Property Rights, Externalities, and Environmental Problems
2
The Economic Approach:
Property Rights, Externalities, and Environmental Problems
The charming landscape which I saw this morning, is indubitably made up of some twenty or thirty farms. Miller owns this field, Locke that, and Manning the woodland beyond. But none of them owns the landscape. There is a property in the horizon which no man has but he whose eye can integrate all the parts, that is, the poet. This is the best part of these men’s farms, yet to this their land deeds give them no title.
—Ralph Waldo Emerson, Nature (1836)
Introduction
Before examining specific environmental problems and the policy responses to them, it is important that we develop and clarify the economic approach, so that we have some sense of the forest before examining each of the trees. By having a feel for the conceptual framework, it becomes easier not only to deal with individual cases but also, perhaps more importantly, to see how they fit into a comprehensive approach. In this chapter, we develop the general conceptual framework used in economics to approach environmental problems. We begin by examining the relationship between human actions, as manifested through the economic system, and the environmental consequences of those actions. We can then establish criteria for judging the desirability of the outcomes of this relationship. These criteria provide a basis for identifying the nature and severity of environmental problems, and a foundation for designing effective policies to deal with them.
Throughout this chapter, the economic point of view is contrasted with alternative points of view. These contrasts bring the economic approach into sharper focus and stimulate deeper and more critical thinking about all possible approaches.
16
The Human–Environment Relationship
The Human–Environment Relationship
The Environment as an Asset
In economics, the environment is viewed as a composite asset that provides a variety of services. It is a very special asset, to be sure,
The Economic Approach:
Property Rights, Externalities, and Environmental Problems
The charming landscape which I saw this morning, is indubitably made up of some twenty or thirty farms. Miller owns this field, Locke that, and Manning the woodland beyond. But none of them owns the landscape. There is a property in the horizon which no man has but he whose eye can integrate all the parts, that is, the poet. This is the best part of these men’s farms, yet to this their land deeds give them no title.
—Ralph Waldo Emerson, Nature (1836)
Introduction
Before examining specific environmental problems and the policy responses to them, it is important that we develop and clarify the economic approach, so that we have some sense of the forest before examining each of the trees. By having a feel for the conceptual framework, it becomes easier not only to deal with individual cases but also, perhaps more importantly, to see how they fit into a comprehensive approach. In this chapter, we develop the general conceptual framework used in economics to approach environmental problems. We begin by examining the relationship between human actions, as manifested through the economic system, and the environmental consequences of those actions. We can then establish criteria for judging the desirability of the outcomes of this relationship. These criteria provide a basis for identifying the nature and severity of environmental problems, and a foundation for designing effective policies to deal with them.
Throughout this chapter, the economic point of view is contrasted with alternative points of view. These contrasts bring the economic approach into sharper focus and stimulate deeper and more critical thinking about all possible approaches.
16
The Human–Environment Relationship
The Human–Environment Relationship
The Environment as an Asset
In economics, the environment is viewed as a composite asset that provides a variety of services. It is a very special asset, to be sure,
References: are available on this book’s Companion Website: http://www.pearsonhighered.com/tietenberg/ 45