ENVIRONMENTAL AND NATURAL RESOURCE

ECONOMICS

FIFTH EDITION

Tom Tietenberg Colby College

\

^ADDISON-WESLEY

An imprint of Addison Wesley Longman, Inc.

Reading, Massachusetts • Menlo Park, California • New York • Harlow, England Don Mills, Ontario • Sydney • Mexico City • Madrid • Amsterdam

CONTENTS

PREFACE XXI

CHAPTER ONE VISIONS OF THE FUTURE 1 INTRODUCTION 1

The Self-Extinction Premise 1 The Use of Models 3 Thinking about the Future 3

Example hi The Dangers of Prognostication 4

THE BASIC PESSIMIST MODEL 4 Conclusions of Pessimist Model 5 The Nature of the Model 6

THE BASIC OPTIMIST MODEL 8 Conclusions of the Optimist Model 8 The Nature of the Model 8

THE ROAD AHEAD 10 The Issues 10 An Overview of the Book 11

SUMMARY 13 Further Reading 14 Additional Readings 14 Discussion Questions 15

CHAPTER TWO VALUING THE ENVIRONMENT: CONCEPTS 16

INTRODUCTION 16

THE HUMAN ENVIRONMENT RELATIONSHIP 17 The Environment as an Asset 17 The Economic Approach 19

NORMATIVE CRITERIA FOR DECISION-MAKING 19 Evaluating Predefined Options 19 Example 2.1 Nature Knows Best 21

FINDING THE OPTIMAL OUTCOME 26 Static Efficiency 27 Dynamic Efficiency 28

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APPLYING THE CONCEPTS 28 Pollution Control 28 Example 2.2 Does Reducing Pollution Make Economic Sense? 29 Preservation versus Development 30

SUMMARY 30 Example 2.3 Choosing Between Preservation and Development

in Australia 31 Further Reading 32 Additional References 32 Discussion Question 32 Problem 32

APPENDIX 33 The Simple Mathematics of Dynamic Efficiency 33

CHAPTER THREE VALUING THE ENVIRONMENT: METHODS 34

INTRODUCTION 34

VALUING BENEFITS 35 Types of Values 37 Example 3.7 Valuing the Northern Spotted Owl 38 Classifying Valuation Methods 38 Valuing Human Life 42 Example 3.2 Valuing Damage From Groundwater Contamination

Using Averting Expenditures 43 Example 3.3 Valuing Diesel Odor Reduction by Contingent

Ranking 44 Issues in Benefit Estimation 44

Primary versus Secondary Effects 44 Example 3.4 The Value of Wildlife Viewing 45

Tangible versus Intangible Benefits 47 Approaches to Cost Estimation 47

The Survey Approach 48 The Engineering Approach 48 The Combined Approach 48

The Treatment of Risk 48 Choosing the Discount Rate 51 A Critical Appraisal 51 Example 3.5 The Importance of the Discount Rate 52

COST-EFFECTIVENESS ANALYSIS 54

IMPACT ANALYSIS 55 Example 3.6 N02 Control in Chicago: An Example of Cost-

Effectiveness Analysis 56

SUMMARY 57 Further Reading 58 '

Contents V

Additional References 59 Discussion Questions 60 Problems 60

CHAPTER FOUR PROPERTY RIGHTS, EXTERNALITIES, AND ENVIRONMENTAL PROBLEMS 61

INTRODUCTION 61

PROPERTY RIGHTS 62 Property Rights and Efficient Market Allocations 62 Efficient Property Right Structures 62 Example 4.1 Pollution in Centrally Planned Economies 63

EXTERNALITIES AS A SOURCE OF MARKET FAILURE 65 The Concept Introduced 65 Types of Externalities 68

IMPROPERLY DESIGNED PROPERTY RIGHTS SYSTEMS 69 Other Property Rights Regimes 69 Public Goods 71

IMPERFECT MARKET STRUCTURES 73 Example 4.2 Public Goods Privately Provided: The Nature

Conservancy 74 '

DIVERGENCE OF SOCIAL AND PRIVATE DISCOUNT RATES 74

GOVERNMENT FAILURE 76 Example 4.3 Religion as the Source of Environmental Problems 77

THE PURSUIT OF EFFICIENCY 78 Private Resolution through Negotiation 78 The Courts: Property Rules and Liability Rules 79

LEGISLATIVE AND EXECUTIVE REGULATION 81

AN EFFICIENT ROLE FOR GOVERNMENT 82

SUMMARY 82 Further Reading 83 Additional References 83 Discussion Questions 84 Problems 84

