade and the global environment’, American Economic Review 84(4): 851–874.Google Scholar
Chopra, K., Kadekodi, G.K. and Murty, M.N. (1990), Participatory Development: People and Common Property Resources, New Delhi: Sage Publications.Google Scholar
Clark, C.W. (1976), Mathematical Bioeconomics: The Optimal Management of Renewable Resources, New York: John Wiley.Google Scholar
Cleaver, K.M. and Schreiber, G.A. (1994), Reversing the Spiral: The Population, Agriculture, and Environment Nexus in Sub-Saharan Africa, Washington, DC: World Bank.Google Scholar
Coase, R. (1960), ‘The problem of social cost’, Journal of Law and Economics 3; 1–44.CrossRefGoogle Scholar
Cooper, R. (1977), ‘An economist's view of the oceans’, Journal of World Trade Law 9(1): 347–377.Google Scholar
Copeland, B.R. and Taylor, M.S. (1994), ‘North–South trade and the environment’, Quarterly Journal of Economics 109(3): 754–787.CrossRefGoogle Scholar
Copeland, B.R. and Taylor, M.S. (1995), ‘Trade and transboundary pollution’, American Economic Review 85(4): 716–737.Google Scholar
Costanza, R., ed. (1991), Ecological Economics: The Science and Management of Sustainability, New York: Columbia University Press.Google Scholar
Cropper, M. and Oates, W. (1992), ‘Environmental economics: a survey’, Journal of Economic Literature 30(2): 906–908.Google Scholar
CSE (1990), Human–Nature Interactions in a Central Himalayan Village: A Case Study of Village Bembru, New Delhi: Centre for Science and Environment.Google Scholar
Dales, J.H. (1968), Pollution, Property and Prices, University of Toronto Press.Google Scholar
Daly, H.E. (1994), ‘The perils of free trade’, Scientific American 269(5): 50–53.CrossRefGoogle Scholar
Dasgupta, P. (1982), The Control of Resources, Oxford: Basil Blackwell.Google Scholar
Dasgupta, P. (1988), ‘Trust as a commodity’, in Gambetta, D., ed., Trust: Making and Breaking Cooperative Relations, Oxford: Basil Blackwell: 49–72.Google Scholar
Dasgupta, P. (1990), ‘The environment as a commodity’, Oxford Review of Economic Policy 6.CrossRefGoogle Scholar
Dasgupta, P. (1993), An Inquiry into Well-Being and Destitution, Oxford: Clarendon Press.Google Scholar
Dasgupta, P. (1995a), ‘Population, poverty, and the local environment’, Scientific American 272(2): 26–31.CrossRefGoogle Scholar
Dasgupta, P. (1995b), ‘The population problem: theory and evidence’, Journal of Economic Literature 33(4): 1879–1902.Google Scholar
Dasgupta, P. (1996), ‘Poverty traps’, in Kreps, D. and Wallis, K., eds., Advances in Economic Theory, vol. 1: Seventh World Congress of the Econometric Society, Cambridge University Press.Google Scholar
Dasgupta, P. and Ehrlich, P.H. (1996), ‘Nature's housekeeping and human housekeeping’, Discussion Paper, Beijer International Institute of Ecological Economics, Stockholm.Google Scholar
Dasgupta, P. and Heal, G.M. (1979), Economic Theory and Exhaustible Resources, Cambridge University Press.Google Scholar
Dasgupta, P. and Mäler, K.-G. (1991), ‘The environment and emerging development issues’, Proceedings of the Annual World Bank Conference on Development Economics,1990 (Supplement to World Bank Economic Review and World Bank Research Observer).CrossRefGoogle Scholar
Dasgupta, P. and Mäler, K.-G. (1995), ‘Poverty, institutions, and the environmental resource-base’, in Behrman, J. and Srinivasan, T.N., eds., Handbook of Development Economics, vol. IIIA, Amsterdam: North Holland: 2373–2463.Google Scholar
Dasgupta, P., Marglin, S. and Sen, A. (1972), Guidelines for Project Evaluation, New York: United Nations.Google Scholar
Dasgupta, P., Kristrom, B. and Mäler, K.-G. (1996), ‘Net national product as a measure of social well-being’, Discussion Paper, Beijer International Institute of Ecological Economics, Stockholm.Google Scholar
Deacon, R.T. (1994), ‘Deforestation and the rule of law in a cross section of countries’, Land Economics 70(4): 414–430.CrossRefGoogle Scholar
Dixon, J.A. and Hufschmidt, M.M., eds. (1986), Economic Valuation Techniques for the Environment, Baltimore: Johns Hopkins University Press.Google Scholar
Dixon, J.A. et al. (1988), Economic Analysis of Environmental Impacts, London: Earthscan.Google Scholar
Ehrlich, P.R., Ehrlich, A.H. and Holdren, J.P. (1977), Eco-Science: Population, Resources, Environment, San Francisco, CA: W.H. Freeman.Google Scholar
