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may be used in correcting environmental externalities. Siebert extends the typical discussion of policy instruments to con- sider how the nature of the environmen- tal externality affects the choice of policy instrument. In Chapter 10, he discusses how the working of political processes may limit the implementation of instru- ments that economists may suggest. The fourth section of the book expands the discussion to cover a number of topics related to the spatial characteristics of environmental problem. This includes an examination of trade issues, transfrontier pollution, global pollution and regional allocation issues. Finally, Section 5 ex- pands the previous discussion to in- clude temporal and uncertainty aspects in a dynamic framework. In this context Siebert also discusses issues of growth and sustainability.

It is useful to compare Siebert to the other primary text aimed at a similar level of exposition, Baumol and Oates' 1988 second edition of The Theory of Environmental Policy (hereafter B&O). Siebert's text is very similar to B&O in multiple respects. The basic model de- veloped in Chapter 4 is almost identical to B&O, and several other topics are covered in a parallel manner. Comparing Siebert to B&O several positive and neg- ative attributes are identified: (1) Siebert is not as rigorous from a theoretical point of view as B&O; (2) Siebert provides more intuition following his model and discussion of several topics than B&O; (3) Siebert deals more with applications and provides more real world examples than B&O; and yet (4) Siebert is less sys- tematic in the level of exposition than B&O.

Siebert covers some areas in much more in depth than Baumol and Oates. These include issues of transboundary pollution, the political economy of envir- onmental pollution, issues of environ- mental quality as a public good and some alternative approaches to solving the en- vironmental problem such as property rights assignments. In particular, the spa- tial dimensions of environmental prob- lems that Siebert examines are likely to take a larger role in policy debates, espe- cially as global environmental problems, such as global warming, come to domin- ate many environmental agendas.

Throughout the book Siebert intro- duces methods from areas now being

used to examine issues in environmental policy making. For instance, Siebert in- troduces applied general equilibrium modeling in Chapter 2, a method that is being developed and applied more rigor- ously to environmental problems. And in Part 4 some methods from cooperative and non-cooperative game theory are touched upon to explore issues of inter- regional and transboundary pollution.

On a critical note I find three (per- haps rather minor) weaknesses with Siebert's fourth edition. First, the extent to which Siebert refers to results devel- oped in the various appendices often makes it difficult to follow the argu- ments being developed in the text of the chapters. As these arguments are often the prime focus of the chapter, this re- viewer feels the text would be more readable by simply building the models in the main text rather than having to constantly refer to the appendices. Sec- ond, the level of exposition and use of advanced methods varies considerably from chapter to chapter. The basic static modelling is developed using principles from calculus. Then much of the discus- sion after analysing the impacts of an emissions tax is purely verbal without rigorous theoretical analysis. At the most technical level, Appendix 15A attempts to introduce control theory for dynamic modelling, but this would not be attain- able by most individuals without some prior background in dynamic methods. Third, on a more pragmatic level, it is noted that there are a multitude of typo- graphical and grammatical errors and several missing references, While all texts inevitably contain printing errors, the number of errors in this edition sug- gest that they should have been detected with a good spell checker and proof- reading.

Jeffr~ K Lazo Department of Mineral Economics The Pennsylvania State University

References

Baumol, W J and Oates, W E (1988) The Theory of Environmental Policy 2nd edition, Cambridge University Press, Cambridge

Freeman, A M (1993) The Measurement of Environmental and Resource Val- ues: Theory and Methods Resources for the Future, Washington, DC

Economists and the Environment: What the Top Economists Say About the Environment Carla Ravaioli (with a contribution by Paul Ekins) London, Zed Books, 1995, 212 pp, ISBN 1-85649-278-8

Very few would argue that the environ- mental problems that face humanity today don't concern the field of eco- nomics. But if this is so, why do main- stream economists tend to treat the environment as a marginal subject? This question is the starting point of this book on economists and the environment. Searching for an answer, Carla Ravaioli has interviewed many of the top eco- nomists to hear their view on environ- mental issues. Twenty-eight economists from a range of positions participate in the book, The intention of Ravaioli is also to confront the views of famous mainstream economists with the opin- ions of so-called ecological economists, for example Herman Daly and Nicholas Georgescu-Roegen.

Even though one might feel that it is not fair to accuse economists of over- looking environmental problems, it is still interesting to see how different economists argue when they are con- fronted with questions like the relation- ship between economic growth and environmental quality, the limits of the market mechanism and other related is- sues. In this sense, Ravaioli's interviews in the first part of the book provide an excellent overview.

Faced with the question of whether or not a market economy is a good instru- ment for protecting the environment the answers don't differ that much among the mainstream economists. In general their attitudes towards market mechan- isms are (not surprisingly) positive but it is emphasized that many environmental goods are so-called public goods for which markets are not established. Thus, government policies, especially in the form of pollution taxes, are needed to improve the situation.