CHAPTER FIVE SUSTAINABLE DEVELOPMENT: DEFINING THE CONCEPT 86

INTRODUCTION 86

A TWO-PERIOD MODEL 87

DEFINING INTERTEMPORAL FAIRNESS 91

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ARE EFFICIENT ALLOCATIONS FAIR? 92

APPLYING THE SUSTAINABIUTY CRITERION 93

IMPLICATIONS FOR ENVIRONMENTAL POLICY 95

SUMMARY 95 Further Reading 97 Additional References 97 Discussion Questions 98 Problems 98

APPENDIX 98 The Mathematics of the Two-Period Model 98

CHAPTER six THE POPULATION PROBLEM 100 INTRODUCTION 100

HISTORICAL PERSPECTIVE 101 World Population Growth 101 Population Growth in the United States 102

EFFECTS OF POPULATION GROWTH O N ECONOMIC DEVELOPMENT 104

EFFECTS OF ECONOMIC DEVELOPMENT ON POPULATION GROWTH 110

THE ECONOMIC APPROACH TO POPULATION CONTROL 113

Example 6.1 The Value of an Averted Birth 114 Example 6.2 Fertility Decline in Korea: A Case Study 118 Example 6.3 Income-Generating Activities as Fertility Control:

Bangladesh 120

SUMMARY 121 Further Reading 122 Additional References 122 Discussion Questions 123 Problems 124

CHAPTER SEVEN THE ALLOCATION OF DEPLETABLE AND RENEWABLE RESOURCES: AN OVERVIEW 125

INTRODUCTION 125

A RESOURCE TAXONOMY 126 Example 7.1 The Pitfalls in Misusing Reserve Data 129

EFFICIENT INTERTEMPORAL ALLOCATIONS 131 The Two-Period Model Revisited 131

Contents VII

The N-Period Constant-Cost Case 132 Transition to a Renewable Substitute 132 Increasing Marginal Extraction Cost 136 Exploration and Technological Progress 137

MARKET ALLOCATIONS 138 Appropriate Property Right Structures 138 Example 7.2 Technological Progress in the Iron Ore Industry 159 Environmental Costs 140

SUMMARY 142 Further Reading 143 Additional References 143 Problems 143

APPENDIX 144 Extensions of the Basic Depletable Resource Model 144 The N-Period, Constant-Cost, No-Substitute Case 144 Constant Marginal Cost with an Abundant Renewable

Substitute 145 Increasing Marginal Cost Case 147 Including Environmental Cost 148

CHAPTER EIGHT DEPLETABLE, NONRECYCLABLE ENERGY RESOURCES: OIL, GAS, COAL, AND URANIUM 149

INTRODUCTION 149

NATURAL CAS: PRICE CONTROLS 150 Example 8.1 Price Controls and Substitution Bias 154

OIL: THE CARTEL PROBLEM 156 Price Elasticity of Demand 157 Example 8.2 Optimal OPEC Pricing 758 Example 8.3 Are Soft Energy Paths Doomed? 159 Income Elasticity of Demand 159 Non-OPEC Suppliers 160 Compatibility of Member Interests 161

OIL: NATIONAL SECURITY PROBLEM 162

TRANSITION FUELS: ENVIRONMENTAL PROBLEMS 166

ELECTRICITY 170

THE LONG RUN 173

SUMMARY 175 Further Reading 176 Additional References 176 Discussion Questions 177 Problems 178

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CHAPTER NINE RECYCLABLE RESOURCES: MINERALS, PAPER, CLASS, ETC. 179

INTRODUCTION 179

AN EFFICIENT ALLOCATION OF RECYCLABLE RESOURCES 180

Extraction and Disposal Cost 181 Example 9.7 Population Density and Recycling:

The Japanese Experience 181 Example 9.2 New Markets for Trash: Tires 182 Recycling: A Closer Look 182 Recycling and Virgin Ore Depletion 183

THE STRATEGIC-MATERIAL PROBLEM REVISITED 184 General Principles 184 Example 9.3 Lead Recycling 184 Government Response 185 Cobalt: A Case Study 186 Substitution and Vulnerability 186

WASTE DISPOSAL AND POLLUTION DAMAGE 188 Disposal Cost and Efficiency 188 The Disposal Decision 188 Disposal Costs and the Scrap Market 190 Public Policies 190 Pollution Damage 195 Example 9.4 Implementing the "Take-Back" Principle 196

