Preface

This book is a response to two concerns. First, the list of serious environmental and natural resource problems in need of attention grows longer by the day. Second, there is a widely held perception that economics is to environmentalism what Spam is to French cuisine: it's either completely irrelevant or it's in some sense antagonistic.

The first concern is hard to argue with. Not only have economic expansion and population growth taken a toll on our air, water, forests, oceans, and atmosphere, but broad systemic changes and harmful pollutants that are finding their way into the food chain may jeopardize the health and sustainability of individual species and whole ecosystems. In addition, growing demands on dwindling supplies of resources such as water, arable land, and forest products have raised tensions and sparked violent conflicts in many parts of the world.

The second concern is also unmistakable based on remarks I hear from students, activists, academics, policymakers, and the general public. Frequently, when introducing myself as an economist who works on environmental issues, I am greeted with a slight tilt of the head and a furrowing of the brow, as if to say: What possibly could economics have to do with environmental problems?! Aren't economists interested only in money? This kind of reaction is not limited to casual encounters with the general public, but also in discussions with university professors and in one case a member of Congress.

For those skeptics who see economics as irrelevant, or even antagonistic, to environmental progress, and whether they regard the label "tree hugger" as derogatory or complimentary, I have one message: economics is power! There is no getting around the fact that economic arguments can carry a lot of weight and be very influential in policymaking. So if you want to xii

Preface make a strong case for solving an environmental problem, and if there is an economic case supporting your views, then economics can be a powerful ally to your cause. The reverse is also true and equally important. If opponents of environmental protection use economic arguments, those arguments can also be very influential. But if those arguments are flawed, misinterpreted, or overstated, then being able to expose the shortcomings of those arguments is equally valuable. Yes, economics is power, but power can make mischief just as it can promote positive social change.

So why does economics have such a bad reputation? One problem, clearly, is the perception that "economics" is only about the stock market, consumer spending, interest rates, and the gross domestic product. Since environmental quality and species diversity are not "market commodities," many people believe that, at best, economics has nothing to say about them or, at worst, economics judges them to be worthless. Such criticisms of economics were at least partially true fifty years ago (when environmental concerns were not on many people's radar screens the way they are today). And those criticisms probably do reflect the views of some individual economists today (just as some geologists see beautiful landscapes only in terms of their potential for drilling and digging). But when we distinguish the practice (the social science of economics) from the practitioner (an individual economist), the former can be said to be largely neutral (some qualifications to this will come later).

True, many environmental topics involve nonmarket issues, like scenic vistas, but that does not make them noneconomic issues. Just because a beautiful view doesn't have a price doesn't mean it doesn't involve trade-offs and incentives for keeping or destroying it. Indeed, economics is actually a very broadly based social science that can be used, and has been used, to examine and understand things such as the conduct of families, the structure of organized religions, the ways we use time, the importance of cooperation, the role of "status seeking" in society, the decision to have a child, and many more topics not directly involving markets and money. In the realm of environmental resources, "environmental economics" and "natural resource economics" have become large, well-established, and important fields of economics, involving many active researchers and university professors, with professional associations, academic journals, and hundreds of peer-reviewed journal articles and dozens of books published every year.

Since economists began to pay attention to environmental issues in the 1950s and 1960s, the field of environmental economics has grown dramatically and has contributed to a better understanding of the causes of environmental problems, the strengths and drawbacks of alternative ways to address environmental problems, and the ways to measure and compare the value people place on specific environmental resources. Some of the important progress that has been made in recent years on many environmental issues has come about because of, not in spite of, the insights and powerful analytical tools developed by economists.

For example, many environmentalists are familiar with the idea of the "tragedy of the commons" popularized by Garrett Hardin in 1968, but few are aware that the central idea of that work was first pointed out by an economist, Scott Gordon, in 1956. Environmentalists are also familiar with the idea of sus-tainability, but few are aware that the essential idea was contained in the economist Sir John Hicks's definition of income in 1939. And more recently, John Nash, in work that won him the Nobel Prize in Economics in 1994, explained how cooperation can help solve problems of the tragedy of the commons.

