Instructor’s Manual to Accompany
ENVIRONMENTAL ECONOMICS
An Introduction
,Table of Contents
Preface..................................................................................................................................2
Section I. Introduction
Chapter 1. What Is Environmental Economics? ................................................................... 4
Chapter 2. The Economy and the Environment .................................................................... 6
Section II. Analytical Tools
Chapter 3. Benefits and Costs, Supply and Demand ....................................................... 9
Chapter 4. Markets, Externalities, and Public Goods ...................................................... 15
Chapter 5. The Economics of Environmental Quality..................................................... 19
Section III. Environmental Analysis
Chapter 6. Frameworks of Analysis .................................................................................. 24
Chapter 7. Benefit–Cost Analysis: Benefits...................................................................... 28
Chapter 8. Benefit–Cost Analysis: Costs .......................................................................... 34
Section IV. Environmental Policy Analysis
Chapter 9. Criteria for Evaluating Environmental Policies............................................... 37
Chapter 10. Decentralized Policies: Liability Laws, Property Rights, Voluntary Action... 41
Chapter 11. Command-and-Control Strategies: The Case of Standards ............................. 47
Chapter 12. Incentive-Based Strategies: Environmental Charges and Subsidies ............... 53
Chapter 13. Incentive-Based Strategies: Market Trading Systems ..................................... 57
Section V. Environmental Policy in the United States
Chapter 14. Federal Water Pollution-Control Policy .......................................................... 62
Chapter 15. Federal Air Pollution-Control Policy............................................................... 67
Chapter 16. Federal Policy on Toxic and Hazardous Substances ....................................... 71
Chapter 17. State and Local Environmental Issues ............................................................. 75
Section VI. Global Environmental Issues
Chapter 18. Global Climate Change....................................................................................... 78
Chapter 19. International Environmental Agreements ........................................................... 82
Chapter 20. Globalization ...................................................................................................... 85
Chapter 21. Economic Development and the Environment ................................................... 88
, Preface
Environmental Economics, An Introduction is designed as a text for a one-
semester course. It is based on courses we have taught for many years, courses predicated
on the notion that the subject is interesting and important enough to be presented to a
wide audience of lower-division students, rather than delayed until students have
negotiated a set of prerequisite courses. Thus, the book is meant to be used by students
who have not necessarily had any economics yet. Nevertheless, the book is intended to
have a distinctly analytical perspective. Given these objectives, it’s necessary to focus on
a limited number of primary concepts―incentives, efficiency, the equimarginal principle,
cost-effectiveness, and so on. It’s also necessary, in the later chapters on domestic and
international environmental policy, to concentrate on the main stories and avoid getting
drawn into the endless details that these subjects contain.
After the first two introductory chapters, there are three chapters on the most basic
of economic principles. These are probably about the minimum for someone who has
never had any economics. In writing these chapters, there was a continuing temptation to
go for a slightly higher level of sophistication. We tried very hard to resist this, to keep
clearly in mind the type of student for whom the book is primarily intended. We would
hope that students who have had, say, introductory micro, would find these chapters a
useful review.
In this instructor’s manual, we have worked through each of the chapters,
discussing (a) updates of subjects that are new to the chapter in this edition, (b) the
objectives of each, (c) main ideas covered, (d) points of discussion (cautions, techniques
we have found useful, possible extensions, etc.), and (e) brief answers to each of the
questions for further discussion.
The book is 21 chapters long, perhaps too long for students to get through
completely under normal circumstances. The book is divided into sections so that
different instructors can emphasize the material they find most useful. After having gone
through Sections I and II, you may wish to pick and choose chapters from the other
sections depending on the relative emphasis you wish to put on: (a) benefit–cost analysis,
(b) policy analysis, (c) U.S. environmental policy, and (d) international issues.
The questions at the end of the chapters are called ―discussion‖ questions, but
they are perhaps more specific than this label implies. For the most part, they are not
meant to lead to open-ended discussion but have answers that we hope are more or less
correct. They are designed to lead students toward making modest extensions of the ideas
covered, which should help them both review the material and perhaps think more deeply
about it.
The exhibits presented throughout the chapters are for the purpose of illustrating
points in the text. The objective is to show students that the economic ideas we are
discussing in the classroom are actually at work in the real world.
, Appendix A of acronyms and abbreviations is updated. We recommend
highlighting this feature for students. A short, matching quiz of about 10 of the most used
acronyms or abbreviations, like the EPA, helps plug students into the lingo of
environmental economics.
Appendix B is a list of websites, which can be found in the Instructor’s Resources
area of Connect.
The 2024 Release of the book preserves the basic structure of the earlier editions.