TAX TREATMENT OF MINERALS 197

PRODUCT DURABILITY 199 Functional Obsolescence 200 Fashion Obsolescence 200 Durability Obsolescence 200

SUMMARY 203 Further Reading 203 Additional References 204 Discussion Questions 205 Problems 205

CHAPTER TEN REPLENISHABLE BUT DEPLETABLE RESOURCES: WATER 207

INTRODUCTION 207

THE POTENTIAL FOR WATER SCARCITY 208

THE EFFICIENT ALLOCATION OF SCARCE WATER 210 Surface Water 210 Groundwater 212

Contents ix

THE CURRENT ALLOCATION SYSTEM 213 Riparian and Prior Appropriation Doctrines 213 Sources of Inefficiency 214 Restrictions on Transfers 215 Federal Reclamation Projects 216 Water Pricing 217 Common Property Problems 217

POTENTIAL REMEDIES 218 Example 10.7 Using Economic Principles to Conserve Water

in California 219 Example 10.2 Protecting Instream Uses Through Acquiring

Water Rights 220

SUMMARY 224 Example 10. Z Politics and the Pricing of Scarce Water 225 Further Reading 226 Additional References 226 Discussion Questions 227 Problems 228

CHAPTER ELEVEN REPRODUCIBLE PRIVATE-PROPERTY RESOURCES: AGRICULTURE 229

INTRODUCTION 229

GLOBAL SCARCITY 230

FORMULATING THE GLOBAL SCARCITY HYPOTHESIS 231

TESTING THE HYPOTHESIS 233 Outlook for the Future 234 Technological Progress 234 Allocation of Agricultural Land 235 Energy Costs 236 Environmental Costs 236

THE ROLE OF AGRICULTURAL POLICIES 238

A SUMMING UP 239

DISTRIBUTION OF FOOD RESOURCES 239 Defining the Problem 240 Domestic Production in LDCs 240 The Undervaluation Bias 242 Example 11.1 The Price Responsiveness of Supply: Thailand 243 Feeding the Poor 244 Example 11.2 Perverse Government Intervention: The Case

of Colombia 245

FEAST AND FAMINE CYCLES 246

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SUMMARY 249 Further Reading 250 Additional References 251 Discussion Questions 252 Problems 253

CHAPTER TWELVE S T O R A B L E , RENEWABLE RESOURCES: FORESTS 254

INTRODUCTION 254

DEFINING EFFICIENT MANAGEMENT 256 The Biological Dimension 256 The Economics of Forest Harvesting 257 Extending the Basic Model 261

SOURCES OF INEFFICIENCY 263 Global Inefficiencies 263 Biodiversity 263 Global Warming 263 Poverty and Debt 264 Perverse Incentives 265 Example 12.1 Externalities in Forest Management:

Waldsterben 267

IMPLEMENTING EFFICIENT MANAGEMENT 268 Debt-Nature Swaps 270 Extractive Reserves 271 Establishing Conservation Easements 271 Example 12.2 Success Stories in Conserving Tropical

Forests 272

SUMMARY 273 Example 12.5 The International Tropical Timber Agreement 275 Example 12.4 Trust Funds for Habitat Preservation 274 Further Reading 275 Additional References 276 Discussion Questions 277 Problems 277

APPENDIX 277 The Harvesting Decision: Forests 277

CHAPTER THIRTEEN RENEWABLE COMMON-PROPERTY RESOURCES: FISHERIES AND OTHER SPECIES 279

INTRODUCTION 279

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Contents xi

EFFICIENT ALLOCATION 280 The Biological Dimension 280 Static Efficient Sustainable Yield 282 Dynamic Efficient Sustainable Yield 284

APPROPRIABILITY AND MARKET SOLUTIONS 286 Example 13.1 Property Rights and Fisheries: Oysters 289 Example 13.2 Free-Access Harvesting of the Minke Whale 290 Example 13.3 Harbor Gangs of Maine 291

PUBLIC POLICY TOWARD FISHERIES 292 Aquaculture 292 Raising the Real Cost of Fishing 293 Taxes 295 Individual Transferable Quotas (ITQs) 296 Example 13.4 Efficient Versus Market Exploitation

of Lobsters 297 The 200-Mile Limit 300 The Economics of Enforcement 301 Extension to Other Species 302

SUMMARY 302 Example 13.5 Local Approaches to Wildlife Protection:

