1st Edition

Economic Theory for Environmentalists

By John Gowdy, Sabine O'Hara Copyright 1995

    Economic Theory for Environmentalists is a much-needed and heralded new book that examines the implications of neoclassical economic theory and how it relates to the environment and environmental activity. It addresses the ongoing conflict between market forces and environmental integrity and explains how neoclassical economic theory views the relationship between economic activity and the natural world. Each chapter outlines the concepts of economic theory and the relevance of its environmental and policy implications. It focuses on both micro and macro-economics. Policy tools such as price and income elasticities, consumer surplus and methods for measuring the economic value of environmental resources are discussed. A case study which examines a range of policy options is presented. Examples are also given throughout the text to illustrate regional and international policy questions. Presented in a simple and easy to understand manner, this valuable book is suited for anyone dealing with environmental, economic, or policy issues.

    Introduction Markets and Models: The Circular Flow of Economic Activity Economic Efficiency and Pareto Optimality The Context of Market Exchange Economics and the Biophysical World What This Book Does and Does Not Do Suggestions for Further Reading The Theory of the Consumer Introduction The Indifference Curve The Edgeworth Box Diagram Pareto Optimality in Exchange Consumer Theory and the Biophysical World Models and Reality Summary Suggestions for Further Reading The Theory of the Firm Introduction The Isoquant The Edgeworth Box Diagram for Production The Production Possibilities Frontier Production Theory and the Biophysical World Summary Appendix-A Digression on Functional Form Suggestions for Further Reading General Equilibrium and Welfare Economics Introduction General Equilibrium in Exchange The Social Welfare Function General Equilibrium Theory and the Biophysical World Social Welfare and Ethics Beyond Human Welfare Summary Suggestions for Further Reading Introducing Prices: Pareto Optimality & Perfect Competition Introduction Prices in Consumption: The Budget Constraint The Demand Curve Prices in Production: The Cost Constraint The Supply Curve The Model of Perfect Competition Efficiency in Resource Use: Long-Run Competitive Equilibrium Perfect Competition and Pareto Optimality Prices and the Biophysical World Summary Suggestions for Further Reading Market Failure: When Prices Are Wrong Introduction Imperfect Market Structures Public Goods Externalities Solutions to the Externality Problem-Coase Versus Pigou Elasticities-Measuring Policy Effectiveness Consumer Surplus-Who Pays for Intervention? Intervention Failure Existence Failure Summary Suggestions for Further Reading From Supply and Demand to Social and Ecological Context Introduction Before the Classical Economists The Classical Economists The Marginalist Revolution and the Mathematical Foundations of Neoclassical Economics The Battle Lines Are Drawn: John Maynard Keynes and the General Theory The Neoclassical Synthesis Revolution and Counterrevolution: The End of Consensus New Directions in Economic Theory and Policy: Ecological Economics Summary Notes Suggestions for Further Reading The Challenge of Pollution Control: Groundwater Pollution Introduction Determining the Source of Pollution The Efficiency Standard Market Prices Versus Shadow Prices Determining the Pollution Optimum The "Second Best" Approach The Policy Question-How Do We Enforce Pollution Standards? Safe Minimum Standard Options Summary Suggested Readings New Directions for Economics, the Economy, and the Environment Taking Stock of Where We Are Economic Decision-Making and the Biophysical World Economic Decision-Making and Human Culture Decision Under Uncertainty Where Do We Go From Here? Suggested Reading Index


    John M. Gowdy, Rittenhouse Professor of Humanities and Social Science, Department of Economics, Rensselaer Polytechnic Institute, US