Environmental &

Natural Resource

Economics

7 OzÄ

Tom Tietenberg

Emeritus, Colby College

Lynne Lewis

Bates College

PEARSON

Boston Columbus Indianapolis New York San Francisco Upper Saddle River Amsterdam Cape Town Dubai London Madrid Milan Munich Paris Montreal Toronto

Delhi Mexico City Sao Paulo Sydney HongKong Seoul Singapore Taipei Tokyo

Contents in Brief

Preface xx

1 Visions of the Future 1 2 The Economic Approach: Property Rights, Externalities, and

Environmental Problems 15 3 Evaluating Trade-Offs: Benefit-Cost Analysis and Other

Decision-Making Metrics 46 4 Valuing the Environment: Methods 73 5 Dynamic Efficiency and Sustainable Development 105 6 Depletable Resource Allocation: The Role of Longer Time Horizons,

Substitutes, and Extraction Cost 122 7 Energy: The Transition from Depletable to Renewable Resources 145 8 Recyclable Resources: Minerals, Paper, Botties, and E-Waste 173 9 Water: A Confluence of Renewable and Depletable Resources 200

10 A Locationally Fixed, Multipurpose Resource: Land 234 11 Storable, Renewable Resources: Forests 254 12 Common-Pool Resources: Commercially Valuable Fisheries 278 13 Ecosystem Goods and Services: Nature's Threatened Bounty 316 14 Economics of Pollution Control: An Overview 343 15 Stationary-Source Local and Regional Air Pollution 378 16 Climate Change 399 17 Mobile-Source Air Pollution 420 18 Water Pollution 445 19 Toxic Substances and Environmental Justice 480 20 The Quest for Sustainable Development 508 21 Visions of the Future Revisited 531

Answers to Self-Test Exercises 541 Glossary 564 Name Index 575 Subject Index 582

v

Contents

Preface

Yisions of the Future 1

Introduction 1 The Self-Extinction Premise 1 EXAMPLE 1.1 A Tale ofTwo Cultures 2

Future Environmental Challenges 3 Climate Change 3 Water Accessibility 4

Meeting the Challenges 5 How Will Societies Respond? 6

The Role of Economics 6 DEBATE 1.1 Ecological Economics versus Environmental Economics 7 The Use of Models 8 EXAMPLE 1.2 Experimental Economics: Studying Human Behavior in

a Laboratory 9 The Road Ahead 9

The Issues 10 DEBATE 1.2 What Does the Future Hold? 11 An Overview of the Book 11

Summary 12 • Discussion Questions 13 • Seif -Test Exereise 13 • Furth er Reading 13

The Economic Approach: Property Rights, Externalities, and Environmental Problems 15

Introduction 15 The Human-Environment Relationship 16

The Environment as an Asset 16 The Economic Approach 18 EXAMPLE 2.1 Economic Imf acts ofReducing Hazardous Pollutant

Emissions from Iron and Steel Foundries 19

Contents vii

Environmental Problems and Economic Efficiency 19 Static Efficiency 19

Property Rights 21 Property Rights and Efficient Market Allocations 21 Efficient Property Rights Structures 22 Producer's Surplus, Scarcity Rent, and Long-Run Competitive

Equilibrium 23 Externalities as a Source of Market Failure 24

The Concept Introduced 24 Types of Externalities 25 EXAMPLE 2.2 Shrimp Farming Externalities in Thailand 26 Perverse Incentives Arising from Some Property Right Structures 27 Public Goods 30 Imperfect Market Structures 32 EXAMPLE 2.3 Public Goods Privately Provided: The Nature Conservancy 3 3 Asymmetrie Information 34 Government Failure 35

The Pursuit of Efficiency 36 Private Resolution through Negotiation—Property, Liability

and the Coase Theorem 3 7 Legislative and Executive Regulation 40 EXAMPLE 2.4 Can Eco-Certification Make a Difference? Organic

Costa Rican Coffee 42 An Efficient Role for Government 42 Simrmary 43 • Discussion Questions 44 • Self-Test Exercises 44

• Further Reading 45

Evaluating Trade-Offs: Benefit-Cost Analysis and Other Decision-Making Metrics 46

Introduction 46 Normative Criteria for Decision Making 46

Evaluating Predefined Options: Benefit-Cost Analysis 47 Finding the Optimal Outcome 48 Relating Optimality to Efficiency 49 Comparing Benefits and Costs across Time 51 Dynamic Efficiency 53

Applying the Concepts 53 Pollution Control 53 Estimating Benefits of Carbon Dioxide Emission Reductions 54 EXAMPLE 3.1 Does Reducing Pollution Make Economic Sense?

