Environmental Economics (I)
Department of Economics, National Taiwan University
2003 Fall

Course Instructor：劉錦添（Jin-Tan Liu）
Class Hours：Thursday 9:00 – 12:00 am
Office Hours：Friday, 2:00 - 4:30 pm
Office Room：Room 102, Dept. of Economics Building
Tel：23519641-520, or 281 鄭凱文或林泔薇 ( RA office )
E-mail：liujt@ntu.edu.tw
Topics
1. Externalities
2. Environmental Regulation and Informal Regulation
3. Welfare Economics
4. Benefit Estimation and Damage Assessment
5. Trade and Environment
Course Requirement
1. Midterm Exam（30%）
2. Final Exam（50%）
3. Oral Presentation（20%）
Web Sites
1. www.rff.org (Resources for the Future)
2. www.epa.gov/economics (U.S. EPA Economy and Environment)
3. www.worldbank.org/nipr (NIPR, Environmental Economics and Indicators)
4. www.nber.org (National Bureau of Economic Research)
5. www.oecd.org (OECD)
6. www.damagevaluation.com (Environmental Valuation & Cost Benefit website)
7. www.evri.ec.gc.ca (Environmental Valuation Reference Inventory)
8. www.msu.edu/course/prm/320 (Professor Eileen van Ravenswaay website)
9. www.sscnet.ucla.edu/ssc/labs/cameron (Professor Trudy Ann Cameron website)
10. http://ase.tufts.edu/gdae (Global Development and Environment Institute at Tufts University)
11. www.unfccc.de (Home page for the United Nations Framework Convention on Climate Change).
12. http://wri.org/climate (World Resource Institute’s web site on climate and atmosphere).

Textbooks and References
Baumol and Oates (1988), Theory of Environmental Policy, 2nd edition, New York:
Cambridge University Press.
Braden, J.B. and C. D. Kolstad (1991), Measuring the Demand for Environmental
Improvement, North Holland.
Callan and Thomas (1996), Environmental Economics and Management, Irwin.
Cornes and Sandler (1986), The Theory of Externalities, Public Goods, and Club
Goods, New York: Cambridge University Press. (HB846.3. C67, 1986).
Cummings, Brookshire and Schulze (ed.) (1986), Valuing Environmental Goods:
An Assessment of the Contingent Valuation Method, NJ: Rowman and Allenheld.
. Field, Barry C. (2000), Natural Resource Economics: An Introduction, New York:
MaGraw-Hill Co.
Fisher, Anthony (1981), Resource and Environmental Economics, Cambridge
University Press. (HC59. F558).
Folmer, Henk and Tom Tietenberg (1999), The International Yearbook of Environmental and Resource Economics, Edward Elgar.
Freeman, A. Myrick (1979), Benefits of Environmental Improvement, Johns
Hopkins University Press. (HC79. E5. F7).
Freeman, A. Myrick (1993), The Measurement of Environmental and Resource
Value: Theory and Methods, Resources for the Future.
Halvorsen and Ruby (1981), Benefit-Cost Analysis of Air Pollution Control, Mass:
Lexington Books. (TD883. H35).
Hanley, Nick, Jason F. Shogren and Ben White (1997), Environmental Economics
in Theory and Practice, England, Macmillan Ltd.
Jeroen, C. J. M. and van den Bergh (1999), Handbook of Environmental and Resource Economics, Edward Elgar.
Johansson (1987), The Economic Theory and Measurement of Environmental
Benefits, Cambridge: Cambridge University Press.
Johansson (1991), Introduction to Modern Welfare Economics, Cambridge:
Cambridge University Press.
Johansson (1993), Cost-Benefit Analysis of Environmental Change, Cambridge:
Cambridge University Press.
Just, et al. (1982), Applied Welfare Economics, N.J.: Prenice-Hall. (HB846. J87).
Kahn, James R. (1995), The Economic Approach to Environmental and Natural
Resources, Dryden Press.
Kemien and Schwartz (1981), Dynamic Optimization, North Holland. (QA402.5.
K32).
Kneese and Sweeney (1985), Handbook of Natural Resource and Energy
Economics, volumes 1 and 2, North-Holland Publisher. (HD9502. A2. H257, 1985).
Kopp, Raymond J. and V. Keng Smith ads. (1993), Valuing National Assets: The
Economics of Natural Resource Damagement Assessment, Washington, D.C.:
Resources for the Future.
Maureen L. Cropper and Wallace E. Oates (1992), “Environmental Economics: A
Survey”, Journal of Economic Literature, June, 675-740.
Mendelsohn, Robert and Daigee shaw ed. (1997), The Economics of Pollution
Control in the Asia Pacific, UK: Edward Elgar.
