Environmental and Natural Resource Economics PDF
Preview Environmental and Natural Resource Economics
Kentaka Aruga Environmental and Natural Resource Economics Environmental and Natural Resource Economics Kentaka Aruga Environmental and Natural Resource Economics KentakaAruga GraduateSchoolofHumanities andSocialSciences SaitamaUniversity Saitama,Japan ISBN978-3-030-95076-7 ISBN978-3-030-95077-4 (eBook) https://doi.org/10.1007/978-3-030-95077-4 ©TheEditor(s)(ifapplicable)andTheAuthor(s),underexclusivelicensetoSpringerNature SwitzerlandAG2022 Thisworkissubjecttocopyright.AllrightsaresolelyandexclusivelylicensedbythePublisher,whether thewholeorpartofthematerialisconcerned,specificallytherightsoftranslation,reprinting,reuse ofillustrations,recitation,broadcasting,reproductiononmicrofilmsorinanyotherphysicalway,and transmissionorinformationstorageandretrieval,electronicadaptation,computersoftware,orbysimilar ordissimilarmethodologynowknownorhereafterdeveloped. Theuseofgeneraldescriptivenames,registerednames,trademarks,servicemarks,etc.inthispublication doesnotimply,evenintheabsenceofaspecificstatement,thatsuchnamesareexemptfromtherelevant protectivelawsandregulationsandthereforefreeforgeneraluse. Thepublisher,theauthorsandtheeditorsaresafetoassumethattheadviceandinformationinthisbook arebelievedtobetrueandaccurateatthedateofpublication.Neitherthepublishernortheauthorsor theeditorsgiveawarranty,expressedorimplied,withrespecttothematerialcontainedhereinorforany errorsoromissionsthatmayhavebeenmade.Thepublisherremainsneutralwithregardtojurisdictional claimsinpublishedmapsandinstitutionalaffiliations. ThisSpringerimprintispublishedbytheregisteredcompanySpringerNatureSwitzerlandAG Theregisteredcompanyaddressis:Gewerbestrasse11,6330Cham,Switzerland Preface Environmentalproblemssuchasglobalwarming,airpollution,deforestation,biodi- versityloss,energysecurity,andpoorwastemanagementareworseningeveryday. Recently, rainfall patterns have become abnormal, and unprecedented weather is now prevalent in all parts of the world. Unusual weather is often associated with climatechange duetoincreasinggreenhouse gasemissionsfromeconomic activi- ties,whichaccountformostenvironmentalproblems.Thus,thecriticalsolutionis toalterthenatureofeconomicactivities.Itisessentialtounderstandhowdifferent typesofeconomicactivitiesleadtoenvironmentalproblems.Subsequently,wecan formulate and implement economic policies that effectively reduce environmental pressures.Solutionstoenvironmentalproblemsarediscoveredwhenknowledgeof environmental economics is applied, and that the importance of the knowledge in thisfieldisexpanding. Thisbookismeantlargelyforbeginners.Itintroducestherelationshipbetween the environment and economics. To benefit readers with elementary knowledge in economics, it minimizes the use of advanced economic models, and the models introduced are combined with graphical explanations. Those with limited back- groundineconomicscanskipthemathematicalpresentationofthemodelsandlearn fromthegraphicalillustrations.However,Irecommendusinganintroductory-level microeconomicstextbookformoredetailsofthemodelsintroducedinthisbook. This book is distinctive because it covers not only the concepts from general environmental economics but also contains important topics in natural resource economics.Generalenvironmentaleconomicsfocusesontheoutputsideofeconomic activities,suchaspollutantsandwastesemitted.Notably,itintroduceseconometric modelstoestimatethedamagescausedbyeconomicactivities.Additionally,itcovers economicpoliciesforreducinghuman-drivenenvironmentalpressures.Incontrast, naturalresourceeconomicsdealswithenvironmentalissuesrelatedtotheinputside, suchasoverexploitationofnaturalresources.Sincenaturalresourcesaresusceptible to environmental factors such as weather, climate, and natural disasters, resource economicsaimsatapplyingeconomicmodelstoprovidesolutionsforthesustainable managementofnaturalresources. v vi Preface Although both areas are equally important for understanding economic issues related to environmental problems, many introductory-level environmental economicstextbooksoftenomitmaterialsfromnaturalresourceeconomics.Thisis because the models in this field often require advanced mathematical knowledge, whichischallengingforundergraduatestudents.Instead,thebookfocusesonhow themodelscanbeappliedtodealwithnaturalresourceissuesinpractice. Anothercharacteristicdistinguishingthistextbookisthatitusesacaseofenvi- ronmentalissuesinJapanorlocalregionsofJapanasexamples.Thebookisbasedon mylecturenotesforaJapaneseuniversity’sundergraduateenvironmentaleconomics class. Therefore, it offers a different perspective from textbooks based on US and Europeanexperiences.Forinstance,thebookpresentsexamplesofJapanesepolicy forenhancingrenewableenergy,protectingbiodiversityandmarineresources,and managingwaste,amongothers. The first four chapters discuss issues related to conventional environmental economics.Chapters5and6dealwithresourceeconomics.Chapter7summarizes thebookandhighlightstopicsthatneedtobepursuedinthefuture.Thus,readerswho want to learn basic concepts in environmental economics can prioritize Chaps. 1– 4.Thoseinterestedinlearninghoweconomicmodelsareappliedtoanalyzenatural resourceproblemscanskipthefirstfourchaptersandfocusonChaps.5and6. Saitama,Japan KentakaAruga Acknowledgment Part of this book was supported by JSPS KAKENHI Grant NumberJP18K12763. Contents 1 WhatIsEnvironmentalEconomics? ............................. 