Production, Growth, and the Environment: An Economic Approach, 1st Edition (Paperback) book cover

Production, Growth, and the Environment

An Economic Approach, 1st Edition

By William L. Weber

CRC Press

360 pages | 89 B/W Illus.

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Written in a way that facilitates understanding of complex concepts, laws, and policy, Production, Growth, and the Environment: An Economic Approach explores how economic growth usually makes people better off, but also asks at what environmental cost? These costs are not often realized until after the fact, when their remediation is more expensive, and sometimes not reversible. Very few books on environmental economics model the joint production of desirable and undesirable outcomes in any depth. This book fills that void. It discusses the demographic transition and the escape from the Malthusian trap. It also covers the environmental Kuznets curve hypothesis that examines the relation between polluting outputs and economic welfare.

The book integrates environmental valuation methods with the production possibility frontier (PPF) approach. It presents both types of outcomes in a PPF framework that accounts for scarcity and allows the concepts of technical and allocative efficiencies to be introduced and measured. The PPF can then measure technological progress/regress and can be used to measure whether resource use is sustainable over time. It can also be used to determine shadow prices for non-market desirable outputs such as ecological services and non-market undesirable by-products such as SO2, NOx, and CO2 that arise from fossil fuel combustion.

The beauty of the PPF framework is that it can be depicted in simple two-dimensional diagrams that make the concepts easy to understand. The author uses this framework to introduce concepts such as technical efficiency, allocative efficiency, technological progress/regress, shadow pricing, externalities, public goods, pollution taxes, and permits. In addition, each chapter has numerous problems and discussion questions that provide examples and practice in using the introduced theories. The book also includes a chapter that shows how the solver routine in Excel can be used to measure technical and allocative efficiency. This gives you the tools to examine all outcomes and therefore make a decision that takes into account the environmental challenges along with any economic benefits.


"I strongly recommend Production, Growth, and the Environment: An Economic Approach as a useful textbook for professors who teach the courses such as environmental economics and ecological economics. This textbook introduces a production possibility frontier framework, which accounts for undesirable (bad) outputs as joint by-products of desirable (good) outputs. This framework allows one to gauge technical efficiency, allocative efficiency, technological change, and shadow prices of bad outputs. Students can learn how the measures of technical and allocative efficiency can be calculated by using the solver routine in EXCEL. Furthermore, numerous examples and questions help students learn how to apply the theory to environmental and ecological issues and problems. Therefore, this is an excellent textbook for junior/senior college students and graduate students who would like to learn environmental economics and environmental science."

—Hirofumi Fukuyama, Faculty of Commerce, Fukuoka University, Japan

"The topics covered in Production, Growth, and the Environment: An Economic Approach reflect Professor Weber’s expertise and interests in public economics, production theory, performance in general and especially in the presence of externalities and always as a highly skilled applied economist. This volume is distinguished from the many textbooks in environmental economics by explicitly including state of the art frontier methods of performance measurement when production results in undesirable byproducts—an area in which he has published extensively. This book makes this new material accessible—including real world data and easy to use spreadsheet code and problems, which should prove useful for instructor and students alike."

—Shawna Grosskopf, Professor Emerita, Oregon State University, Corvallis, USA

"This book manages to ground a series of timely and compelling environmental problems in rigorous economic theory, in a way that is fresh and engaging. It also provides a much needed production-oriented perspective. This would be an ideal text to use in an advanced undergraduate or master’s level course. The numerous well-developed numerical examples and exercise problems also make this an excellent teaching resource."