Zimbabwe 303 Further Reading 304 Additional References 304 Discussion Questions 306 Problems 306

APPENDIX 307 The Harvesting Decision: Fisheries 307

CHAPTER FOURTEEN GENERALIZED RESOURCE SCARCITY 310

INTRODUCTION 310 , ' - • , '

FACTORS MITIGATING RESOURCE SCARCITY 311 Exploration and Discovery 311 Technological Progress 312 Substitution 312

DETECTING RESOURCE SCARCITY 313 Example 14.1 Resource Scarcity in Historical Perspective:

Timber 314 Criteria for an Ideal Scarcity Indicator 315 Applying the Criteria 315 The Physical Indicators 315 Resource Prices 316

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Scarcity Rent 317 Marginal Discovery Cost 318 Marginal Extraction Cost 318

EVIDENCE O N RESOURCE SCARCITY 319 Physical Indicators 319 Economic Indicators 324 Extraction Cost 324 Example 14.2 Geochemically Scarce Metals: How Would

the Economy React? 326 Studies of Resource Price Trends 328 Example 14.3 The Bet 329 Discovery Cost 330 Juxtaposing Alternative Measures 330

SUMMARY 331 Further Reading 331 Additional References 332

CHAPTER FIFTEEN ECONOMICS OF POLLUTION CONTROL: AN OVERVIEW 334

INTRODUCTION 334

POLLUTANT TAXONOMY 335

DEFINING THE EFFICIENT ALLOCATION OF POLLUTION 336

Stock Pollutants 336 Fund Pollutants 338

MARKET ALLOCATIONS 340

EFFICIENT POLICY RESPONSES 341 Example 15.1 Environmental Taxation in China 342

COST-EFFECTIVE POLICIES FOR UNIFORMLY MIXED FIND POLLUTANTS 343

Defining A Cost-Effective Allocation 343 Cost-Effective Pollution Control Policies 344 Emission Standards 345 Emission Charges 345 Transferable Emission Permits 348

COST-EFFECTIVE POLICIES FOR NONUNIFORMLY MIXED SURFACE POLLUTANTS 349

The Single-Receptor Case 349 Policy Approaches 352 The Many-Receptors Case 354

OTHER POLICY DIMENSIONS 355

Contents XÜi

Example 15.2 Energy-Demand Uncertainty and the Cost of Being Wrong: Permits Versus Charges 357

SUMMARY 357 Further Reading 359 Additional References 359 Discussion Questions 360 Problems 360

APPENDIX 361 The Simple Mathematics of Cost-Effective Pollution Control 361 Policy Instruments 362

CHAPTER SIXTEEN STATIONARY-SOURCE LOCAL AIR POLLUTION 363

INTRODUCTION 363

CONVENTIONAL POLLUTANTS 364 The Command-and-Control Policy Framework 364 The Efficiency of the Command-and-Control Approach 368 The Threshold Concept 368 The Level of the Ambient Standard 368 Uniformity 369 Timing of Emission Flows Example 16.1 Net Benefit Analysis of the Particulate Ambient

Standard 370 Concentration versus Exposure 371 Cost-Effectiveness of the Command-and-Control Approach 371 Air Quality 373

INNOVATIVE APPROACHES 374 The Emissions Trading Program 374 The Emission Reduction Credit 374 The Offset Policy 374 The Bubble Policy 374 Netting 375 Example 16.2 The Bubble and Offset Policies in Action 376 Banking 376 The Effectiveness of Emissions Trading 376 Smog Trading 379 Emission Charges 379 Hazardous Pollutants 380

SUMMARY 382 Example 16.3 Efficient Regulation of Hazardous Pollutants:

The Benzene Case 384 Further Reading 385 Additional References 386 Discussion Questions 387 Problems 387

XIV CONTENTS

CHAPTER SEVENTEEN REGIONAL AND GLOBAL AIR POLLUTANTS: ACID RAIN AND ATMOSPHERIC MODIFICATION 388

INTRODUCTION 388

REGIONAL POLLUTANTS 389 Acid Rain 389 Example 17.1 Adirondack Acidification 391

Example 17.2 The Sulfur Allowance Program 396 Example 17.3 Why and How do Environmentalists But Pollution? 397

GLOBAL POLLUTANTS 398 Ozone Depletion 398 Global Warming 401 Example 17.4 Tradable Permits for Ozone-Depleting Chemicals 403 Example 17.5 Ethics, Risk Aversion, and the Greenhouse Effect 405