Evidence from the Clean Air Act 54 EXAMPLE 3.2 Using the Social Cost of Capital: The DOE Microwave

Oven Rule 5 7

viii Contents

Issues in Benefit Estimation Approaches to Cost Estimation The Treatment of Risk Distribution of Benefits and Costs Choosing the Discount Rate EXAMPLE 3.3 The Importance of the Discount Rate

Divergence of Social and Private Discount Rates DEBATE 3.1 Discounting over Long Time Horizons: Should Discount

Rates Decline? A Critical Appraisal

Cost-Effectiveness Analysis Impact Analysis Summary 70 • Discussion Questions 71* Seif-Test Exercises 71

• Furth er Reading 72

L • Valuing the Environment: Methods

Introduction Why Value the Environment?

DEBATE 4.1 Should Humans Place an Economic Value on the Environment?

Valuation Types of Values Classifying Valuation Methods Stated Preference Methods DEBATE 4.2 Willingness to Pay versus Willingness toAccept: Why So Different? EXAMPLE 4.1 Leave No Behavioral Trace: Using the Contingent

Valuation Method to Measure Passive- Use Values Revealed Preference Methods EXAMPLE 4.2 Using the Travel Cost Method to Estimate Recreational

Value: Beaches in Minorca, Spain Benefit Transfer and Meta Analysis Using Geographie Information Systems to Enhance Valuation EXAMPLE 4.3 Using GIS to Inform Hedonic Property Values: Visualizing

the Data Challenges EXAMPLE 4.4 Valuing the Reliability of Water Supplies: Coping

Expenditures in Kathmandu Valley, Nepal DEBATE 4.3 Distance Decay in Willingness to Pay: When and

How Much Does Location Matter? Valuing Human Life DEBATE 4.4 What Is the Value ofa Polar Bear? DEBATE 4.5 h Valuing Human Life lmmoral?

SmwMary; Pa/zwOon Twby 102 * 102 * Ererwej 103 * Pwa&er 103

57 59 60 62 62 63 64

65 66 67 69

73

73 74

75 75 77 78 79 82

84 86

88 89 90

92 92

93

94 95 96 98

Contents ix

Dynamic Efficiency and Sustainable Development 105

Introduction 105 A Two-Period Model 106 Defining Intertemporal Fairness 110 Are Efficient Allocations Fair? 111

EXAMPLE 5.1 The Alaska Permanent Fund 113 Applying the Sustainability Criterion 114

EXAMPLE 5.2 Nauru: Weak Sustainability in the Extreme 115 Implications for Environmental Policy 116 Summary 117* Discussion Question 118 * Seif-Test Exercises 118

• Further Reading 119 Appendix-. The Simple Mathematics of Dynamic Efficiency 120

Depletable Resource Allocation: The Role of Longer Time Horizons, Substitutes, and Extraction Cost 122

Introduction 122 A Resource T axonomy 123 Efficient Intertemporal Allocations 127

The Two-Period Model Revisited 127 The N-Period Constant-Cost Case 128 Transition to a Renewable Substitute 129 Increasing Marginal Extraction Cost 131 Exploration and Technological Progress 133

Market Allocations of Depletable Resources 134 Appropriate Property Rights Structures 134 EXAMPLE 6.1 Historical Example ofTechnological Progress in the

Iron Ore Industry 135 Environmental Costs 136 EXAMPLE 6.2 The Green Paradox 138

Summary 139 • Discussion Question 140 • Self-Test Exercises 140 • Furth er Reading 141

Appendix: Extensions of the Constant Extraction Cost Depletable Resource Model: Longer Time Horizons and the Role of an Abundant Substitute 142

Energy: The Transition from Depletable to Renewable Resources 145

Introduction 145 EXAMPLE 7.1 Hubbert's Peak 146

Natural Gas: From Price Controls to Fracking 147

X Contents

The Role of Price Controls in the History of Natural Gas 147 Fracking 149 DEBATE 7.1 Does the Advent of Fracking Increase Net Benefits? 150

Oil: The Cartel Problem 150 Price Elasticity of Demand 151 Income Elasticity of Demand 152 Non-Member Suppliers 152 Compatibility of Member Interests 153

