Edited by Ekko C. Van Ierland, Jan van der Straaten and Herman Vollebergh
David Pearce, Kirk Hamilton and Giles Atkinson 1 INTRODUCTION Roeﬁe Hueting’s New Scarcity and Economic Growth (Hueting, 1980) has a deserved place in the history of environmental economics. Roeﬁe warned that slavish adherence to gross national product (GNP) as an indicator of human well-being was totally misleading because of its exclusion of so many of the factors that contribute to that well-being, not least the quality of the services provided to us by the natural environment. While this observation is today a commonplace, we often risk forgetting the pioneers who drew the issue to our attention. Much the same goes for the other messages of New Scarcity: the need to integrate economics and ecology, the distortionary eﬀects of economic policy that neglects non-market values and the need to embrace sustainability as a goal of society. But Roeﬁe has always insisted that, in practice, one of the ways of correcting the failure to account for non-market values is illicit. He has never believed that we can, or even should, measure the shadow prices of many non-market functions. A shadow price in this context is the willingness to pay for securing a change in a non-market value such as clean air, species preservation or a ﬁne landscape. It measures what people are willing to pay indirectly through surrogate markets, or what they would be willing to pay if only there was a market. An example of the former would be the hedonic house price approach, which measures marginal...
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