Ehrlich, P.R., Ehrlich, A.H. and Daily, G. (1995), The Stork and the Plow: The Equity Answer to the Human Dilemma, New York: G.P. Putnam's Sons.Google Scholar
Ensminger, J. (1990), ‘Co-opting the elders: the political economy of state incorporation in Africa’, American Anthropologist 92(3): 662–675.CrossRefGoogle Scholar
Falconer, J. (1990), The Major Significance of ‘Minor’ Forest Products, Rome: FAO.Google Scholar
Falconer, J. and Arnold, J.E.M. (1989), Household Food Security and Forestry: An Analysis of Socio-Economic Issues, Rome: FAO.Google Scholar
Feder, E. (1977), ‘Agribusiness and the elimination of Latin America's rural proletariat’, World Development 5: 559–571.CrossRefGoogle Scholar
Feder, E. (1979), ‘Agricultural resources in underdeveloped countries: competition between man and animal’, Economic and Political Weekly 14 (30–32) (special number, August): 1345–1366.Google Scholar
Feeny, D. et al. (1990), ‘The tragedy of the commons: twenty-two years later’, Human Ecology 18(1): 1–19.CrossRefGoogle ScholarPubMed
Filmer, D. and Pritchett, L. (1996), ‘Environmental degradation and the demand for children’, Policy Research Working Paper 1623, Policy Resources Department, World Bank, Washington, DC.Google Scholar
French, H.F. (1994), ‘Making environmental treaties work’, Scientific American 271: 62–65.CrossRefGoogle Scholar
Fudenberg, D. and Tirole, J. (1991), Game Theory, Cambridge, MA: MIT Press.Google Scholar
Gadgil, M. and Malhotra, K.C. (1983), ‘Adaptive significance of the Indian caste system: an ecological perspective’, Annals of Human Biology 10(5): 453–463.CrossRefGoogle ScholarPubMed
Gadgil, M. and Guha, R. (1992), This Fissured Land: An Ecological History of India, Delhi: Oxford University Press.Google Scholar
Gordon, H.S. (1954), ‘The economic theory of common-property resources’, Journal of Political Economy 62:124–142.CrossRefGoogle Scholar
Goulder, L. (1995), ‘Environmental taxation and the double dividend: a reader's guide’, International Tax and Public Finance 2:157–183.CrossRefGoogle Scholar
Greif, A. (1993), ‘Contract enforceability and economic institutions in early trade: the Maghribi traders' coalition’, American Economic Review 83(3): 525–548.Google Scholar
Greif, A., Milgrom, P. and Weingast, B. (1994), ‘Coordination, commitment, and enforcement: the case of the Merchant Guild’, Journal of Political Economy 102(4): 745–776.CrossRefGoogle Scholar
Hardin, G. (1968), ‘The tragedy of the commons’, Science 162: 1243–1248.CrossRefGoogle ScholarPubMed
Hartwick, J. and Olewiler, N. (1986), The Economics of Natural Resource Use, New York: Harper & Row.Google Scholar
Heal, G.M. (1994), ‘Formation of international environmental agreements’, in Carraro, C., ed., Trade, Innovation, Environment, Dordrecht: Kluwer.Google Scholar
Heath, J. and Binswanger, H. (1996), ‘Natural resource degradation effects of poverty and population growth are largely policy-induced: the case of Colombia’, Environment and Development Economics 1(1): 65–84.CrossRefGoogle Scholar
Hecht, S. (1985), ‘Environment, development and politics: capital accumulation and the livestock sector in eastern Amazonia’, World Development 13(6): 663–684.CrossRefGoogle Scholar
Hecht, S., Anderson, A.B. and May, P. (1988), ‘The subsidy from Nature: shifting cultivation, successional palm forests and rural development’, Human Organization 47(1): 25–35.CrossRefGoogle Scholar
Henry, C. (1974), ‘Investment decisions under uncertainty: the irreversibiliry effect’, American Economic Review 64:1006–1042.Google Scholar
Hodgson, G. and Dixon, J. (1992), ‘Sedimentation damage to marine resources: environmental and economic analysis’, in Marsh, J.B., ed., Resources and Environment in Asia's Marine Sector, London: Taylor & Francis.Google Scholar
Hoel, M. (1992), ‘International environmental conventions: the case of uniform reductions of emissions’, Environmental and Resource Economics 2:141–159.CrossRefGoogle Scholar
Howe, J. (1986), The Kuna Gathering, Austin, TX: University of Texas Press.Google Scholar
Humphries, J. (1990), ‘Enclosures, common rights, and women: the proletarianization of families in the late eighteenth and early nineteenth centuries’, Journal of Economic History 50(1): 17–42.CrossRefGoogle Scholar