Fossil Fuels: National Security Considerations 154 DEBATE 7.2 How Should Countries Deal with the Vulnerability of

Imported Oil? 156 EXAMPLE 7.2 Strategie Petroleum Reserve 158 EXAMPLE 7.3 Fuelfrom Shale: The Bakken Formation 159

Electricity: Goal and Nuclear Energy 160 Goal 160 Uranium 161

Electricity: Transitioning to Renewables 162 DEBATE 7.3 Dueling Externalities: Should the United States Promote

Wind Power? 163 EXAMPLE 7.4 The Relative Cost-Effectiveness ofRenewable Energy

Policies in the United States 166 Energy Efficiency 167 EXAMPLE 7.5 Energy Efficiency in Rental Housing Markets 168

Summary 170 • Discussion Questions 171 * Seif-Test Exercises 171 • Further Reading 172

Recyclable Resources: Minerals, Paper, Botties, and E-Waste 173 Introduction 173 Minerals 173 An Efficient Allocation of Recyclable Resources 175

Extraction and Disposal Cost 175 Recycling: A Closer Look 177 Recycling and Ore Depletion 178 EXAMPLE 8.1 l^ead Recycling 179

Factors Mitigating Resource Scarcity 179 Exploration and Discovery 180 Technological Progress 180 Substitution 181 EXAMPLE 8.2 The Bet 182

Market Imperfectaons 183 Disposal Cost and Efficiency 183 The Disposal Decision 183

Contents xi

Disposal Costs and the Scrap Market 185 Subsidies on Raw Materials 185 Corrective Public Policies 186

EXAMPLE 8.3 An Early Example: Pricing Trash in Marietta, Georgia 186 EXAMPLE 8.4 Does Packaging Curbside Recyling with Incentives Promote

Efficiency? 187 DEBATE 8.1 "Bottie Bills": Economic Incentives at Work? 190 EXAMPLE 8.5 Implementingthe "Take-Back"Principle 192

Markets for Recycled Materials 193 E-Waste 193 Pollution Damage 195 Summary 197 • Discussion Questions 197 • Seif--Test Exercises 198

• Furth er Reading 199

Water: A Confluence of Renewable and Depletable Resources 200

Introduction 200 The Potential for Water Scarcity 201 The Efficient Allocation of Scarce Water 205

Surface Water 205 Groundwater 207

The Current Allocation System 208 Riparian and Prior Appropriation Doctrines 209 Sources of Inefficiency 210 DEBATE 9.1 Wh at Is the Value ofWater? 214

Potential Remedies 216 Water Transfers, Water Markets, and Water Banks 216 EXAMPLE 9.1 Using Economic Principles to Conserve Water in California 217 EXAMPLE 9.2 Water Transfers in Colorado: What Makes a Market for

Water Work? 218 EXAMPLE 9.3 Water Market Assessment: Australia, Chile, South Africa,

and the United States 219 Instream Flow Protection 220 WaterPrices 221 EXAMPLE 9.4 Reserving Instream Rights for Endangered Species 221 EXAMPLE 9.5 Water Pricing in Canada 226 Desalination 227 EXAMPLE 9.6 Moving Rivers or Desalting the Sea? Costly Remedies for

Water Shortages 228 Privatization 229 DEBATE 9.2 Should Water Systems Be Privatized? 229

GIS and Water Resources 230 Summary 230 • Discussion Questions 231 • Self-Test Exercises 232

232

xii Contents

A Locationally Fixed, Multipurpose Resource: Land 234

Introduction 234 The Economics of Land Allocation 235

Land Use 235 Land-Use Conversion 236

Sources of Inefficient Use and Conversion 238 Sprawl and Leapfrogging 238 Incompatible Land Uses 239 Undervaluing Environmental Amenities 240 The Influence of Taxes on Land-Use Conversion 241 DEBATE 10.1 Should Landowners Be Compensated for "Regulatory Takings"? 242 Market Power 243 Special Problems in Developing Countries 244 DEBATE 10.2 What Is a "Public Purpose"? 245

Innovative Market-Based Policy Remedies 247 Establishing Property Rights 247 Transferable Development Rights 247 Grazing Rights 248 EXAMPLE 10.1 Controlling Land Development ivith TDRs 248 Conservation Easements 249 Land Trusts 250 Development Impact Pees 250 Property T ax Adjustments 250

Summary 251 * Discussion Questions 252 • Seif-Test Exercises 252 • Further Reading 253

