Microeconomic Policy

Microeconomic Policy

A New Perspective

Clem Tisdell and Keith Hartley

This thoroughly accessible textbook shows students how microeconomic theory can be used and applied to major issues of public policy. In this way, it will improve their understanding of both microeconomic theory and policy and also develop their ability to critically assess them. Clem Tisdell and Keith Hartley have expanded upon their previous successful work on microeconomics. As a result, this new book is considerably updated with substantial chapter revisions, as well as new chapters dealing with business management, ownership, environmental issues, public choice, defence, conflict and terrorism.

Chapter 16: The State of the Environment and the Availability of Natural Resources

Clem Tisdell and Keith Hartley

Subjects: economics and finance, industrial economics

Extract

INTRODUCTION Because of long-term economic growth, the volume of global production is now very large. Economic growth has altered natural environments and continues to do so, and it also impacts on the availability of natural resources. Consequently, the state of the natural environment is not independent of economic activity, and vice versa. Economic growth has resulted in concerns about the continuing availability of clean air and water, the disappearance of natural and semi-natural landscapes, loss of biodiversity, and increasing greenhouse gas emissions (for example, from the combustion of fossil fuels), sparking fears of considerable climate change and sea-level rises (Stern, 2006; BBC, 2006; Anon, 2006). In addition, there are periodic concerns that important natural resources, such as oil reserves and natural fish stocks, are being depleted and that this will result in shortages which will eventually reduce standards of living. Microeconomic analysis can help us assess such issues. Furthermore, if there are socially unwanted environmental changes, including unwanted natural resource depletion, as a result of economic activity, often appropriate microeconomic policies can be adopted to alleviate such problems. This is not, however, to suggest that microeconomics on its own and microeconomic solutions can solve all environmental problems. Generally, the study of environmental problems calls for an interdisciplinary approach. Furthermore, the adoption of particular public policies has social impacts and almost always has ethical or normative objectives. Individuals may disagree about the appropriateness of such objectives. Should human wishes be paramount in deciding on policies, or should the preferences of humans...

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