Mitchell and Carson (1989), Using Surveys to Value Public Goods: The Contingent
Valuation Method, Washington, D.C.: Resources for the Future.
Nishimura, H. (1989), How to Conquer Air Pollution: A Japanese Experience, New
York: Elsevier.
O’Connor, Martin (1998), Valuation and the Environment: Theory, Method and
Practice, Edward Elgar.
OECD (1989), Environmental Policy Benefits: Monetary Valuation, Paris: OECD.
(HC79. E5. E57856).
OECD (1991), Environmental Policy: How to Apply Economic Instruments, Paris:
OECD.
Panayotou, Theodore (1993), Green Markets: The Economics of Sustainable
Development, San Francisco: ICS Press.
Pearce and Turner (1990), Economics of Natural Resources and the Environment,
Johns Hopkins University Press.
Portney (1982), Current Issues in Natural Resource Policy, Johns Hopkins
University Press (HC103.7. C87).
Portney (1990), Public Policies for Environmental Protection, Resources for the
Future.
Smith, ed. (1984), Environmental Policy Under Regan’s Executive Order, Chapel
Hill: University of North Carolina Press.
Tietenberg (1985), Emission Trading, an Exercise in Reforming Pollution Policy,
Johns Hopkins University. (HC110. A4 T54).
Tietenberg (1988), Environmental and Natural Resource Economics, ILL: Scott,
Foresman. (333.7. T564. E61).
Tolley, George, Donald Kenkel, and Robert Fabian eds. (1994), Valuing Health for
Policy, Chicago: University of Chicago Press.
中文書：黃宗煌 等人譯，環境經濟學與政策，聯經出版社.



Course Outline
Ⅰ. Externalities and Efficiency
Hanley, Shogren, and White (1997), Chapter 2-6.
Fisher, Chapter 6 provides an overview of many of the topics in this section and
following two sections.
* Pearce and Turner, Chapter 4-5.
* Harris and Codur (1998), “Microeconomics and the Environment,” in http://ase.tufts.edu/gdae.

A. Taxes
Baumel and Oates, Chapter 2-4,6,7,8,11,12.
Bohm, “Comparative Analysis of Alternative Policy Instruments” in Kneese
and Sweeney, vol.Ⅰ.
Carlton and Loury, “ The Limitations of Pigouvian Taxes as Long Run Remedy
for Exteralities” QJE, Nov. 1980 and comment by Kohn and reply QJE, Nov.
1986.
Dasgupta and Heal, Chapter 3, section 6.
Gould, “ Total Conditions in the Analysis of External Effects” EJ, Sept. 1977.
Oates, “ The Regulation of Externalities: Efficient Behavior by Sources and
Victims” Public Finance, 1983.
* Pearce and Turner, Chapter 6.
Shibata and Winrick, “ Control of Pollution When the Offended Defend
Themselves” Economica, 1983.
Starrett and Zeckhauser, “ Treating External Diseconomies—Markets or Taxes”
in Pratt, Statistical and Mathematical Aspects of Pollution Problems.
B. Subsidies
Baumol and Oates, Chapter14.
Burrows, “ Pigovian Taxes, Polluter Subsidies, Regulation, and the Size of a
Polluting Industry” CJE, Aug. 1979.
Palmquist, “ Pollution Subsidies and Multiple Local Optima” Land Ec, Nov.
1990.
* Pearce and Turner, Chapter 7
Polinsky, “ Notes on the Symmetry of Taxes and Subsides in Pollution Control”
CJE, Feb. 1979.
C. Marketable Permit
Baumol and Oates, Chapter 12.
* Pearce and Turner, Chapter 8.
Tietenberg, Emission Trading.
Tietenberg, “ Transferable Discharge Permits and the Control of Stationary
Source Air Pollution: A Survey and Synthesis,” Land Ec, Nov. 1980.
D. Environmental Policy under Uncertainty and Asymmetric Information
Adar and Griffin, “Uncertainty and the Choice of Pollution Control Instruments
“ JEEM, October 1976.
Baumol and Oates, Chapter 5.
Dasgupta and Heal, 400-409.
Kwerel, “To Tell the Truth: Imperfect Information and Optimal Pollution
Control” REStudies, 1977.
Segerson, “Uncertainty and Incentives for Nonpoint Pollution Control” JEEM,
March 1988.
Weitzman, “ Prices versus Quantities” REStudies, 1974.
E. Formal Regulation
Magat and Visusi, “Effectiveness of the EPA’s Regulatory Enforcement: the Case of Industrial Effluent Standards”, J. of Law and Economics, October 1990.
Deily and Gray, “Enforcement of Pollution Regulations in a Declining Industry,” JEEM, 1991, 260-274.
Cohen, “Monitoring and Enforcement of Environmental Policy,” in Folmer and Tietenberg (1999).