Storable, Renewable Resources: Forests 254 Introduction 254 Characterizing Forest Harvesting Decisions 255

Special Attributes of the Timber Resource 255 The Biological Dimension 256 The Economics of Forest Harvesting 256 Extending the Basic Model 260

Sources of Inefficiency 262 Perverse Incentives for the Landowner 262 Perverse Incentives for Nations 264

Poverty and Debt 265 Sustainable Forestry 266 Public Policy 267

EXAMPLE 11.1 Producing Sustainable Forestry through Certification 268 Debt-Nature Swaps 269

Contents

Extractive Rescrves 270 Conservation Easements and Land Trusts 270 EXAMPLE 11.2 Conservation Easements inAction: The Blackfoot

Community Project 270 The World Heritage Convention 271 Royalty P ayments 271 EXAMPLE 11.3 Does Pharmaceutical Demand Offer Sufficient Protection to

Biodiversity? 272 EXAMPLE 11.4 Trust Funds for Habitat Preservation 273

Summary 274 • Discussion Questions 275 * Seif-Test Exercises 275 • Further Reading 276

Appendix: The Harvesting Decision: Forests 277

Common-Pool Resources: Commercially Valuable Fisheries 278

Introduction 278 Efficient Allocations 279

The Biological Dimension 279 Static Efficient Sustainable Yield 281 Dynamic Efficient Sustainable Yield 284

Appropriability and Market Solutions 287 EXAMPLE 12.1 Harbor Gangs of Maine and Other Informal Arrangements 290

Public Policy Toward Fisheries 291 Raising the Real Cost of Fishing 291 Taxes 293 Catch Share Programs 294 EXAMPLE 12.2 The Relative Effectiveness of Transferable Quotas

and Traditional Size and Effort Restrictions in the Atlantic Sea Scallop Fishery 299

DEBATE 12.1 ITQs or TURFs? Speeles, Space, or Both? 301 Aquaculture 302 DEBATE 12.2 Aquaculture: Does Privatization Cause More Problems Than

It Solves? 304 Subsidies and Buybacks 304 Marine Protected Areas and Marine Reserves 305 The 200-Mile Limit 307 Preventing Poaching 307 DEBATE 12.3 Bluefin Tuna: Is Its High Price Part ofthe Problem or Part of

the Solution? 308 Summary 309 • Discussion Questions 310 * Self-Test Exercises 310

• Further Reading 311 Appendix: The Harvesting Decision: Fisheries 313

xiv Contents

| jj Ecosystem Goods and Services: Nature's Threatened Bounty 316

Introduction 316 The State of Ecosystem Services 317 Economic Analysis of Ecosystem Services 318 Demonstrating the Value of Ecosystem Services 318

The Value of Reefs 319 Damage Assessments: Loss of Ecosystem Services 320 EXAMPLE 13.1 The Value of Coral Reefs in the US Virgin Islands 3 21 Valuing Supporting Services: Pollination 322 EXAMPLE 13.2 Valuing Pollination Services: Tzvo Illustrations 323 Valuing Supporting Services: Forests and Coastal Ecosystems 324 Challenges and Innovation in Ecosystem Valuation 324

Institutional Arrangements and Mechanisms for Protecting Nature's Services 327 Payments for Environmental Services 327 DEBATE 13.1 Payingfor Ecosystem Services or Extortion?:

The Case ofYasuni National Park 329 Tradable Entitlement Systems 329

Wetlands Banking 329 EXAMPLE 13.3 Trading Water for Beehives and Barbed Wire

inBolivia 330 Carbon Sequestration Credits 331 Conftict Resolution in Open-Access Resources via Transferable

Entitlements 331 EXAMPLE 13.4 Reducing Emissions frorn Deforestation and Forest

Degradation (REDD):ATwofer? 332 DEBATE 13.2 Tradable Quotasfor Whales? 333

Ecotourism 334 DEBATE 13.3 Does Ecotourism Provide a Pathivay to Sustainability? 335 EXAMPLE 13.5 LocalApproaches to Wildlife Protection: Zimbabwe 336

The Special Problem of Protecting Endangered Speeles 336 Conservation Banking 337 EXAMPLE 13.6 Conservation Banking: The Gopher Tortoise