Some of the new material we have added includes:
Forever Chemicals (PFAS) Chapter 16
Toxics and Drinking Water Contamination Chapter 14
Circular Economy Chapters 2 and 17
Natural Capital Chapter 2
Economics of Technical Change Chapter 5
Paris Agreement and Subsequent COP Meetings Chapters 18, 19, and 21
Environmental Justice Chapters 9 and 16
Economics of Subsidies & the Inflation Reduction Act Chapter 15
Carbon Offset Markets Chapter 13
Electric Vehicles and Energy Intensity Chapter 15
Green Technology Transfer and Developing Countries Chapter 21
ENVIRONMENTAL ECONOMICS
An Introduction
,Table of Contents
Preface..................................................................................................................................2
Section I. Introduction
Chapter 1. What Is Environmental Economics? ................................................................... 4
Chapter 2. The Economy and the Environment .................................................................... 6
Section II. Analytical Tools
Chapter 3. Benefits and Costs, Supply and Demand ....................................................... 9
Chapter 4. Markets, Externalities, and Public Goods ...................................................... 15
Chapter 5. The Economics of Environmental Quality..................................................... 19
Section III. Environmental Analysis
Chapter 6. Frameworks of Analysis .................................................................................. 24
Chapter 7. Benefit–Cost Analysis: Benefits...................................................................... 28
Chapter 8. Benefit–Cost Analysis: Costs .......................................................................... 34
Section IV. Environmental Policy Analysis
Chapter 9. Criteria for Evaluating Environmental Policies............................................... 37
Chapter 10. Decentralized Policies: Liability Laws, Property Rights, Voluntary Action... 41
Chapter 11. Command-and-Control Strategies: The Case of Standards ............................. 47
Chapter 12. Incentive-Based Strategies: Environmental Charges and Subsidies ............... 53
Chapter 13. Incentive-Based Strategies: Market Trading Systems ..................................... 57
Section V. Environmental Policy in the United States
Chapter 14. Federal Water Pollution-Control Policy .......................................................... 62
Chapter 15. Federal Air Pollution-Control Policy............................................................... 67
Chapter 16. Federal Policy on Toxic and Hazardous Substances ....................................... 71
Chapter 17. State and Local Environmental Issues ............................................................. 75
Section VI. Global Environmental Issues
Chapter 18. Global Climate Change....................................................................................... 78
Chapter 19. International Environmental Agreements ........................................................... 82
Chapter 20. Globalization ...................................................................................................... 85
Chapter 21. Economic Development and the Environment ................................................... 88
, Preface
Environmental Economics, An Introduction is designed as a text for a one-
semester course. It is based on courses we have taught for many years, courses predicated
on the notion that the subject is interesting and important enough to be presented to a
wide audience of lower-division students, rather than delayed until students have
negotiated a set of prerequisite courses. Thus, the book is meant to be used by students
who have not necessarily had any economics yet. Nevertheless, the book is intended to
have a distinctly analytical perspective. Given these objectives, it’s necessary to focus on
a limited number of primary concepts―incentives, efficiency, the equimarginal principle,
cost-effectiveness, and so on. It’s also necessary, in the later chapters on domestic and
international environmental policy, to concentrate on the main stories and avoid getting
drawn into the endless details that these subjects contain.
After the first two introductory chapters, there are three chapters on the most basic
of economic principles. These are probably about the minimum for someone who has
never had any economics. In writing these chapters, there was a continuing temptation to
go for a slightly higher level of sophistication. We tried very hard to resist this, to keep
clearly in mind the type of student for whom the book is primarily intended. We would
hope that students who have had, say, introductory micro, would find these chapters a
useful review.
In this instructor’s manual, we have worked through each of the chapters,
discussing (a) updates of subjects that are new to the chapter in this edition, (b) the
objectives of each, (c) main ideas covered, (d) points of discussion (cautions, techniques
we have found useful, possible extensions, etc.), and (e) brief answers to each of the
questions for further discussion.
The book is 21 chapters long, perhaps too long for students to get through
completely under normal circumstances. The book is divided into sections so that
different instructors can emphasize the material they find most useful. After having gone
through Sections I and II, you may wish to pick and choose chapters from the other
sections depending on the relative emphasis you wish to put on: (a) benefit–cost analysis,
(b) policy analysis, (c) U.S. environmental policy, and (d) international issues.
The questions at the end of the chapters are called ―discussion‖ questions, but
they are perhaps more specific than this label implies. For the most part, they are not
meant to lead to open-ended discussion but have answers that we hope are more or less
correct. They are designed to lead students toward making modest extensions of the ideas
covered, which should help them both review the material and perhaps think more deeply
about it.
The exhibits presented throughout the chapters are for the purpose of illustrating
points in the text. The objective is to show students that the economic ideas we are
discussing in the classroom are actually at work in the real world.
, Appendix A of acronyms and abbreviations is updated. We recommend
highlighting this feature for students. A short, matching quiz of about 10 of the most used
acronyms or abbreviations, like the EPA, helps plug students into the lingo of
environmental economics.
Appendix B is a list of websites, which can be found in the Instructor’s Resources
area of Connect.
The 2024 Release of the book preserves the basic structure of the earlier editions.
Some of the new material we have added includes:
Forever Chemicals (PFAS) Chapter 16
Toxics and Drinking Water Contamination Chapter 14
Circular Economy Chapters 2 and 17
Natural Capital Chapter 2
Economics of Technical Change Chapter 5
Paris Agreement and Subsequent COP Meetings Chapters 18, 19, and 21
Environmental Justice Chapters 9 and 16
Economics of Subsidies & the Inflation Reduction Act Chapter 15
Carbon Offset Markets Chapter 13
Electric Vehicles and Energy Intensity Chapter 15
Green Technology Transfer and Developing Countries Chapter 21
