Handbook of Environmental and Resource Economics
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Handbook of Environmental and Resource Economics

Edited by Jeroen C.J.M. van den Bergh

This major reference book comprises specially commissioned surveys in environmental and resource economics written by an international team of experts. Authoritative yet accessible, each entry provides a state-of-the-art summary of key areas that will be invaluable to researchers, practitioners and advanced students.
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Chapter 32: Transboundary Environmental Problems

M. Hoel


Michael Hoe1 1. General description We have a transboundary environmental problem whenever the environment in one country is directly affected by actions taken in one or more other countries. Notice that the term ‘directly affected’ excludes any indirect effects via prices, incomes, and so on, making actions in one country affect actions in other countries. Transboundary environmental problems have received large attention in the literature; early contributions include OECD (1976), d’Arge (1975). Typical examples of transboundary environmental problems are: (i) several countries polluting a river, a lake or an ocean; (ii) acid rain caused by emissions of SO, and NO,; (iii) global warning caused by emissions of CO, and other greenhouse gases; (iv) depletion of the ozone layer caused by emissions of CFCs and other ozone-depleting substances. In the next section, the examples of acid rain and global warming are treated in more detail. In the examples above the environmental problem is caused by emissions of some physical substances from the countries involved. However, if ‘environment’ in each country is broadly defined, transboundary environmental problems may be of a non-physical kind. Perhaps the most obvious example is biodiversity (see, for example, Barrett, 1992). If a country is concerned about worldwide (or region-wide) loss of biodiversity, then any action in another country which contributes directly to this loss (for example, through deforestation) has a negative ‘environmental’impact on the first country. Formally, this is very similar to the case in which one country is harmed by physical emissions from another country. In...

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