Wednesday, December 18, 2013

A Revised "Fundamentals of Environmental Economics"

I have taken the many comments I received from my students on my environmental economics textbook and have done a complete re-write of the book.  You can now buy the revised book on Amazon Kindle for $6.   I know of no other undergraduate microeconomics text that discusses;  how to run a field experiment to measure the demand for seeing a hippo (named Harry) at the zoo, a regression discontinuity design for testing for whether California's regulation is why its energy consumption is lower than in other states, the root sources of environmentalism, why some companies choose to "go green", discrete choice models of where households and firms choose to locate, the implications of population heterogeneity on household self selection into neighborhoods and the implications of such sorting for estimating how the population's health is affected by air pollution (think of Superman versus the Average Joe).   I know of no book that discusses the political economy of whether government enforces regulation and the incentives of urban mayors to pursue the "green agenda".  I know of no book that carefully discusses information regulation and the intended and unintended consequences of government regulation and how to use basic supply and demand analysis to predict the general equilibrium effects of such policies.   This is not your typical textbook.   As the examples above show, I try to integrate into a consistent narrative both jokes, micro theory and "Big Data" freakonomics focused on environmental economics.    Articles from the New York Times are integrated into the text to give it a "real world" relevant feel.    Unlike other texts, the book has a long last chapter on the future of the world economy in the face of climate change. I contrast the behavioral economics worldview with the Chicago view of households and firms having rational expectations about the future but knowing that they don't know what climate change will do our agricultural and urban sectors. I argue that there is so much money for entrepreneurs to make to come up with solutions for us that by a law of large numbers green innovation will be spurred because of our fear of climate change and that this will help us to adapt to many of the challenges we have collectively unleashed.  

Along the way, the reader learns plenty about externalities, public goods, the Tragedy of the Commons, free riders, resource depletion, population dynamics and government solutions ---- this is the bread and butter of any environmental course and I cover these topics in my own quirky way.   For those who teach urban economics, my book has a clear urban focus with the pollution problems being produced in cities and most of the social costs being borne in cities. For example, there is a long discussion of dog poop in Rome.  This is serious stuff!

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