1 1.1 WhatIsEnvironmentalEconomics? ........................... 1 1.2 TypicalEnvironmentalProblems ............................. 9 1.2.1 AnEnvironmentalProblemCausedbytheOutputSide .... 9 1.2.2 AnEnvironmentalProblemCausedbytheInputSide ..... 16 References ..................................................... 17 2 EconomicInstrumentandEnvironmentalProblems ............... 19 2.1 EconomicsandEnvironmentalProblems ....................... 19 2.1.1 Externality .......................................... 19 2.1.2 MarketPower ....................................... 26 2.1.3 PublicGoods ........................................ 31 2.1.4 InformationAsymmetry .............................. 37 2.2 EconomicPolicyandEnvironmentalProblems ................. 39 2.2.1 InternalizingExternalityThroughDirectRegulation ...... 40 2.2.2 Internalizing Externality Through Economic Instruments ......................................... 42 2.2.3 Internalizing Externality Through Voluntary Approaches ......................................... 54 2.2.4 PolicyMix .......................................... 56 References ..................................................... 58 3 EconomicsandtheValueofNature .............................. 59 3.1 TheValueofNature ........................................ 59 3.2 RevealedPreferenceMethod ................................. 66 3.2.1 ReplacementCostMethod ............................ 67 3.2.2 TravelCostMethod .................................. 68 3.2.3 HedonicPricingMethod .............................. 70 3.3 StatedPreferenceMethod ................................... 72 3.3.1 ContingentValuationMethod .......................... 73 3.3.2 ConjointAnalysis .................................... 77 3.4 Cost–BenefitAnalysis ....................................... 81 References ..................................................... 85 vii viii Contents 4 EconomicsandCross-RegionalEnvironmentalProblems .......... 87 4.1 EconomicsandGlobalWarming .............................. 87 4.1.1 GlobalWarmingasGlobalCommons ................... 87 4.1.2 GlobalPolicyTowardGlobalWarming .................. 89 4.2 EconomicsandAirPollution ................................. 96 4.3 EconomicsandBiodiversity .................................. 99 4.3.1 GlobalPolicyTowardConservingBiodiversity ........... 99 4.3.2 WhatAreEcosystemServices? ........................ 102 4.3.3 EconomicPolicyTowardProtectingBiodiversity ......... 104 References ..................................................... 112 5 EconomicsandNon-renewable/RenewableResources .............. 115 5.1 EconomicsandNon-renewableResources ..................... 115 5.2 EconomicsandRenewableResources ......................... 122 5.2.1 EconomicsandForestResources ....................... 123 5.2.2 EconomicsandFisheriesResources .................... 133 References ..................................................... 149 6 EnergyandWasteProblems ..................................... 151 6.1 EconomicsandEnergyResources ............................ 151 6.2 WasteProblemsandEconomics .............................. 162 References ..................................................... 167 7 FutureIssuesofEnvironmentalEconomics ....................... 169 References ..................................................... 176 Appendix:SolutionstoExercises .................................... 179 Index ............................................................. 191 About the Author Kentaka Aruga finished his Ph.D. from the Department of Environmental and Natural Resource Economics, The University of Rhode Island, USA, in 2010, and is now working at the Graduate School of Humanities and Social Sciences, SaitamaUniversity,Japan.Hehasbeenworkingonissuesrelatedtonaturalresource marketssuchassoybeans,corn,seafood,energy,andmetals,andhowindividuals’ environmentalawarenessisaffectingtheirconsumptionbehavior. AnotherpublishedbookfromSpringerInc.: Aruga, K. (2017) Consumer Reaction, Food Production and the Fukushima Disaster:AssessingReputationDamageDuetoPotentialRadiationContamination, SpringerInternationalPublishingAG,Cham,Switzerland. ix Abbreviations 3Rs Reduce,reuse,andrecycle ABS Accessandbenefitsharing AIA Advancedinformedagreement BC Biocapacity BDO Biodiversityoffset BM Benchmarking BPP Beneficiarypaysprinciple BWS Best–worstscaling CAC Commandandcontrol CBA Cost-benefitanalysis CBD Conventiononbiologicaldiversity CBFM Community-basedfisheriesmanagement CCS Carboncaptureandstorage CCUS Carboncapture,utilizationandstorage CDM Cleandevelopmentmechanism CEPA Communication,education,participation,andawareness CFC Chlorofluorocarbon CH Methane 4 CITES Convention on International Trade in Endangered Species of Wild FaunaandFlora CLRTAP ConventiononLong-RangeTransboundaryAirPollution CMA Conference of the Parties serving as the meeting of the Parties to the ParisAgreement CMP Conference of the Parties serving as the meeting of the Parties to the KyotoProtocol CO Carbondioxide 2 COP ConferenceoftheParties CS Consumersurplus CVM Contingentvaluationmethod EANET AcidDepositionMonitoringNetworkinEastAsia EC Externalcost xi
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