SUMMARY 410 Further Reading 412 Additional References 412 Problems 414

CHAPTER EIGHTEEN MOBILE-SOURCE ALR POLLUTION 415

INTRODUCTION 415 Economies of Mobile-Source Pollution 417 Implicit Subsidies 417 Externalities 417 Consequences 418

POLICY TOWARD MOBILE SOURCES 419 History 419 Structure of the U.S. Approach 420 Certification Program 420 Associated Enforcement Programs 421 Lead 421 Local Responsibilities 422 Alternative Fuels and Vehicles 422 European Approaches 423

AN ECONOMIC AND POLITICAL ASSESSMENT 423 Example 18.1 Car Sharing: Better Use of Automotive Capital? 424 Technology Forcing and Sanctions 425 Differentiated Regulation 425 Uniformity of Control 4236 Example 18.2 Setting the National Automobile Emissions

Standards 427

Contents XV

The Deterioration of New-Car Emission Rates 428 Inspection and Maintenance Programs 428 Other Local Strategies 428 Lead Phaseout Program 430 Alternative Fuels 430 Example 18.3 Getting the Lead Out: The Lead Phaseout

Program 431 Air Quality 431 Ozone 431 Carbon Monoxide 432

POSSIBLE REFORMS 432 Example 18.4 Innovative Mobile Pollution-Control Strategies:

Singapore and Hong Kong 434

SUMMARY 435 Example 18.5 Counterproductive Policy Design 436 Further Reading 437 Additional References 437 Discussion Questions 438

CHAPTER NINETEEN POLLUTION 439 INTRODUCTION 439

NATURE OF WATER POLLUTION PROBLEMS 440 Types of Waste-Receiving Water 440 Sources of Contamination 440 Rivers and Lakes 440 Example 19.1 Incidents of Groundwater Pollution 441 Ocean Pollution 442 Types of Pollutants 442 Fund Pollutants 443 Stock Pollutants 444

TRADITIONAL WATER POLLUTION CONTROL POLICY 445 Early Legislation 445 Subsequent Legislation 446 Point Sources 446 Nonpoint Sources 447 The Safe Drinking Water Act 448 Ocean Pollution 449 Oil Spills 448 Ocean Dumping 449 Citizen Suits 449

EFFICIENCY AND COST-EFFECTIVENESS 449 Ambient Standards and the Zero-Discharge Coal 449 National Effluent Standards 450 Enforcement Problems 451 Allocating Control Responsibility 451 The European Experience 454 Municipal Waster Treatment Subsidies 455

XVI CONTENTS

The Allocation of Funds 455 Example 19.2 Marketable Emission Permits on the Fox River 456 Operation and Maintenance 456 Capital of Costs 457 Pretreatment Standards 457 Nonpoint Pollution 457 Costs 457 Example 19.3 Cost-Effective Pretreatment Standards 458 Oil Spills 458 Example 19.4 Anatomy of an Oil Spill Suit: Amoca Cadiz 460 Citizen Suits 461 An Overall Assessment 462

SUMMARY 463 Further Reading 464 Additional References 465 Discussion Questions 467 Problem 467

г

CHAPTER TWENTY TOXIC SUBSTANCES 4 6 8 INTRODUCTION 468

Nature of Toxic Substance Pollution 469 Health Effects 470 Cancer 470 Reproductive Effects 470 Policy Issues 470 Number of Substances 470 Latency 471 Uncertainty 472

MARKET ALLOCATIONS AND TOXIC SUBSTANCES 473 Occupational Hazard 473 Example 20.1 Susceptible Populations in the Hazardous

Workplace 476 Product Safety 476 Third Parties 477

CURRENT POLICY 478 Common Law 478 Negligence 478 Strict Liability 479

CRIMINAL LAW 479 Statutory Law 480 Example 20.2 judicial Remedies in Toxic Substance Control:

The Kepone Case 481 Federal Food, Drug, and Cosmetic Act 481 Occupational Safety and Health Act 482 Federal Environmental Pesticide Control Act 482 Resource Conservation and Recovery Act 483

Contents XVÜ

Toxic Substances Control Act 483 Comprehensive Environmental Response, Compensation,

and Liability Act 483 International Agreements 484

AN ASSESSMENT OF THE LEGAL REMEDIES 485 The Common Law 485 Judicial-Legislative Complementarity 485 Limitations of Judicial Remedies 486 Joint and Several Liability Doctrine 488 The Statutory Law 489 Balancing the Costs 489 Example 20.3 Weighing the Risks: Saccharin 490 Degree and Form of Intervention 491 Scale 492 Assurance Bonds: An Innovative Proposal 492 Example 20.4 Performance Bonds for Brominated Flame