—Moriah Bostian, Lewis & Clark College

Table of Contents


Economic Growth and the Environment

Brief History of Environmental Economics

Tragedy of the Commons

Scarcity and the Laws of Thermodynamics

Circular Flow of Income and Spending

Evaluating Environmental Policy

Efficiency, Equity, Growth, Stability, and Flexibility

"Law" of Unintended Consequences

Limits to the Economic Approach

Questions to Ponder

Review of Microeconomic Tools

Markets and Prices

Utility Theory



Trade Creates Value

Technical Note on Consumer’s Surplus

Changes in Demand and Supply

Returns to Scale

Equal Marginal Cost Principle

Pareto Efficiency and Equity


Indicators of Environmental and Economic Well-Being

Policies and Instruments


Life Expectancy

Grain Yields

Solid Waste

Oil Spills and Water Quality

Air Pollution

Carbon and Chlorofluorocarbon Emissions

Questions to Ponder

Economic Growth and the Environment

Malthusian Trap

Escape from the Malthusian Equilibrium

Demographic Transition

Stages of Economic Development

Environmental Kuznets Curve Hypothesis

Dynamic EKC Models

Environmental Justice

Race to the Bottom?


Joint Production of Desirable and Undesirable Outputs

Production Possibilities with Two Desirable Outputs

Production with Desirable and Undesirable Outputs


View of the Two Koreas at Night

Technical Efficiency

Technical Efficiency with Two Desirable Outputs

Technical Efficiency with Desirable and Undesirable Outputs

Allocative Efficiency

Two Desirable Outputs

Allocative Efficiency with a Desirable and Undesirable Output

Input Allocative Efficiency

Productivity Change

Productivity Change with Desirable Outputs

Productivity Change with Desirable and Undesirable Outputs

Aggregate Production Possibilities Frontier

Regulated Production Possibilities



Estimating Environmental Performance

Data Envelopment Analysis

DEA Reference Technology

DEA with Desirable Outputs and Inputs

DEA with Undesirable Outputs

Measuring Efficiency Using DEA

Output Distance Function

Technical Efficiency with Undesirable Outputs

Using Excel to Estimate Technical Efficiency

Revenue Efficiency

Limits of the DEA Approach


Public Goods and Bads

Characteristics of Public Goods and Bads

Efficiency Conditions for Public Goods and Bads

Political Process and Lindahl Equilibrium

Fiscal Federalism

Dominant Assurance Contracts

Climate as a Public Good

Questions and Problems

Externalities and Common Property Resources

Is the Price Right?

Trade with Spillover Costs and Benefits

Efficiency in the Presence of Externalities

Common Property Resources

Internalizing Externalities through Taxes and Subsidies

Using Property Rights to Internalize External Costs and Benefits

Uncertainty and the Choice between Taxes and Permits

Negotiation and Bargaining

Social Contract

Pigouvian Tax to Reduce Global Warming

Regional Differences in the Damages of Pollution


Valuing Environmental Resources


Travel Cost Approach

Hedonic Price Approach

Compensating Wage Differentials and Hedonic Wages

Weak Complementarity Approach

Contingent Valuation Method

Shadow Pricing

Valuing Nonmarket Outputs

Valuing Un-priced Inputs


Endangered Species


Unintended Consequences of the ESA

Economics and Endangered Species

Noah’s Ark Problem

Habitat Protection


Choosing Distinctive Sites

Problems and Questions to Ponder

Interest Rates, Cost–Benefit Analysis, and Nonrenewable Resources

Rate of Time Preference

Time Value of Money

Social Rate of Discount

Do Biofuels Pass the Cost–Benefit Test?

Hyperbolic Discounting

Resource Extraction

Trends in Nonrenewable Resource Prices


Renewable Resources

Not Enough Fish in the Sea

Bioeconomic Fishery Model

Biological Growth Functions

Static Bioeconomic Equilibrium

Aspects of Dynamic Bioeconomic Equilibrium

Policies to Reduce Overfishing

Two Examples of Overexploitation: Whales and Buffalo



Forest Resources


Transaction Costs and Institutional Choice


Transaction Costs

Transaction Costs of Using the Market

Transaction Costs of Using Government

Private Market Failure

Nonmarket Failure

Private Property Rights

Water Rights

Institutional Choice

Summing Up


Retrospect and Future Prospects


Future Prospects



Answers to Selected End of Chapter Questions

Subject Categories

BISAC Subject Codes/Headings:
LAW / Environmental
NATURE / Environmental Conservation & Protection
SCIENCE / Life Sciences / Ecology
TECHNOLOGY & ENGINEERING / Environmental / General