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Environmental policy is high on the political agenda in many countries. Considering the various dimensions of environmental quality as public goods, Sandmo identifies the failures of the market mechanism in the face of environmental problems and shows how economic policy should be designed to overcome them. Specific topics covered include the assessment of environmental benefits and costs, the choice between taxes and quotas as policy tools, the principles of environmental taxation in a second-best world, the various notions of the double dividend from environmental tax reform, and international aspects of environmental policy as well as its political economy ramifications. The treatment is mainly theoretical, but the emphasis throughout is on showing how theory can be relevant to the rational design of economic policy.
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The Public Economics of the Environment Agnar Sandmo OXFORD UNIVERSITY PRESS This book has been printed digitally and produced in a standard specification in order to ensure its continuing availability OXFORD UNIVERSITY PRESS Great Clarendon Street, Oxford OX2 6DP Oxford University Press is a department of the University of Oxford. It furthers the University's objective of excellence in research, scholarship, and education by publishing worldwide in Oxford New York Auckland Cape Town Dar es Salaam Hong Kong Karachi Kuala Lumpur Madrid Melbourne Mexico City Nairobi New Delhi Shanghai Taipei Toronto With offices in Argentina Austria Brazil Chile Czech Republic France Greece Guatemala Hungary Italy Japan South Korea Poland Portugal Singapore Switzerland Thailand Turkey Ukraine Vietnam Oxford is a registered trade mark of Oxford University Press in the UK and in certain other countries Published in the United States by Oxford University Press Inc., New York © Agnar Sandmo, 2000 The moral rights of the author have been asserted Database right Oxford University Press (maker) Reprinted 2006 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, without the prior permission in writing of Oxford University Press, or as expressly permitted by law, or under terms agreed with the appropriate reprographics rights organization. Enquiries concerning reproduction outside the scope of the above should be sent to the Rights Department, Oxford University Press, at the address above You must not circulate this book in any other binding or cover And you must impose this same condition on any acquirer ISBN 0-19-829798-X Series Foreword The Lindahl Lectures on Monetary and Fiscal Policy have been instituted by Uppsala University with support from Nordbanken as a biannual event to honour the memory of Erik Lindahl (1891-1960). Lindahl was a great economist who held a chair in economics at the University between 1942 and 1958. A concise but thorough account of Lindahl's scientific contributions with a selective bibliography has been published by Otto Steiger,1 A more extensive account, including many valuable biographical details, has been presented by Jan Petersson.2 Lindahl's contributions fall mainly within four areas: 1. 2. 3. 4. National income accounting. Public finance. Monetary and macroeconomic theory. Stabilization policy. National accounts are essential for the design of tax policy and stabilization policies. Lindahl developed a consistent intertemporal framework for the basic concept of income by relating it to capital, the pricing of capital goods, and capital gains and losses. He also devoted much time and effort to initiating the empirical measurement of national income movements over time in Sweden, His extremely meticulous work with social accounting concepts has proved to be of such lasting value that it led Sir John Hicks