Jodha, N.S. (1980), ‘The process of desertification and the choice of interventions’, Economic and Political Weekly 15(32): 1351–1356.Google Scholar
Jodha, N.S. (1986), ‘Common property resources and the rural poor‘, Economic and Political Weekly 21:1169–1181.Google Scholar
Jodha, N.S. (1995), ‘Common property resources and the environmental context: role of biophysical versus social stress’, Economic and Political Weekly 30: 3278–3283.Google Scholar
Koch, E. (1996), ‘A watershed for apartheid’, New Scientist 2025 (12 April).Google Scholar
Koopmans, T.C. (1957), ‘The price system and the allocation of resources’, in Three Essays on the State of Economic Science, New York: McGraw-Hill.Google Scholar
Kriström, B. and Riera, P. (1996), ‘Is the income elasticity of environmental improvements less than one?’, Environmental and Resource Economics 7: 45–55.CrossRefGoogle Scholar
Lindahl, E.R. (1958), ‘Some controversial questions in the theory of taxation’, in Musgrave, R.A. and Peacock, A.T., eds., Classics in the Theory of Public Finance, London: Macmillan. Originally published in Swedish, in 1928.Google Scholar
Little, I.M.D. and Mirrlees, J.A. (1974), Project Appraisal and Planning for Developing Countries, London: Heinemann.Google Scholar
Low, P., ed. (1992), International Trade and the Environment, World Bank Discussion Paper 159, Washington, DC: World Bank.Google Scholar
Lutz, E., ed. (1993), Toward Improved Accounting for the Environment, Washington, DC: World Bank.CrossRefGoogle Scholar
Magrath, W. and Arens, P. (1989), ‘The costs of soil erosion in Java: a natural resource accounting approach’, World Bank Environmental Department Working Paper No. 18, World Bank, Washington, DC.Google Scholar
Mäler, K.-G. (1974), Environmental Economics: A Theoretical Enquiry, Baltimore: Johns Hopkins University Press.Google Scholar
Mäler, K.-G. (1990), ‘International Environmental Problems’, Oxford Review of Economic Policy 6(1): 80–108.CrossRefGoogle Scholar
Mäler, K.-G. (1991), ‘National accounting and environmental resources’, Environmental and Resource Economics 1(10): 1–15.CrossRefGoogle Scholar
Mäler, K.-G. and Uzawa, H. (1995), ‘Tradeable emission permits and the stability of Lindahl equilibrium’, Discussion Paper, JDB Research Center on Global Warming, Japan Development Bank, Tokyo.Google Scholar
Mäler, K.-G. et al. (1992), ‘The Baltic Drainage-Basin Programme’, mimeo, Beijer International Institute of Ecological Economics, Stockholm.Google Scholar
May, R.M. (1972), ‘Will a large complex system be stable?’, Nature 238: 413–414.CrossRefGoogle Scholar
May, R.M. and MacArthur, R.H. (1972), ‘Niche overlap as a function of environmental variability’, Proceedings of the National Academy of Sciences of the US 69.CrossRefGoogle ScholarPubMed
Meade, J.E. (1973), The Theory of Externalities, Geneva: Institut Universitaire de Hautes Etudes Internationales.Google Scholar
Milgrom, P., North, D. and Weingast, B. (1990), ‘The role of institutions in the revival of trade: the law merchant, private judges, and the Champagne fairs’, Economics and Politics 2: 1–23.CrossRefGoogle Scholar
Mitchell, R.C. and Carson, R.T. (1989), Using Surveys to Value Public Goods: The Contingent Valuation Method, Washington, DC: Resources for the Future.Google Scholar
Murphy, Y. and Murphy, R. (1985), Women of the Forest, New York: Columbia University Press.Google Scholar
Nash, J. (1950), ‘The bargaining problem’, Econometrica 18: 155–162.CrossRefGoogle Scholar
Newcombe, K. (1987), ‘An economic justification of rural afforestation: the case of Ethiopia’, Annals of Regional Science 21(3): 80–99.CrossRefGoogle Scholar
Nordhaus, W.D. (1994), Managing the Global Commons: The Economics of Climate Change, Cambridge, MA: MIT Press.Google Scholar
Nordhaus, W.D. and Tobin, J. (1972), ‘Is economic growth obsolete?’, in National Bureau of Economic Research, Economic Growth, 5th Anniversary Colloquium of the NBER, New York: Columbia University Press.Google Scholar
Ornstein, and Ehrlich, (1989), New World New Mind, New York: Doubleday.Google Scholar
Ostrom, E. (1990), Governing the Commons: The Evolution of Institutions for Collective Action, Cambridge University Press.CrossRefGoogle Scholar
Ostrom, E. (1996), ‘Incentives, rules of the game, and development’, Proceedings of the Annual World Bank Conference on Development Economics,1995 (Supplement to World Bank Economic Review and World Bank Research Observer).Google Scholar