Economists have also made important contributions to the design of creative policy tools for environmental problems, and for understanding why different policies can be expected to achieve different outcomes. Although economists are well known for favoring market-based instruments such as pollution charges and tradable pollution rights, they have also contributed to our understanding of the advantages of and opportunities for approaches such as deposit-refund systems, transferable development rights, habitat conservation plans, clean technology subsidies, and many more.

Still, some skeptics simply do not see a role for economics. They see a role for biology, ecology, and atmospheric chemistry because those fields study the physical systems where the symptoms of environmental problems appear. These fields do not, however, help us understand the ultimate cause of these problems: people. Indeed, just to define or identify what constitutes an environmental "problem" is to ask a social question, one requiring a judgment about the magnitude of harm, or loss, or the severity of consequence in human terms, based on people's values.

Environmental economics recognizes that the social system and the natural system are interconnected parts of the whole. Each part has its own forces and processes, actions and reactions, and linkages and feedbacks. The socioeconomic system involves incentives and disincentives, opportunities and constraints, laws and markets, political jurisdictions, wants and needs, ethics and morals. To understand the workings of the whole system, we need to understand enough about both subsystems to predict cause and effect, action and response. In some cases this may be as straightforward as recognizing that dumping waste in a river will kill fish; in other cases the interactions are more complex, as in a chess game, where a given move can set in motion a string of actions and reactions quite different from the sequence of events for a different path.

Wishful thinking won't solve these problems and, let's face it, the economy is not going to go away. People have wants and needs, and they respond to incentives, prices, and profit motives. People tend to want more for less, to avoid costs, and yes, to get away with things (like polluting or not paying their fair share). If there is a case to be made for trying to actually change people's values and preferences, this book makes no attempt to do so. In general, economists take people's preferences as is: Some people like SUVs, others tofu. Some want to backpack in a wilderness, others want to shop or watch NASCAR. But don't shoot the messenger! Economics should not be blamed for the preferences people have; human nature seems to be the culprit—perhaps with the help of history, advertising, corporate greed, and political influences.

Given all that, the goal of this book is not only to show just how valuable and important economic analysis can be for understanding the causes of environmental problems, but also to provide the reader with the tools necessary to see ways, perhaps really creative ways, to go about solving these problems. Another goal of this book—since many people are just plain scared of economics—is to be accessible and nonthreatening to readers. The theory, graphs, and equations used are kept as simple as possible, but at the same time they provide all the basic tools for understanding the ideas and insights that economics has to offer.

This book is also more of a "primer" than an exhaustive six-hundred-page textbook trying to cover all of economics and all environmental issues. It can be used most successfully when combined with case studies or supplemental readings in economics or from other fields. And it is also meant to serve as a handy reference for professionals in government, nongovernmental organizations, and the private sector. Finally, although no prior economics training is needed, the coverage of microeconomics principles is fairly brief, and the text does not include extra exercises and problem sets. Readers who have had prior exposure to introductory microeconomics should have no trouble with the theory covered and may find it to be a welcome refresher. For readers with no prior exposure to economics, who would like some additional reinforcement of these concepts, suggestions on further readings are found at the end of each chapter.

One last point: economists sometimes distinguish between "environmental economics" and "natural resource economics." The former topic focuses on nonmarket goods such as clean air and biodiversity; the latter topic focuses on marketable commodities such as fossil fuels, timber, water, and fish. But there is so much overlap between environmental issues and natural resource issues that keeping them separate is often difficult and awkward. For example, examining the economics of timber production without simultaneously looking at forest habitats, watersheds, wildlife, and recreation would be silly. With few exceptions natural resources are also environmental resources, and this book addresses both.

Project Management Made Easy

Project Management Made Easy

What you need to know about… Project Management Made Easy! Project management consists of more than just a large building project and can encompass small projects as well. No matter what the size of your project, you need to have some sort of project management. How you manage your project has everything to do with its outcome.

Get My Free Ebook


Post a comment