A Comparative Study, Volume 2
The Fondazione Eni Enrico Mattei series on Economics, the Environment and Sustainable Development
Edited by Anil Markandya and Marialuisa Tamborra
Anil Markandya and Marialuisa Tamborra THE CONTEXT As countries become richer, a heightened interest in the environment comes from two sources. Individuals have a greater concern for the quality of the ambient environment, as more pressing needs are satisﬁed. At the same time the pressures on that ambient environment increase, with a higher loading of pollution from transport, power, industry and household consumption. One way in which this increased awareness of environmental problems manifests itself is through the demand for better information on what is happening to the environment and what that means for us as citizens and human beings. It is not surprising therefore that there has been an explosion of work on measuring impacts in terms of the pressures on the ambient environment, the state of that environment and the responses of society to these pressures (Adriaanse, 1993). This work has been carried out almost exclusively in physical units, with little attention paid to the economic implications of the environmental changes. At the same time, it is clear that there is an economic dimension to the changes. The environment provides an economic function and it is at our peril that we ignore that function. But, in drawing up traditional measures of economic activity, such as Gross Domestic Product, that is precisely what we do. We do not take account of damages done to the stock of natural capital, nor of the losses of welfare that economic activities cause through increased pollution. In response to these concerns, a...