Edited by Jeroen C.J.M. van den Bergh
Chapter 24: Equity in Environmental Policy: An Application to Global Warming
A. Rose and S. Kverndokk
24 Equity in environmental policy with an application to global warming Adam Rose and Snorre Kverndokk' 1. Background A hallmark of political economy, as economics was known in the nineteenth century because of its policy emphasis, was the co-equal status of aggregate and distributional analysis, often translating into co-equal concern with efficiency and equity. It was clear from the beginning, however, that the latter term defied universal agreement as to its precise definition, though it was generally held to be synonymous with the concept of fairnes2 It was acknowledged that equity had deeper and more profound philosophical roots than did efficiency. To some this became a stigma. The combination of philosophical depth and competing definitions led critics to focus on the value judgements underlying equity, and to conclude that equity in particular and the current status of welfare economics (the twentieth-century synonym for political economy in the mainstream of the profession) in general were inherently subjective and therefore on shaky ground. This attitude reached its peak in the work of Robbins (1935), who recommended that for economics to become more scientific it must be purged of all value judgements. Little (1957), Nath (1969), and others have pointed out that even some aspects of economic efficiency are value-laden. However, the immediate response to Robbins by much of the economics profession was t o rally around the welfare criteria of Pareto, which focused on efficiency as the sole objective of welfare. Analysts soon pointed out the inherent conservativeness and policy paralysis associated...
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