Conservation Bank 337 The Agglomeration Bonus 338 Safe Harbor Agreements 33g

Moving Forward 339 Szowwary 339 * DÄrwamw ßaemow 340 * Eyerorer 341

• Further Reading 341

Contents xv

Economics of Pollution Control: An Overview 343

Introduction 343 A Pollutant T axonomy 3 44 Defining the Efficient Allocation of Pollution 345

Stock Pollutants 345 Fund Pollutants 346

Market Allocation of Pollution 349 Efficient Policy Responses 350 Cost-Effective Policies for Uniformly Mixed Fund Pollutants 351

Defining a Cost-Effective Allocation 351 Cost-Effective Pollution Control Policies 353 DEBATE 14.1 Should Developing Countries Rely on Market-Based

Instruments to Control Pollution? 358 Cost-Effective Policies for Nonuniformly Mixed Surface Pollutants 359

The Single-Receptor Case 359 The Many-Receptors Case 364

Other Policy Dimensions 365 The Revenue Effect 365 EXAMPLE 14.1 The Swedish Nitrogen Charge 366 EXAMPLE 14.2 RGGIRevenue: The Maine Example 368 Responses to Changes in the Regulatory Environment 368 Price Volatility 369 Instrument Choice under Uncertainty 370 Product Charges: An Indirect Form of Environmental Taxation 371

Summary 372 • Discussion Question 373 • Self-Test Exercises 374 • Further Reading 375

Appendix: The Simple Mathematics of Cost-Effective Pollution Control 376

Stationary-Source Local and Regional Air Pollution 378

Introduction 378 Conventional Pollutants 378

The Command-and-Control Policy Framework 379 The Efficiency of the Command-and-Control Approach 380 DEBATE 15.1 Does Sound Policy Require Targeting New Sources via the

New Source Review? 381 DEBATE 15.2 The Particulate and Smog Ambient Standards Controversy 382 Cost-Effectiveness of the Command-and-Control Approach 383 EXAMPLE 15.1 Controlling SO2 Emissions by Command-and-Control

in Germany 386 Air Quality 386

xvi Contents

17

Market-Based Approaches 387 Smog Trading (RECLAIM) 388 Emissions Charges 389

Regional Pollutants 390 EXAMPLE 15.2 The Economics ofAdirondack Acidification Control 391 Crafting a Policy 392 EXAMPLE 15.3 The Sulfur Albmance Program afier 20 Years 394 EXAMPLE 15.4 Technology Diffusion in the Chlorine-Manufacturing Sector 396

SMMMMry 395 * 397 * Erermer 397 • Further Reading 398

Climate Change 399

Introduction 3 99 The Science of Climate Change 400 Negotiations over Climate Change Policy 401

Characterizing the Broad Strategies 401 DEBATE 16.1 Should Carbon Sequestration in the Terrestrial Biosphere

Be Credited? 402 Game Theory as a Window on Climate Negotiations 402

The Precedent: Reducing Ozone-Depleting Gases 405 Economics and the Mitigation Policy Choice 407

Providing Context: A Brief Look at Three Illustrative Carbon Pricing Programs 408

Carbon Markets and Taxes: How Have These Approaches Worked in Practice? 409

Two Carbon Pricing Program Design Issues: Offsets and Price Volatility 412

Controversy: The Morality of Emissions Trading 413 DEBATE 16.2 Is Global Greenhouse Gas Trading Immoral? 414

Policy Timing 414 Summary 416 • Discussion Question 417 • Seif-Test Exercises 417

• Further Reading 418

Mobile-Source Air Pollution 420

Introduction 420 Subsidies and Externalities 422

Implicit Subsidies 422 Externalities 42 3 Consequences 424

Policy toward Mobile Sources 424 History 424 The US Approach 425

Contents xvii

Lead Phaseout Program 426 EXAMPLE 17.1 Getting the Lead Out: The Lead Phaseout Program 427 CAFE Standards 427 DEBATE 17.1 CAFE Standards or FuelTaxes? 429 Fuel Economy Standards in Other Countries 429 External Benefits of Fuel Economy Standards 430 EXAMPLE 17.2 Car-Sharing: Better Use of Automotive Capital? 431 Alternative Fuels and Vehicles 431 Road Pricing 43 3 EXAMPLE 17.3 ZonalMobile-Source Pollution-Control Strategies:

