Book Reviews 481

health damages or to the exposure of only sensitive populations? In any case, there are serious problems in setting the charge if the exposure-response function is non-linear.

Aside from the unpersuasive discussion of the expo- sure charge, the book has several additional weaknesses. If monitoring and enforcement costs were considered for each instrument-target, the relative efficiencies of the policies would likely be affected. While Nichols con- siders such costs qualitatively, their quantitative integra- tion in the model would have been more helpful (and more difficult, I suspect).

Terminology is sometimes confusing. An "optimal standard" here is not one which equates marginal damages to a marginal aggregate treatment cost func- tion constructed under the assumption of optimal alloca- tion of treatment activity. Rather, cost functions are instrument-dependent. Thus, Nichols states that "the marginal cost curve under charges is different from that under standards because the allocation of control ef- forts will differ." With such an approach both emissions and costs can differ across "optimal" instruments. As another example, the terms specifications and perfor- mance targets are central to chapter 7 but are never defined.

Also, the readability of the text is marred by place- ment of all footnotes at the back of the book. This in- creasingly prevalent practice, when applied to the kind of substantive footnotes present in this book, makes for a needlessly frustrating read. Finally, the author takes the economics profession and practitioners to task for giving too little attention to the issue of targeting. "Lit- tie" is a relative term. Given our environmental laws, the current regulatory system, and the inability of any type of charge policy to receive serious considerations by policymakers, the current allocation of attention that favors marketable permits over charges, and emission and concentration targets over exposure and damage targets, may be just about right.

In spite of these deficiencies, Nichols has produced a worthwhile comparison of standards and charges and has reminded academics and regulators alike of the myriad policy design options available for achieving en- vironmental goals.

Alan J. Krupnick Resources for the Future 1616 P Street NW Washington, DC 20036

Energy: The Conservation Revolution (1981) by John H. Gibbons and William U. Chandler. Plenum Press, New York (258 pp., U.S. $17.50)

Energy: The Conservation Revolution is a provocative analysis of the U.S. energy situation that presents a

well-reasoned and technically sound case for energy con- servation as the cornerstone of energy policy. The prior- ity of energy efficiency is established through a critical review of factors influencing energy demand and supply conditions and an extensive examination of the potential of various energy options for meeting U.S. energy needs. In addition, practical guidelines are proposed for the policy, institutional, and behavioral changes required to carry forward the conservation revolution. The book is informative, well-written and carefully organized, mak- ing it valuable for a general audience as well as energy policy specialists.

The book is organized in three main sections but be- gins with a useful summary of major conclusions. Part One considers a number of earlier U.S. energy demand projections and indicates why such projections have tended to point inaccurately to high energy consump- tions futures. The authors describe the changing demo- graphic, economic, international, and other factors in- fluencing energy demand, document the failure of most demand projections to adequately incorporate these fac- tors, and suggest that policies based on such projections will be costly and counterproductive. The authors pro- pose that a relatively low energy consumption future for the United States is feasible but that this will require the devotion of greater attention and resources to conserva- tion as a means of meeting current U.S. energy needs and as a way of providing the time necessary for transition to sustainable fuels in a low energy future. While the United States will probably need less energy than many originally believed, the authors believe that the develop- ing countries are going to need more. This suggests that the process of energy transition needs to be rapid but that it will occur in the context of continuing instability regarding the availability and use of world energy re- sources. The authors conclude that the key to U.S. en- ergy policy in the 1980s is to facilitate a rapid transition while exploiting the opportunities to reduce energy de- mand through increased energy productivity.

Part Two is devoted to an assessment of energy supply options in terms of their price, availability, and both their internal and external costs. The section provides a context for assessing the implications of the demand forecasts presented earlier and offers a useful frame- work for considering the value of conservation alterna- tives and the time needed for transition to sustainable sources of supply. Readers of Environment International will appreciate the authors' careful consideration of the environmental and health costs of different supply op- tions. The authors argue that to ignore these costs in order to obtain cheaper energy is ultimately a false bar- gain. On this basis they propose that conservation op- tions may be judged cost-effective even when the price of these options equals or exceeds the price of supply options. The review of supply options leads the authors to conclude that the price of energy can only increase, but that conservation could substantially reduce energy

482 Book Reviews

demand in the year 2010 to a level below that at the be- ginning of the 1980s.