F. Informal Regulation
Pargal and Wheeler, “Informal Regulation of Industrial Pollution in Developing Countries: Evidence from Indonesia,” JPE, 1996.
Pargal, Hettige, Singh, and Wheeler, “Formal and Informal Regulation of
Industrial Pollution: Comparative Evidence from Indonesia and the United
States” World Bank Economic Review, 1997, 433-450.
G. Pollution and Economic Growth
Environment and Development Economics: Special Issue: The Environmental
Kuznets Curve. Oct. 1997.
Barbier, “ Introduction to the Environmental Kuznets Curve”.
Grossman and Krueger, “ Economic Growth and the Environment” QJE, May
1995,353-377.
Ⅱ. Common Property Resources and Open Access Resources
Counes and Sandler, “ On Commons and Tragedies”, AER, 1983, 787.
Dasgupta and Heal, 11-21, 55-78.
Ⅲ. Welfare Measurement or Damage Assessment
An overview of this section of the course is provided by:
Freeman, “ Methods for Assessing the Benefits of Environmental Programs” in
Kneese and Sweeney.
* OECD (1989).
Freeman, Chapter 2-3.
A. Monetary Measures of Welfare Change under Certainty
1. Consumers Welfare
Johansson, Chapter 1-6.
Just, et al. Chapter 5,6,7,9 and Appendix B.
Hausman, “ Exact Consumer Surplus and Deadweight Loss” AER, 1981, 662.
Schulze, “The Use of Direct Methods for Valuing Natural Resource Damages”
in Kopp and Smith, eds. Natural Resources Damage Assessment.
* Willig, “Consumer’s Surplus without Apology”, AER, 1976, 589-597.
Vartia, “Efficient Methods of Measuring Welfare Change and Compensated
Income in Terms of Market Demand Functions”, Economitrica, 1983, 79-98.
Hanemann, “Willingness to Pay and Willingness to Accept: How Much Can
They Differ”, AER, 1990.
Bockstael and McConnell, “ Welfare Effects of Changes in Quality” A
Synthesis” working paper 1987.
2. Producer Rents
Just, et al. Chapter 4 and Appendix A1-5.
3. Multi-Market Welfare Measurement
Just, et al. Chapter 9 and Appendix D1-2.
B. Monetary Measures of Welfare Change under Uncertainty: Option Price,
Option Value, and Quasi-option Value
Freeman, Chapter 8, 5.
Bishop, “Option Value: An Exposition and Extension” Land Ec, Feb. 1982.
Bishop, “Resource Valuation under Uncertainty: Theoretical Principles for
Empirical” 1986.
Freeman, “Nonuse Values in Natural Resource Damage Assessment” in Kopp
and Smith, eds. Naturnal Resources Damage Assessment.
Graham, “Cost-Benefit Analysis under Uncertainty” AER, Sept. 1981.
Hanemann, “Information and the Concept of Option Value” JEEM, March 1989.
Johansson, Chapter 10, 11.
* Pearce and Turner, Chapter 9.
Smith, “Non-Use Values in Benefit Cost Analysis” SEJ, July 1987.
C. Indirect Benefit Measurement
1. Hedonic Models
Freeman, Chapter 11,12.
Johansson, Chapter 7.
McConnell, “Indirect Methods for Assessing Natural Resource Damages under
CERCLA” in Kopp and Smith, eds. Natural Resource Damage Assessment.
* OECD (1989), Chapter 5.
Palmquist, “Hedonic Methods” in Braden and Kolstad, ed, Measuring the
Demand for Environmental Improvement. North-Holland, 1990.
Palmquist, “Welfare Measurement in the Hedonic Model: The Case of
Nonparametric Marginal Prices”, JEEM, Sept. 1988.
Rosen, “Hedonic Prices and Implicit Markets” JPE, 1974.
Visusi and Aldy, “The Value of a Statistical Life: A Critical Review of Market Estimates Throughout the World,” NBER working paper 9487, 2003.

2. Recreation Demad Models: Travel Cost, Hedonic Travel Cost, Random
Utility Models, and Nested Logit Models
Freeman, Chapter 13.
Bockstael, Hanemann, and Kling, “Estimating the Value of Water Quality
Improvements in a Recreational Demand Framework” WRR, May 1987.
Bockstael, McConnell, and Strand, “Recreation” in Braden and Kolstad, eds.,
Measuring the Demand for Environmental Improvement, North-Holland, 1990.
Brown and Mendelsohn, “The Hedonic Travel Cost Method” REStat, August
1984.
McConnell, “The Economics of Outdoor Recreation” in the Kneese and
Sweeney.
Smith, “Travel Cost Recreation Demand Methods: Theory and Implementation”.