Perrings, C. et al. (1994), Biodiversity Loss: Ecological and Economic Perspectives, Cambridge University Press.Google Scholar
Pigou, A.C. (1920), The Economics of Welfare, London: Macmillan.Google Scholar
Putnam, R.D., with Leonardi, R. and Nanetti, R.Y. (1993), Making Democracy Work: Civic Traditions in Modern Italy, Princeton University Press.Google Scholar
Radner, R. (1981), ‘Monitoring cooperative agreements in a repeated principle–agent relationship’, Econometrica 49(5): 1127–1148.CrossRefGoogle Scholar
Reardon, T. and Vosti, S.A. (1995), ‘Links between rural poverty and the environment in developing countries: asset categories and investment poverty’, World Development 23(9): 1495–1506.CrossRefGoogle Scholar
Repetto, R. (1988), ‘Economic policy reform for natural resource conservation’, World Bank Environment Department Working Paper No. 4, World Bank, Washington, DC.Google Scholar
Repetto, R. et al. (1989), Wasting Assets: Natural Resources and the National Income Accounts, Washington, DC: World Resources Institute.Google Scholar
Romer, D. (1996), Advanced Macroeconomics, New York: McGraw-Hill.Google Scholar
Sabourian, H. (1988), ‘Repeated games: a survey’, in Hahn, F.H., ed., The Economic Theory of Missing Markets, Information, and Games, Oxford: Basil Blackwell.Google Scholar
Safina, C. (1995), ‘The world's imperiled fish’, Scientific American 273(5): 46–53.CrossRefGoogle Scholar
Seabright, P. (1993), ‘Managing local commons: theoretical issues in incentive design’, Journal of Economic Perspectives 7(4): 113–134.CrossRefGoogle Scholar
Schneider, R.R. (1995), ‘Government and the economy on the Amazon frontier’, World Bank Environmental Paper No. 11, World Bank, Washington, DC.CrossRefGoogle Scholar
Sefton, J. and Weale, M. (1996), ‘The net national product and exhaustible resources: the effects of foreign trade’, Journal of Public Economics 61: 21–48.CrossRefGoogle Scholar
Sethi, R. and Somanathan, E. (1996), ‘The evolution of social norms in common property resource use’, American Economic Review 86(4): 766–788.Google Scholar
Solorzano, R. et al. (1991), Accounts Overdue: Natural Resource Depreciation in Costa Rica, Washington, DC: World Resources Institute.Google Scholar
Spence, A.M. (1974), ‘Blue whales and optimal control theory’, in Göttinger, H., ed., Systems Approaches and Environmental Problems, Göttingen: Vandenhoek and Ruprecht.Google Scholar
Starrett, D.A. (1972), ‘Fundamental non-convexities in the theory of externalities’, Journal of Economic Theory 4:180–199.CrossRefGoogle Scholar
Stevenson, G.G. (1991), Common Property Resources: A General Theory and Land Use Applications, Cambridge University Press.CrossRefGoogle Scholar
Swanson, T.M. (1994), The International Regulation of Extinction, London: Macmillan.CrossRefGoogle Scholar
Tietenberg, T. (1988), Environmental and Natural Resource Economics, 2nd edn, Glenview, IL: Scott, Forsman.Google Scholar
United Nations Development Programme (UNDP) (1993), Human Development Report, 1993, New York: Oxford University Press.Google Scholar
Vincent, J. (1996), ‘Resource depletion and economic sustainability in Malaysia’, mimeo, Harvard Institute for International Development, Harvard University, Cambridge, MA.Google Scholar
Vitousek, P. et al. (1986), ‘Human appropriation of the product of photosynthesis’, BioScience 36(6): 368–373.CrossRefGoogle Scholar
Wade, R. (1988), Village Republics: Economic Conditions for Collective Action in South India, Cambridge University Press.Google Scholar
Walker, B.H. (1993), ‘Rangeland ecology: understanding and managing change’, Ambio 22: 80–87.Google Scholar
Weitzman, M.L. (1974a), ‘Free access vs. private ownership as alternative systems for managing common property’, Journal of Economic Theory 8(2): 225–234.CrossRefGoogle Scholar
Weitzman, M.L. (1974b), ‘Taxes vs. quantities’, Review of Economic Studies 41: 477–491.CrossRefGoogle Scholar
World Bank (1992), World Development Report, New York: Oxford University Press.Google Scholar
World Resources Institute (1994), World Resources 1994–1995, New York: Oxford University Press.Google Scholar
Young, H.P. (1994), Equity: in Theory and Practice, Princeton University Press.Google Scholar