Retardants 493

SUMMARY 493 Further Reading 494 Additional References 495 Discussion Questions 496

CHAPTER TWENTY-ONE ENVIRONMENTAL JUSTICE 4 9 7 INTRODUCTION 497

THE INCIDENCE OF HAZARDOUS WASTE SITING DECISIONS 498

The Economics of Site Location 499 The Policy Response 500

THE INCIDENCE OF POLLUTION CONTROL COSTS: INDIVIDUAL INDUSTRIES 501

A Competitive Industry 501 Incidence 501 Scale Effects 503 New-Source Bias 504 Example 21.1 The Effects of Environmental Controls on the Tissue

Industry 505 Monopoly 506

THE GENERATION OF POLLUTANTS 507

THE INCIDENCE ON HOUSEHOLDS 508 Air Pollution 508 Automobile Control 508 Stationary Source Control 509 A Combined Assessment 510 Water Pollution 511 Point Sources 512

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Nonpoint Sources 512

IMPLICATIONS FOR POLICY 513 Example 21.2 Distributional Impacts of RECLAIM 515

SUMMARY 516 Further Reading 517 Additional References 517 Discussion Questions 519

CHAPTER TWENTY-TWO DEVELOPMENT, POVERTY, AND THE ENVIRONMENT 520

INTRODUCTION 520

THE GROWTH PROCESS 522 The Nature of the Process 522 Increases in Inputs 522 Technological Progress 522 Example 22.1 The Generalized Cobb-Douglas Production

Function 523 Potential Sources of Reduced Growth 523 Reduced Input Flows 524 Limits on Technological Progress 526 Environmental Policy 526 Energy 528 Example 22.2 jobs Versus the Environment: What is

the Evidence? 529

OUTLOOK FOR THE NEAR FUTURE 530 Population Impacts 530 The Information Economy 531

THE GROWTH-DEVELOPMENT REUTIONSHIP 532 Conventional Measures 532 Alternative Measures 534

GROWTH AND POVERTY: THE INDUSTRIALIZED NATIONS 536

The Effects on Income Inequality 537

POVERTY IN THE LESS INDUSTRIALIZED NATIONS 537 Example 22.3 Does Money Buy Happiness? 538 Appropriateness of the Traditional Model 539 Scale 539 Forms of Development 539 Barriers to Development 540 Population Growth 540 Land Ownership Patterns 540 Trade Policies 541 Debt 542

Contents XIX

SUMMARY 543 Further Reading 544 Additional References 544 Discussion Questions 546

CHAPTER TWENTY-THREE THE QUEST FOR SUSTAINABLE DEVELOPMENT 548

INTRODUCTION 548

SUSTAINABILITY OF GROWTH 548 Market Allocations 550 Efficiency and Sustainability 551 Example 23.1 Resource Depletion and Economic Sustainability:

Malaysia 553 Trade and the Environment 555

A MENU OF OPPORTUNITIES 556 Agriculture 556 Energy 557 Waste Reduction 558

MANAGING THE TRANSITION 559 Example 23.2 Sustainable Development: Three Success Stories 560

PROSPECTS FOR INTERNATIONAL COOPERATION 561 Example 23.3 Controlling Land Development with TDRs 562 Opportunities for Cooperation 562 Restructuring Incentives 563 The Full-Cost Principle 564 The Cost-Effectiveness Principle 566 The Property Rights Principle 567 The Sustainability Principle 568 The Information Principle 569

FORCED TRANSITION 569 Defining the Target 570 Institutional Structure 570 Population Stabilization 571 Example 23.4 Reputational Strategies for Pollution Control

in Indonesia 571 Stock and Throughput Stabilization 571 Ensuring Distributional Fairness 572 Administration 572

SUMMARY 572 Further Reading 573 Additional References 574 Discussion Questions 576

XX CONTENTS

CHAPTER TWENTY-FOUR VISIONS OF THE FUTURE REVISITED 577

ADDRESSING THE ISSUES 577 Conceptualizing the Problem 577 Institutional Responses 579 Sustainable Development 582 A Concluding Comment 585

PROBLEM SET ANSWERS 587

GLOSSARY 597

NAME INDEX 609

SUBJECT INDEX 613