Nevertheless, most of the participants also recognize that the policy of internal- izing all environmental costs is very dif- ficult to pursue in practice and they are not too impressed by government action so far. In the words of Paul Samuelson; 'Public intervention in the field of the

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Book reviews

environment has been inadequate so far ' (p 46). The group of ecological economists surely agree with this and also accept the notion that some prob- lems can be dealt with through tax/price mechanisms. However, they argue, quan- titative regulations to restrain economic growth must be mandatory.

Thus, when we reach the question of whether economic growth is bad for the environment or not, the difference in opinions between the interviewees be- comes much more clear. The ecological economists primarily look upon eco- nomic growth as a physical concept and they stress that we cannot always rely on technological progress as natural re- sources become scarce. This means that unlimited growth in consumption in- evitably must lead to a degradation of the natural capital and our life-supporting ecosystems will be threatened. For the mainstream economist, though, growth is about adding value to resources. Even if most of the these participants believe that the historical consumption patterns have been harmful to the environment, not many of them recommend anything like a zero-growth policy. Instead, they emphasize that environmental concern has to be integrated into private decision making (preferably by full cost pricing) ie a concentration on the micro level of the economy rather than the macro level. Then, as David Pearce puts it; 'we would discover that we can have many of the benefits of development without destroy- ing the environment' (p 83).

The different economists ' opinions about economic growth and market forces also come forth when they are confronted with questions about the on- going transition in Eastern Europe and the environmental problems of the Third World. In these cases, though, their pol- icy recommendations are much more cautious and humble. Transfer of tech- nologies and financial aid from the rich countries are emphasized but the com- ments on how this should work in prac- tice are ambiguous.

Having read the interviews in the first part of the book one may be surprised reading Ravaioli 's own conclusions in the ending chapter. She writes that her hunch that mainstream economists ig- nore the importance of environmental is- sues has been confirmed. She also claims to know why; economists treat environ-

mental problems as a marginal malfunc- tion of the market system, a problem that easily can be solved by taxes and a re- moval of ineffective subsidies. Even if this was a correct description, the notion is open to objections. First, even 'mar- ginal' adjustments, like pollution taxes, can have large positive environmental ef- fects (especially if the tax level is high!). Taxes on emissions provide cost effect- ive reductions in emissions and induce the introduction of cleaner production technology. Second, economics neces- sarily has a limited perspective but this does not mean that the discipline as such is ignorant to environmental problems. In the words of Volkmar Hartje; 'like any other discipline economics should be aware of its limits' (p. 134). After all, the lessons that can be learnt from eco- nomics are valuable in helping to solve many environmental problems, but only with the help of other disciplines.

This view on the role of economics is also (ironically) supported in the second part of the book. Here Paul Ekins discuss- es to what extent the discipline can con- tribute to the achievement of sustainable development. He begins by a short and instructive review of mainstream resource and environmental economics. His main conclusion is that there is nothing in the optimality concept of economic models that necessarily secures sustainability. Here the ecological economists seem to have a point; the discipline lacks an environmental macroeconomics. On the other hand, Ekins argues, sustainable development has many dimensions; ethi- cal, environmental, social as well as eco- nomic. Gaining knowledge and recom- mending policies for a sustainable society must be a multidisciplinary task. In this process economists do have a role, how- ever limited the discipline may be. 'It is the economists' task not to define the goal of sustainability, but to advise on ways of minimising the cost of achieving it' (p 201). The role of economists should be restricted. So, if one is concerned about the state of the environment, an interview book that focuses its attention on how dif- ferent disciplines (and other forces as well) influence political decisions would perhaps be more appropriate.

Patrik S6derholm Division of Economics

Luled University Luled, Sweden

The European Business Environment Neill Nugent and Rory O'Donnell (eds) Macmillan, 1994, 260 pp (so, cover). ISBN 0-333-56643-2

There is an increasing justification to discuss Europe as a business environ- ment in its own right. The importance of the European Union has recently in- creased with the 1995 addition of three new countries. The possible creation of the European Monetary Union and fur- ther expansion of the EU towards eastern Europe are now top priorities on the agendas of frequent summit meetings. Consequently, Europeanization is a topic which, for every businessman whether European or not, deserves continuous analysis when designing company busi- ness objectives and strategies. For this purpose this book provides valuable information covering the most relevant aspects of the European business envir- onment. But as the book is written for businessmen or academic people in gen- eral, the direct benefit for mineral indus- try professionals is limited.

The first chapter deals with the polit- ical environment. Neill Nugent describes the nature of political influence on busi- ness at national and community levels and discusses the principles of policies followed in major European countries. The book is useful in that it assists in un- derstanding how different the traditions are in Europe starting from French di- rigisme where the central govermnent has a strong position to more liberal and decentralized systems in Germany and Nordic countries where corporatistic features are still important. Europe is by no means uniform in terms of political and cultural systems and this is reflected on the level of the European Union where there are many inefficiencies and an unwieldy bureaucracy. The chapter contains a good description of European institutions and their decision making procedures which companies must know about when dealing with the European Commission. However, it would be inter- esting to learn more about the author's visions on future political developments such as 'European federalism', the pos- sible expansion of the EU to include eastern European countries and about foreign relations in general.

In the second chapter author Rory O'Donnel l gives a good description of

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