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2 - Is Government Regulation the Solution?

Published online by Cambridge University Press:  05 July 2014

Terry L. Anderson  and
Gary D. Libecap
Terry L. Anderson
Affiliation:
Property and Environment Research Center
Gary D. Libecap
Affiliation:
University of California, Santa Barbara
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Summary

As discussed in Chapter 1, we have a multitude of demands for environmental goods and services. Whether it is clean air and water, tropical rainforests, habitat for polar bears, open spaces, controls on carbon emissions, whales, or energy conservation, we are willing to spend time and money on getting more of the environmental goods we want. The problems we face are how to respond to changing demands, how to tradeoff competing demands against one another, and how to balance these with the desires for other goods and services in the economy. Addressing these questions requires that environmental policies be efficient or as cost-effective as possible. This chapter examines the role of government regulations as a way of improving environmental quality – which is the traditional approach – and compares it to environmental markets.

There are many different ways to produce environmental goods, ranging from markets with well-specified private property rights, the subject of Chapter 3, to governmental regulation, the solution considered in detail here. One reason for choosing government rather than markets is the potential for markets to fail in fully accounting for social costs and benefits.

As discussed in Chapter 1, we have a multitude of demands for environmental goods and services. Whether it is clean air and water, tropical rainforests, habitat for polar bears, open spaces, controls on carbon emissions, whales, or energy conservation, we are willing to spend time and money on getting more of the environmental goods we want. The problems we face are how to respond to changing demands, how to tradeoff competing demands against one another, and how to balance these with the desires for other goods and services in the economy. Addressing these questions requires that environmental policies be efficient or as cost-effective as possible. This chapter examines the role of government regulations as a way of improving environmental quality – which is the traditional approach – and compares it to environmental markets.

Type
Chapter
Information
Environmental Markets
A Property Rights Approach
 , pp. 21 - 52
Publisher: Cambridge University Press
Print publication year: 2014

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