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1 Environmental and Natural Resource Economics A Contemporary Approach Third Edition Jonathan M. Harris and Brian Roach cm.e.sharpe Armonk, New York London, England

2 Contents Note to the Reader Key Terms are bolded in the text, with a sidebar definition. All Key Terms in a chapter are listed at the end of the chapter, and the definitions are collected in the Glossary, noting the chapters in which they appear. PREFACE TO THE THIRD EDITION ix PART I. INTRODUCTION: THE ECONOMY AND THE ENVIRONMENT 1 1. CHANGING PERSPECTIVES ON THE ENVIRONMENT Economics and the Environment A Framework for Environmental Analysis Environmental Microeconomics and Macroeconomics A Look Ahead RESOURCES, ENVIRONMENT, AND ECONOMIC DEVELOPMENT A Brief History of Economic Growth and the Environment A Summary of Recent Growth The Future of Economic Growth and the Environment Sustainable Development 26 PART II. ECONOMIC ANALYSIS OF ENVIRONMENTAL ISSUES THE THEORY OF ENVIRONMENTAL EXTERNALITIES The Theory of Externalities Welfare Analysis of Externalities Property Rights and the Environment 46 Appendix 3.1: Supply, Demand, and Welfare Analysis 57 Appendix 3.2: Externality Analysis: Advanced Material 66

3 4. COMMON PROPERTY RESOURCES AND PUBLIC GOODS Common Property, Open Access, and Property Rights 4.2 The Environment as a Public Good g 4.3 The Global Commons 5. RESOURCE ALLOCATION OVER TIME ^3 5.1 Allocation of Nonrenewable Resources 5.2 Hotelling's Rule and Time Discounting 1 "i 6. VALUING THE ENVIRONMENT 1 J{' 6.1 Total Economic Value 6.2 Overview of Valuation Techniques J J j: 6.3 Revealed Preference Methods ^ 6.4 Stated Preference Methods 6.5 Cost-Benefit Analysis ^ ^ 6.6 Conclusion: The Role of Cost-Benefit Analysis in Policy Decisions 134 Appendix 6.1: Advanced Material on Valuation Methods 143 Appendix 6.2: Using Excel to Perform Present Value Calculations 146 PART III. ECOLOGICAL ECONOMICS AND ENVIRONMENTAL ACCOUNTING ECOLOGICAL ECONOMICS: BASIC CONCEPTS An Ecological Perspective Natural Capital Issues of Macroeconomic Scale Long-Term Sustainability Energy and Entropy NATIONAL INCOME AND ENVIRONMENTAL ACCOUNTING Greening the National Income Accounts Environmentally Adjusted Net Domestic Product Adjusted Net Saving The Genuine Progress Indicator The Better Life Index Environmental Asset Accounts The Future of Alternative Indicators 192 Appendix 8.1: Basic National Income Accounting 198 PART IV. POPULATION, AGRICULTURE, AND THE ENVIRONMENT POPULATION AND THE ENVIRONMENT 9.1 The Dynamics of Population Growth 9.2 Predicting Future Population Growth 9.3 The Theory of Demographic Transition 9.4 Population Growth and Economic Growth 9.5 Ecological Perspectives on Population Growth Population Policies for the Twenty-First Century

4 10. AGRICULTURE, FOOD, AND ENVIRONMENT Feeding the World: Population and Food Supply Trends in Global Food Production Projections for the Future Agriculture's Impact on the Environment Sustainable Agriculture for the Future 251 PART V. ENERGY AND RESOURCES NONRENEWABLE RESOURCES: SCARCITY AND ABUNDANCE The Supply of Nonrenewable Resources Economic Theory of Nonrenewable Resource Use Global Scarcity or Increasing Abundance? Environmental Impacts of Mining The Potential for Recycling ENERGY: THE GREAT TRANSITION Energy and Economic Systems Evaluation of Energy Sources Energy Trends and Projections Energy Supplies: Fossil Fuels The Economics of Alternative Energy Futures Policies for the Great Energy Transition RENEWABLE RESOURCE USE: FISHERIES Principles of Renewable Resource Management Ecological and Economic Analysis of Fisheries The Economics of Fisheries in Practice Policies for Sustainable Fisheries Management ECOSYSTEM MANAGEMENT- FORESTS The Economics of Forest Management Forest Loss and Biodiversity Politics for Sustainable Forest Management Conclusion: Reconciling Economic and Ecological Principles WATER ECONOMICS AND POLICY Global Supply and Demand for Water Addressing Water Shortages Water Pricing Water Markets and Privatization 365 PART VI. POLLUTION: IMPACTS AND POLICY RESPONSES POLLUTION: ANALYSIS AND POLICY The Economics of Pollution Control Policies for Pollution Control 380 vii

5 16.3 The Scale of Pollution Impacts Assessing Pollution Control Policies Pollution Control Policies in Practice GREENING THE ECONOMY The Green Economy: Introduction The Relationship between Economy and Environment Industrial Ecology Does Protecting the Environment Harm the Economy? Creating a Green Economy GLOBAL CLIMATE CHANGE Causes and Consequences of Climate Change Responses to Climate Change Economic Analysis of Climate Change GLOBAL CLIMATE CHANGE: POLICY RESPONSES Adaptation and Mitigation Climate Change Mitigation: Economic Policy Options Climate Change: The Technical Challenge Climate Change Policy in Practice Economic Policy Proposals Conclusion 483 PART VII. ENVIRONMENT, TRADE, AND DEVELOPMENT WORLD TRADE AND THE ENVIRONMENT Environmental Impacts of Trade Trade and Environment: Policy and Practice Trade Agreements and the Environment Strategies for Sustainable Trade INSTITUTIONS AND POLICIES FOR SUSTAINABLE DEVELOPMENT The Concept of Sustainable Development The Economics of Sustainable Development Reforming Global Institutions New Goals and New Production Methods 520 GLOSSARY 531 INDEX 553 ABOUT THE AUTHORS 569 viii

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