Recent Advances in Environmental Economics http://avaxhome.ws/blogs/ChrisRedfield NEW HORIZONS IN ENVIRONMENTAL ECONOMICS Series Editors:Wallace E.Oates,Professor ofEconomics,University ofMaryland,USA and Henk Folmer,Professor ofGeneral Economics,Wageningen University and Professor of Environmental Economics,Tilburg University,The Netherlands This important series is designed to make a significant contribution to the development of the principles and practices ofenvironmental economics.It includes both theoretical and empirical work.International in scope,it addresses issues ofcurrent and future concern in both East and West and in developed and developing countries. The main purpose ofthe series is to create a forum for the publication ofhigh quality work and to show how economic analysis can make a contribution to understanding and resolving the environmental problems confronting the world in the twenty-first century. Recent titles in the series include: The International Yearbook ofEnvironmental and Resource Economics 2002/2003 A Survey ofCurrent Issues Edited by Tom Tietenberg and Henk Folmer International Climate Policy to Combat Global Warming An Analysis ofthe Ancillary Benefits ofReducing Carbon Emissions Dirk T.G.Rübbelke Pollution,Property and Prices An Essay in Policy-making & Economics J.H.Dales The Contingent Valuation ofNatural Parks Assessing the Warmglow Propensity Factor Paulo A.L.D.Nunes Environmental Policy Making in Economics with Prior Tax Distortions Edited by Lawrence H.Goulder Recent Advances in Environmental Economics Edited by John A.List and Aart de Zeeuw Sustainability and Endogenous Growth Karen Pittel The Economic Valuation ofthe Environment and Public Policy A Hedonic Approach Noboru Hidano Global Climate Change The Science,Economics and Politics James M.Griffin Global Environmental Change in Alpine Regions Recognition,Impact,Adaptation and Mitigation Edited by Karl W.Steininger and Hannelore Weck-Hannemann Environmental Management and the Competitiveness ofthe Nature-Based Tourism Destinations Twan Huybers and JeffBennett Recent Advances in Environmental Economics Edited by John A. List Professor, Department of Agricultural and Resource Economics,University of Maryland,US Aart de Zeeuw Professor of Environmental Economics,Department of Economics and CentER,Tilburg University,The Netherlands NEW HORIZONS IN ENVIRONMENTAL ECONOMICS Edward Elgar Cheltenham,UK • Northampton,MA,USA © John A.List,Aart de Zeeuw 2002 All rights reserved.No part of this publication may be reproduced,stored in a retrieval system or transmitted in any form or by any means,electronic, mechanical or photocopying,recording,or otherwise without the prior permission of the publisher. Published by Edward Elgar Publishing Limited Glensanda House Montpellier Parade Cheltenham Glos GL50 1UA UK Edward Elgar Publishing,Inc. 136 West Street Suite 202 Northampton Massachusetts 01060 USA A catalogue record for this book is available from the British Library Library ofCongress Cataloguing in Publication Data Recent advances in environmental economics / edited by John A.List,Aart de Zeeuw. p.cm.—(New horizons in environmental economics) Papers from a workshop held in Orlando,Florida,30 November–2 December 2000. Includes index. 1. Environmental economics—Congresses. 2. Environmental policy— Congresses. 3. International cooperation—Congresses. 4. Greenhouse gas mitigation—Congresses. I. List,John A.,1968– II. Zeeuw,Aart de,1952– III. Series. HD75.6.R426 2002 333.7—dc21 2002021391 ISBN1 84376 002 9 Printed and bound in Great Britain by MPG Books Ltd,Bodmin,Cornwall Contents List of contributors vii Introduction ix 1 A reconsideration of environmental federalism 1 Wallace E.Oates 2 Global environmental governance,political lobbying and transboundary pollution 33 Surjinder Johal and Alistair Ulph 3 Endogenous transfrontier pollution 59 Michael Rauscher 4 Allocating greenhouse gas emissions among countries with mobilepopulations 84 Michael Hoel 5 Environmental regulation and international trade:a general equilibrium approach 98 Chris Elbers and Cees Withagen 6 The ups and downs of the environmental Kuznets curve 119 Arik Levinson 7 Participation in industry-wide voluntary approaches: short-runvs.long-run equilibrium 142 Na Li Dawson and Kathleen Segerson 8 Irreversible development of a natural resource:management rulesand policy issues when direct use values and environmentalvalues are uncertain 158 Anastasios Xepapadeas 9 A model of neighbourhood conditions and internal householdenvironments 182 Mark Agee and Thomas Crocker 10 Environmental policy and the timing of drilling and productioninthe oil and gas industry 202 Mitch Kunce,Shelby Gerking and William Morgan v vi Contents 11 Using flexible scenarios in benefit estimation:an application tothecluster rule and the pulp and paper industry 232 Susan Kask,Todd Cherry,Jason Shogren and Peter Frykblom 12 Trade-offat the trough:TMDLs and the evolving status of USwaterquality policy 257 Carol Mansfield and V.Kerry Smith 13 Heterogeneous preferences and complex environmental goods: thecase of ecosystem restoration 286 J.Walter Milon and David Scrogin 14 Incentives in public goods experiments:implications for the environment 309 Jacob Goeree,Charles Holt and Susan Laury 15 An experimental test for options value:relevance for contingentvaluation elicitation 340 David Bjornstad,Paul Brewer,Ronald Cummings and Michael McKee 16 Is the scope test meaningful in the presence of other-regarding behaviour? 