Abstract
The growing field of environmental economics enriches itself with the remarkable book of Daniel Phaneuf and Till Requate which integrates, as the subtitle presents, theory, policy, and practical topics. The book is primary addressed to graduate students with a basic background in microeconomics and econometrics and their professors, and it elegantly combines the traditional approach with the cutting-edge research. The text is stylishly organized to allow readers combine theory with practice through data-based examples and exercises, enabling them to understand the economic theory and methods applied to environment and to develop specific skills. The authors have taken up the challenge of defining environmental economics and succeeded to achieve this objective through a smart synthesis of historical and contemporary topics.
Professors Daniel Phaneuf and Till Requate inspiringly show the impressive progress of environmental economics from its roots of 1960s to present and remarkably emphasize the dynamism and excitement of this growing field. This book represents the outstanding outcome of a work of more than 10 years, as the authors state in the preface, and it constitutes a synergic result of well-jointed topics. The authors’ vision includes the addressing of the need of a suitable volume for advanced study in environmental economics that merges together in an integrated manner the theoretical, empirical, and policy aspects of the field. In the effort to connect all the various topics, the authors employ the use of a single notational convention across the whole book. To enhance the learning experience, the authors complement theory in the field by a variety of end-of-chapter exercises, these being numerical, empirical, analytical, and literature based, depending on the chapter’s content. A distinguishing feature of this text is that it offers flexibility to readers, for instance, to instructors, as it may be used as a whole or in parts and chapters, depending on the students’ level or specialty, or to practitioners as they may focus on the empirical methods and theoretical predictions.
The book is organized in four main parts which offer a compelling narrative of environmental economics by presenting a blend of traditional and emerging perspectives on the field. As the authors state in the book’s preface, some of the material of this book comes from their lecture notes, therefore, the chapters are academic in style, but they succeed to bridge effectively the gap between theory and practice, conveying with consistent voice comprehensive information to readers. Each chapter ends with a knowledgeable summary and includes a section with recommendation for further readings meant to serve as a literature-organizing vehicle for the classification of different areas of inquiry. Following a pedagogical organizational scheme, the first two parts are focused on theoretical approach of policy design, while the other two are concerned with the empirical methodology and its implementation. The authors succeed to provide the advised readers with a comprehensive, clear, and easy to follow text on economics applied to decision-making and policymaking in the field of natural environment. This exceptional book is conveyed to readers via 23 chapters which tell the story of environmental economics from the neo-classical welfare theory and the movements of 1960s to the sophisticated research of the present.
The first part, covered by three chapters, deals with setting the stage for environmental economics covering important aspects like neo-classical welfare theory, theory of public goods and externalities, and also environmental policy instruments. This part offers an overview of the historical context of environmental economics showing how this field evolved from the environmental movements of the 1960s to present. The authors demonstrate that policies based on various economic incentives, like cap-and-trade, emission taxes, and subsidies, are equivalent in their economic efficiency.
The second part, divided into 10 chapters, tackles the design of environmental policy, including the effects of uncertainty in formulating policies in environmental domain, the non-environmental distortions, such as income taxes, and other institutional features. The first half of this part covers the topics related to national environmental policy for flow pollutants, while the last part examines the international aspects and their effects on environmental policy. The authors argue that the context is what matters most in selecting the best economic incentive, depending on the consideration of a multitude of factors characteristic to a multi-criteria decision problem.
The third part, structured in seven chapters, discusses the value of the environment for welfare and has a greater emphasis on econometrics than the early parts. This part is more empirically oriented than the first two parts, and therefore, it contains more exercises and applied examples, making it a great instrument for those willing to understand the core issues of environmental economics. Throughout this part, the readers are encouraged to explore topics on environmental risks arisen from individuals’ interactions with the natural environment. Therefore, the discussion in this part is cast around key areas of application of environmental economics, like recreation services and health valuation.
The fourth part, which contains three chapters, looks at the practice of environmental economics covering topics related to cost-benefit analysis. The book ends with a chapter on current developments and future research needs and trends in the field environmental economics. This section also discusses important sub-areas of environmental economics uncovered by the first parts, which overlap with topics related to climate change economics, energy economics, development economics, and resource economics.
Throughout this well-constructed and clearly written book, the authors demonstrate not only a great admiration for pioneers of environmental economics whom pushed forward the understanding in this domain but also a great excitement about the expanding available tools to work with on the growing rage of policy needs on environment. A great merit of this book is that the authors successfully manage to transmit these feelings to the readers, along with the actual theory and practice on environmental economics.
This is an outstanding book and represents the best tool for anyone interested in the environmental issues, like scholars, students at Master’s or PhD’s level, or practitioners engaging in the work of environmental economics. I very much enjoyed the reading of this book and warmly recommend it as I believe that in time it will become a classical one and an obvious and authoritative choice for environmental policy design. This authentic state-of-the-art course book provides the readers with robust understanding of the breadth and depth of environmental economics and, at the same time, may constitute an inspiration for readers to stand out in the research of this field, as specialists, policymakers, or instructors.