The final section offers an overview of the cost-effec- tiveness of relying on conservation options. Unlike most analyses of conservation, the authors treat conservation as a resource in its own right rather than simply as cur- tailment in response to higher prices for conventional fuels. Such an understanding is recognized as essential for a full assessment of conservation's value as an energy option. Drawing on a diversity of sources, the authors conclude that cost-effective options exist for cutting the energy consumption of buildings in half, for halving the use of oil in automobiles and for increasing industrial energy productivity so that economic growth can occur without growth in energy demand. The obstacles to ex- ploiting these possibilities are accurately depicted as in- stitutional as well as technical and are seen to require local, state, and national commitments in both the pub- lic and private sectors to pursue energy efficiency sys- tematically.

The authors do not propose greater energy efficiency as a panacea for U.S. energy problems nor do they pre- tend to have dealt with all aspects of recent energy condi- tions, prospects, and policy options. They have nonethe- less provided a persuasive assessment of the opportunities for energy efficiency, the actions necessary to exploit these opportunities, and the contributions conservation can make in the transition to a sustainable energy future.

In the four years since publication, the importance of the authors' argument has not diminished. Indeed, recent experience would seem to further support their conclu- sion that "in every area of energy, conservation remains the cheapest, most productive, most reliable, fastest, and safest alternative." Their proposition that energy efficiency should be the first priority of U.S. energy policy remains well supported. It is disconcerting, how- ever, to recognize how little responsiveness there has been to this priority in the last four years. Conservation is still undervalued and investment in federal conserva- tion programs has been drastically reduced. At the same time, U.S. energy policy has continued to be based on a fallacious assumption that increased energy production is essential to meet an inevitable escalation in demand required for economic growth. In this environment, there remain many lessons to be learned from the thoughtful analysis provided by Gibbons and Chandler and this book deserves a careful and sincere review within the U.S. energy policy community.

Daniel Rich Center for Energy and Urban Policy Research University of Delaware Newark, Delaware 19716

Running On Empty: The Future of the Automobile in an Oil Short World(1979) by L. R. Brown, C. Flavin, and C. Norman. W. W. Norton, New York (U.S. $7.95)

Technological prophecy is a risky undertaking; the march of events may prove you wrong. Here we have an ex- tended prediction regarding the future of the private automobile which is not so much wrong as premature. The authors are senior researchers at the Worldwatch Institute, self-appointed mine canary to the planet, an organization with a commendable record of brief, far- sighted publications in areas of environmental concern. Their book appeared in late 1979, shortly after the de- position of the Shah of Iran, as gasoline prices resumed their seemingly unending upward spiral and domestic auto production plunged to new postwar lows. As befits the emotional climate of the time, it is black with pessi- mism and full of dire alarms. It paints a future of grow- ing deprivation, in which disaffected motorists queue up for the privilege of filling their tanks at $50 a turn. Now, five years later, such talk seems almost foolish. Nothing of the kind has happened. Imported crude oil costs less today than it did in 1980. Auto manufacturers continue to post record profits. What went wrong? How did sen- sible, competent, well-informed researchers arrive at conclusions so at variance with subsequent events? Why should we harken to t h e s e - o r any o the r - c r i e s of "Wolf"?

The answer of course is that there is no single answer. At least four factors conspired to upset the gloomy sce- narios of Brown, Flavin, and Norman. Chief among these are the in tervent ionis t -one could scarcely call them laissez-faire-policies of the Reagan administra- tion, which awarded the domestic auto industry overt subsidies in the form of loan guarantees and covert sub- sidies in the form of relaxed emission and safety stan- dards, willingness to accept a deteriorating balance of payments, trade restrictions on imported autos, and mil- itary support to keep oil shipping lanes open. The indus- try itself, in an unparalleled display of chutzpah, suc- ceeded in wringing favorable wage concessions from its captive labor force. Accelerated extraction from Alas- kan, Mexican, and North Sea oil fields lessened Ameri- can dependence on OPEC oil, while internal dissension among OPEC members undermined Western belief in the monolithic nature of that cartel. And finally, Ameri- can motorists displayed hitherto unsuspected elasticity in their demand for gasoline. The result has been a sort of "Indian summer" for the American petropig, a tem- porary interlude of specious vitality sustained by federal largesse and the skillful exploitation of transient advan- tage. Yes, Virginia, they still build Lincoln Continentals, and more to the point, they still sell them.

But if Running On Empty has proved false in the short run, it will just as surely prove correct in the long run. The central thesis--that petroleum allocation will even- tually be governed by a "depletion psychology" in which the private automobile is accorded relatively low priority - c a n scarcely be denied. Regardless of ideology or de- gree of economic development, it is argued, national gov- ernments will necessarily give preference to less readily displaceable uses of petroleum, such as freight transpor-