3. Household Production Models
Bockstael and McConnell, “Welfare Measurement in the Household Production
Framework” AER, Sept. 1983.
Deaton and Muellbauer, Chapter 10.
Smith, “Household Production Functions and Environmental Benefit
Measurement” in Braden and Kolstad, eds., Measuring the Demand for
Environmental Improvement, North-Holland, 1990.
D. Contingent Valuation and Contingent Behavior Methods
Freeman, Chapter 6.
Boyle and Bishop, “Welfare Measures Using Contingent Valuation: A
Comparison of Techniques” AJAE, Feb. 1988.
Camerson, “A New Paradigm for Valuing Non-market Goods using
Referendum Data” JEEM, Sept. 1988.
Carson, “Constructed Markets” in Braden and Kolsted, eds., Measuring the
Demand for Environmental Improvement, North-Holland, 1990.
Hanemann, “Welfare Evaluations in Contingent Valuation Experiments with
Discrete Responses” AJAE, Aug. 1984.
Hanemann, Loomis, and Kanninen, “Statistical Efficiency of
Double-Bounded Dichotomous Choice Contingent Valuation, AJAE, 1991.
Jahansson (1987), Chapter 7.
McConnell, “Models for Referendum Data: The Structure of Discrete Choice
Models for Contingent Valuation” JEEM, Jan. 1990.
* OECD (1989) , Chapter 4.
Ⅳ. Valuation of Environmental Risks
Freeman, Chapter 8.
Jones-Lee, The Economics of Safety and Physical Risk, Basil Blackwell, 1989,
Chapter 2, 3.
Slovic, “Perception of Risk” Science, April 1987.
Smith, “Environmental Risk Perception and Valuation: Conventional versus
Prospective Reference Theory” in The Social Response to Risk: Policy
Formation in an Age of Uncertainty, D. Bromley and K. Segerson, Editors
(Kluwer, 1992).
Smith, et al., “Can Public Information Programs Affect Risk Perceptions?”
Journal of Policy Analysis and Management, Winter 1990.
Viscusi and O’Connor, “Adoptive Responses to Chemical Labelling: Are Workers Bayesian Decision Makers?”, AER, 1984, 942-956.
Smith and Desvousges, “ Risk Communication and the Value of Information: Randon as a Case Study,” REstat, 1990, 137-142.
Viscusi, “ A Bayesian Perspective on Biases in Risk Perception” Economics
Letters, 1985.
Viscusi, Fatal Tradeoffs: Public and Private Responsibilities for Risk, New
York: Oxford University Press, Chapter 6-8.
Viscusi and Evans, “Utility Functions that Depend on Health Status: Estimates
and Economic Implications” AER, June 1990.
Ⅴ. Valuing Longevity and Health
Freeman, Chapter 10.
Tolley, Kenkel and Fabian (1994).
Ⅵ. Environmental Regulations and International Trade
Oates, Palmer, and Portney, “Environmental Regulation and International
Competitiveness: Thinking About the Porter Hypothesis,” REF/QE Discussion
Pater 94-12, Nov. 1993.
Jaffe, Peterson, Portney and Stavins, “Environmental Regulation and the Competitiveness of U.S. Manufacturing: What Does the Evidence Tell us?” JEL, 1995, 132-163.
Anderson and Neary, “A New Approach to Evalvating Trade Policy” World
Bank Working Paper, Nov. 1992.
Dean, “Trade and The Environment, A Survey of the Literature” World Bank
Working Paper, Aug 1992.
De Boer, Ineke, “Trade and Environment: A Brief Survey of Current
Theoretical Issues,” in Ekko C. van Ierland ed. International Environmental Economics: Theories, Models and Applications to Climate Change, International Trade and Acidification. (Asmsterdam: Elsevier, 1994).
Barbera and McConnell, “The Impact of Environmental Regulations on
Industry Productivity: Direct and Indirect Effects” JEEM, Vol. 18, 1990.
Gray and Shadbegian, “Pollution Abatement Costs, Regulation, and Plant-Level
Productivity,” NBER Working paper, 4994, Jan. 1995.
期刊名稱
AER: American Economics Review
AJAE: American Journal of Agricultural Economics
CJE: Canadian Journal of Economics
EC Inq: Economic Inquiry
Economica
EJ: Economic Journal
JEL: Journal of Ecoonomic Literature
JEEM: Journal of Environmental Economics and Management
JPAM: Journal of Political Economy
JPE: Journal of Political Economy
Land Ec: Land Economics
NRJ: Natural Resources Journal
Public Finance
QJE: Quarterly Journal of Economics
SEJ: Southern Economic Journal
REStat: Review of Economics and Statistics
REStudies: Review of Economics Studies
WRR: Water Resources Research