Book reviews

‘‘Introduction to Environmental Economics’’

By Nick Hanley, Jason F. Shogren and Ben White (Oxford University Press, 2001);

and

‘‘Environmental Economics: Theory, Application and Policy’’By Duane Chapman (Addison Wesley Longman, 2000)

It is now well known by most researchers studying the environment (both economists

and others) that solutions to environmental problems must fully consider their economic

implications. Indeed, some knowledge of economics is crucial in order to fully understand

most environmental problems and their optimal solutions. Moreover, reaching such

solutions require integration of other fields and factors as well, such as psychology and

politics, with the economic approach.

In this light, these two books provide a feasible introduction to environmental

economics, by surveying the main environmental problems within a global and inter-

disciplinary perspective, and by emphasizing the economic tools, with which these

problems should be solved.

Both of these books do not require any advanced knowledge of economics, mathe-

matics or environmental science. Rather, they begin by providing some basic relevant

economic tools and concepts (e.g., cost–benefit analysis, supply–demand analysis,

discounting, game theory), which are then utilized for providing solutions to critical

environmental problems (air and water quality, forestry, climate change). These books

show non-economists interested in ‘‘saving our planet’’—who are sometimes quite

reluctant to even think about the possibility that economic concepts and methodology

can be used as tools for solving environmental problems—that economics and economists

can help improve the environment, if economics is applied to environmental issues. They

emphasize that the goal of ‘‘zero health, safety and environmental risk’’ is unattainable.

Eliminating all kinds of risks to everyone is either ‘‘too costly’’ or impossible.

Even though both of the books deal with gloomy and dismal problems, they are indeed

intentionally written in a ‘‘positive outlook’’. Their message is that if policy-makers and

other stakeholders wisely use the toolkit economics provides, and the scientific knowledge

acquired by other disciplines, we all may have reason to be a bit more positively oriented,

when talking about the global environmental reality.

Distributed energy is a fine example for the above; much of the pollution produced in

the process of generating electricity can be abolished by transferring the basis of the

electricity supply industry from one based upon inefficient and polluting giant fossil fuel

www.elsevier.com/locate/econbase

European Journal of Political Economy

Vol. 19 (2003) 391–394

burning plants to a clean and efficient industry based upon a small in-the-customer’s-house

industry. When dealing with developing countries, the attraction of distributed energy can

be even greater than in the developed world. Instead of investing hundreds of billions of

dollars in their unreliable and inefficient electricity infrastructure, they can leapfrog by

investing in a more reliable, much more efficient and cheaper system of distributed energy.

It will also decrease the need for expensive, time-consuming and bad-for-the-environment

transmission grids. This will be an environmental blessing, especially due to the fact that

distributed energy ‘‘plants’’ will use hydrogen or some other renewable energy as their

fuel, instead of coal, oil, natural gas, and nuclear power in the traditional plants.

While distributed energy should be subsidized in the developing world, it should not be

subsidized in developed countries; in these countries it is sufficient to abolish existing

subsidies to fossil fuel burning power plants in order to witness a flourishing of a clean and

price-competitive distributed electricity supply industry.

These two well-written and timely volumes should be used as a first introduction to the

field of environmental economics, as well as by those who are interested in understanding

the way we can and should effectively deal with environmental problems and dangers the

world is faced with today and in the future.

Eli Goldstein

Department of Economics, Bar Ilan University,

Ramat Gan 52900, Israel

E-mail address: goldste@popeye.cc.biu.ac.il

doi:10.1016/S0176-2680(02)00176-3

The Arab Human Development Report

Published by the United Nations Development Program, Regional Bureau for Arab States,

New York, 2002, 168 pages, downloadable at: http://www.undp.org/rbas/ahdr

The Arab Human Development Report—published by the United Nations Develop-

ment Programme (UNDP), Regional Bureau for Arab States—was written ‘‘by Arabs for

Arabs’’, according to the UNDP Assistant Administrator and Director of the Regional

Bureau for Arab States, at the launch of the report in July 2002.

The report is notable for four features. First, it is highly comparative: the achievements

and failures of the Arab world are compared with those of other regions in detail. Second,

clear links are made between economic and socio-economic development and political

structures. Third, a new index is given which includes political and economic factors, one

in which Arab countries score badly. Finally, some reasons for failures are given.

According to the report, over the past 20 years, growth of per capita income in the Arab

world at an average annual of 0.5% was lower than in any other region except sub-Saharan

Africa. Labor productivity in Arab nations was low, and declined, from a third of the North

American level in 1960, to 19% by 1990. If the current annual growth rate of 0.5%

continues, it will take the average Arab citizen 140 years to double his income. Other, fast

growing regions will achieve this level in less than 10 years. Total GDP of the Arab

Book reviews392