Singapore 436 Parking Cash-Outs 436 Pricing Public Transport 437 Feebates 437 Tax Credits for Electric Vehicles 438 Pay-as-You-Drive (PAYD) Insurance 438 Accelerated Retirement Strategies 438 EXAMPLE 17.4 Modifying Car Insurance as an Environmental Strategy 439 EXAMPLE 17.5 The Cash-for-Clunkers Program: Did It Work? 440 EXAMPLE 17.6 Counterproductive Policy Design 441

Summary 441 • Discussion Questions 443 • Seif--Test Exercises 443 • Further Reading 444

Water Pollution 445

Introduction 445 Nature of Water Pollution Problems 446

Types of Waste-Receiving Water 446 Sources of Contamination 446 Types of Pollutants 447 DEBATE 18.1 Toxics in Fish Tissue: Do Fish Consumption Advisories

Change Behavior? 451 Traditional Water Pollution Control Policy 452

Early Legislation 452 Subsequent Legislation 453 The TMDL Program 455 The Safe Drinking Water Act 456 Ocean Pollution 456

Efficiency and Cost-Effectiveness 457 Ambient Standards and the Zero-Discharge Goal 458 National Effluent Standards 459 Watershed-Based Trading 462 EXAMPLE 18.1 Effluent Trading for Nitrogen in Long

Island Sound 464 Municipal Wastewater Treatment Subsidies 466

xviii Contents

470 471 472

Pretreatment Standards 467 Nonpoint Source Pollution 467 Atmospheric Deposition of Pollution 469 The European Experience Developing Country Experience EXAMPLE 18.2 The Irish Bag Levy EXAMPLE 18.3 Economic Incentives for Water Pollution Control:

The Case of Colombia 473 Oil Spills from Tankers 474 An Overall Assessment 475

Summary 477 • Discussion Questions 478 • Seif-Test Exercises 478 • Further Reading 47 8

Toxic Substances and Environmental Justice 480

Introduction 480 Nature of Toxic Substance Pollution 481 Health Effects 482 Policy Issues 483 EXAMPLE 19.1 The Arduous Path to Managing Risk: BisphenolA 484

Market Allocations and Toxic Substances 485 Occupational Hazards 485 EXAMPLE 19.2 Susceptible Populations in the Hazardous Workplace 488 Product Safety 489 Third Parties 490

The Incidence of Hazardous Waste Siting Decisions 490 History 490 Environmental Justice Research and the Emerging Role of GIS 491 EXAMPLE 19.3 Do New Polluting Facilities Affect Housing Values and

Incomes? Evidence in New England 492 The Economics of Site Location 493 EXAMPLE 19.4 Which Came First—The Toxic Facility or the Minority

Neighborhood? 494 The Policy Response 495 DEBATE 19.1 Does Offering Compensation for Accepting an Environmental

RiskAlways Increase the Willingness toAccept the Risk? 497 Creating Incentives through Common Law 498 Statutory Law 499 The Toxic Release Inventory 500 Proposition 65 501 International Agreements 502 EXAMPLE 19.5 Regulating through Mandatory Disclosure: The Case of Lead 503

&«%%%#)' 504 * DücB&MOM 505 * Ergreif# 506 • Furth er Reading 506

Contents xix

The Quest for Sustainable Development 508

Introduction 508 Sustainability of Development 509

Market Allocations 511 Efficiency and Sustainability 511 Trade and the Environment 514 EXAMPLE 20.1 Has NAFTA Improved the Environment in Mexico? 518 Trade Rules under GATT and the WTO 519 DEBATE 20.1 Should an Importing Country BeAble to Use Trade Restriaions

to Influence Harmful Eishing Practices in an Exporting Nation? 520 The Natural Resource Curse 520

The Growth-Development Relationship 520 EXAMPLE 20.2 The "NaturalResource Curse"Hypothesis 521 Conventional Measures 522 Alternative Measures 524 EXAMPLE 20.3 Happiness Economics: Does Money Buy Happiness? 527

Summary 526 • Discussion Questions 528 • Self-Test Exercises 529 • Furth er Reading 529

Visions of the Future Revisited 531

Introduction 531 Addressing the Issues 531

Conceptualizing the Problem 531 Institutional Responses 533 EXAMPLE 21.1 Private Incentives for Sustainable Development:

Can Adopting Sustainable Practices Be Profitable? 534 Sustainable Development 536 EXAMPLE 21.2 Public-Private Partnerships: The Kaiundborg Experience 538

A Concluding Comment 539 Discussion Questions 540 • Further Reading 540

Answers to Self-Test Exercises 541 Glossary 564 Name Index 575 Subject Index 582