Edited by David Pearce, Corin Pearce and Charles Palmer
Chapter 1: Introduction: valuing the developing world environment
David Pearce The science of environmental economics is concerned with an array of issues, but they can be conveniently summarized as: (a) measuring the ‘state of the environment’ in terms of how people feel about their surroundings, (b) assessing the causes of environmental degradation, and (c) designing incentive-based policies for improving the environment. In each case the economic perspective diﬀers markedly from what other disciplines would do if confronted with the same issues. A scientist would measure, say, emissions of air pollutant and their atmospheric concentration. This would be a measure of the ‘state’ of the environment. Causes would most probably be assessed by scientists and most social scientists in terms of ‘who does what’. Thus a slash-and-burn agriculturist, or a logging company, would be seen as the ‘cause’ of the problem of deforestation. To the economist this identiﬁcation of the proximate agent is not what is meant by a cause. Real, or fundamental, causes relate to the incentive systems that give rise to deforestation; that is, what drives the logger to behave as he does, and why does the agriculturist do what he does? To the economist, the answers lie in the many, varied and frequently contradictory signals that economic systems and governments relay to the proximate agent. It might be a subsidy that is contingent on clearing forest land, or the sale of a forest concession to log which does not reﬂect the true costs of logging. From this analysis of causes it also follows...
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