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: [email protected]
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