365 William Schulze,Gregory Poe,Ian Bateman and Daniel Rondeau Index 385 Contributors Mark Agee,Penn State University,USA Ian Bateman,University of East Anglia,UK David Bjornstad,Oak Ridge National Laboratory,USA Paul Brewer, Hong Kong University of Science and Technology, Hong Kong Todd Cherry,Appalachian State University,USA Thomas Crocker,University of Wyoming,USA Ronald Cummings,Georgia State University,USA Na Li Dawson,University of Connecticut,USA Chris Elbers,Free University Amsterdam,The Netherlands Peter Frykblom,Swedish University of Agricultural Sciences,Uppsala Shelby Gerking,University of Central Florida,USA Jacob Goeree,University of Virginia,USA Michael Hoel,University of Oslo,Norway Charles Holt,University of Virginia,USA Surjinder Johal,University of Southampton,UK Susan Kask,Western Carolina University,USA Mitch Kunce,University of Wyoming,USA Susan Laury,Georgia State University,USA Arik Levinson,Georgetown University,USA Carol Mansfield,Research Triangle Institute,USA Michael McKee,University of New Mexico,USA J.Walter Milon,University of Central Florida,USA William Morgan,University of Wyoming,USA Wallace E.Oates,University of Maryland,USA Gregory Poe,Cornell University,USAand University of East Anglia,UK Michael Rauscher,University of Rostock,Germany Daniel Rondeau,University of Victoria,Canada vii viii List ofcontributors William Schulze,Cornell University and University of Washington,USA David Scrogin,University of Central Florida,USA Kathleen Segerson,University of Connecticut,USA Jason Shogren,University of Wyoming,USA V.Kerry Smith,North Carolina State University,USA Alistair Ulph,University of Southampton,UK Cees Withagen, Free University Amsterdam and Tilburg University, The Netherlands Anastasios Xepapadeas,University of Crete,Greece Introduction A few years ago, the Department of Economics at the University of Central Florida decided to commit a considerable amount of resources in the area of environmental and resource economics. The Galloway Professorship in Environmental and Resource Economics was established and preference was given to this research area in the recruitment of junior faculty. In line with this policy of ‘selected excellence’, the Center for Environmental Policy Analysis,which has a mission to improve the quality of Florida’s public and private decisions that have environmental, eco- nomic,and resource-use implications,was created and the idea was born to inaugurate this institute with a premier conference in Orlando. A few years earlier, the CentER for Economic Research at Tilburg University in the Netherlands had developed a successful niche in environ- mental and resource economics. The optimal strategy was to combine forces and to organize the conference jointly.A major notion driving this cooperation was to bring together different strands of research in environ- mental and resource economics that could be considered frontier develop- ments in both Europe and North America. In Europe, the dominant direction in the area seems to be a strong use of theoretical applications to solve policy problems,whereas in North America one distinct trend seems to be toward a more empirically oriented approach. The interaction between the two strands has traditionally been somewhat weak,as schol- ars tend to meet in large conferences with separate (often parallel) sessions or organise distinct workshops. The UCF/CentER conference aimed to produce a forum for a small group of leading researchers from these dis- tinct directions.The workshop came to fruition in Orlando,30 November– 2 December 2000. Our invitation policy was simple: a theme was not compulsory, rather our main focus was on research quality.While the size ofthe workshop only permitted us to invite a handful of scholars,we were pleasantly surprised that several top-notch scholars in this area ofresearch were open to the idea of attending the conference.During the workshop the quality of research presented led many to believe that a refereed volume based on the papers should be pursued. It was clear that the participants were willing to con- tribute manuscripts toward a volume that could become a landmark of recent advances in environmental and resource economics. ix