Basic Concepts and Common Valuation Errors in Cost-Benefit Analysis

The society has limited resources to meet several objectives such as economic growth, poverty alleviation and environmental protection. These objectives compete for resources and may conflict with each other. For example, economic growth may increase environmental degradation and environmental regulation may constrain growth. Therefore, every effort must be made to reconcile and synergize these diverse social objectives and to prioritize them as to allocate the limited resources among them in the most efficient way. Environmental economics provides us with the analytical tools to reconcile environmental protection with economic growth and other social objectives, and to protect and improve the environment without wasting scarce resources.Cost-benefit analysis

Environmental Sustainability and Services in Developing Global City Regions

Globalization brings unparalleled challenges and opportunities for global city-regions, both in terms of wealth creation and environmental sustainability. The purpose of this paper is (1) to analyze the environmental challenges of global city-regions, especially in developing countries, where they are more severe; (2) to examine the implications of globalization for these challenges; and (3) to explore public policy options, private sector involvement and innovative, flexible instruments for addressing these challenges. Based on this analysis, the author proposes a new paradigm for the environmental management of global city-regions, driven by the private sector and civil society, with government playing a regulatory and facilitating role.Urban Planning, Environment, Sustainable Development

Book Review

Environmental Economics and Policy,

Economic Growth and the Environment

Will the world be able to sustain economic growth indefinitely without running into resource constraints or despoiling the environment beyond repair? What is the relationship between steadily increasing incomes and environmental quality? This paper builds on the author's earlier work (1993), in which he argued that the relationship between economic growth and environmental quality – whether inverse or direct -- is not fixed along a country's development path. Indeed, he hypothesized, it may change as a country reaches a level of income at which people can demand and afford a more efficient infrastructure and a cleaner environment. This implied inverted-U relationship between environmental degradation and economic growth came to be known as the "Environmental Kuznets Curve," by analogy with the income-inequality relationship postulated by Kuznets (1965, 1966). The objective of this paper is to critically review, synthesize and interpret the literature on the relationship between economic growth and environment. This literature has followed two distinct but related strands of research: an empirical strand of ad hoc specifications and estimations of a reduced form equation, relating an environmental impact indicator to income per capita; and a theoretical strand of macroeconomic models of interaction between environmental degradation and economic growth, including optimal growth, endogenous growth and overlapping generations models. The author concludes that the macroeconomic models generally support the empirical findings of the Environmental Kuznets Curve literature. He suggests further empirical investigation related to the assumption of additive separability, as well as development of additional macroeconomic models that allow for a more realistic role for government.Economic Growth, Environment, Kuznets Curve

Globalization and Environment

Economic globalization impacts the environment and sustainable development in a wide variety of ways and through a multitude of channels. The purpose of this paper is (a) to identify the key links between globalization and environment; (b) to identify the major issues addressed in multilateral economic agreements in trade and finance that affect environmental sustainability; and (c) to review priority policy issues affecting the environment in multilateral economic agreements and environment, thus identifying incentives implicit in trade and investment policy measures that affect environmental sustainability. The author categorizes these issues under the primary areas of globalization: trade liberalization, investment and finance, and technology diffusion, the latter including intellectual property rights. In the case of the trade-environment interface, the paper examines the impact of both elements, and the causal relationship between them. It also pays special attention to multilateral environmental agreements and their potential effects on trade. An integrative section on the effects of globalization and environmental policy and performance leads to domestic and international priority policy issues and recommendations. The author concludes that globalization brings with it potentially large benefits as well as risks. The challenge is to manage the process of globalization in such a way that it promotes environmental sustainability and equitable human development. In short, the more integrated environmental and trade policies are, the more sustainable economic growth will be and the more globalization can be harnessed for the benefit of the environment.Environment, Globalization, International Trade

Population and Environment

The past fifty years have witnessed two simultaneous and accelerating trends: an explosive growth in population and a steep increase in resource depletion and environmental degradation. These trends have fueled the debate on the link between population and environment that began 150 years earlier, when Malthus voiced his concern about the ability of the earth and its finite resources to feed an exponentially growing population. The purpose of this study is to review the literature on population and environment and to identify the main strands of thought and the assumptions that lie behind them. The author begins with a review of the historical perspective. He then reviews and assesses the evidence on the relationship between population and environment, focusing on selected natural and environmental resources: land use, water use, local pollution, deforestation and climate change. The author also reviews selected recent macro and micro perspectives. The new macro perspective introduces the environment-income relationship and examines the role of population growth and density in mediating this relationship. The new micro perspective introduces the close relationship between poverty and environmental degradation, also examining the roles of gender in decision-making and the role of children as economic assets in fertility decisions. Finally, the author carries out a comparative assessment of the approaches and methods employed in the literature to explain the wide variation in findings and predictions. This literature review demonstrates that there is little agreement on the relationship between population and growth, and even whether any relationship exists at all. Empirical research has been unable to resolve the issue because of limited data, divergent methodologies, and varying levels of analysis.Population, Environment, Economic Growth

Ecología-Economía, Medio Ambiente y Desarrollo

The assay summarize the presentation by the author at “The 2nd Latin American Seminar of Research and Extension in Farming Systems” held in Bogotá, last year. The relationship between economy and ecology is analyzed and, integrative mechanisms are explored. In addition, the concept of sustainability is operationally defined, and a set of changes necessary to put an economy on the road to sustainable development is identified. Guidelines for formulating policies and projects for sustainable development are included.El artículo incluye apartes de la ponencia presentada por el autor durante el Segundo Simposio Latinoamericano sobre Investigación y Extensión en Sistemas Agropecuarios (IESA-AL II), realizado en Bogotá, en Noviembre del año anterior. Se analizan las relaciones entre economía y ecología y se exploran mecanismos para su integración. Además, se define operacionalmente el concepto de sostenibilidad y se identifica una serie de cambios necesarios para colocar la economía en la senda del desarrollo sostenible. Igualmente, se presentan pautas para la formulación de políticas y proyectos orientados al logro de un desarrollo sostenible.