Natural Resource and Environmental Economics
                                                                                                                                                                              www.booksites.net
                          Roger Perman   Yue Ma   James McGilvray   Michael Common                                                             3rd edition
                                                                                                                                                                               3rd edition
                   Natural Resource and Environmental Economics is                                                                                                               Roger PNatural Resource and Environmental Economics
                   among the leading textbooks in its field. Well written and                        Features:
                   rigorous in its approach, this third edition follows in the vein                  •   New chapters on pollution control with 
                   of previous editions and continues to provide a compre-                                                                                                       erman    Y
                   hensive and clear account of the application of economic                              imperfect information; cost-benefit analysis 
                   analysis to environmental issues. The new edition retains all                         and other project appraisal tools; and stock 
                   of the topics from the second edition but has been                                    pollution problems 
                   reorganised into four Parts: I Foundation II Environmental                        •   Substantial extensions to existing chapters, 
                   Pollution III Project Appraisal IV Natural Resource                                   including a thorough account of game theory 
                   Exploitation.                                                                         and its application to international                                    ue Ma    James McGilvray    Mic
                   This text has been written primarily for the specialist                               environmental problems; fuller treatments of 
                   market of second and third year undergraduate and                                     renewable resource and forestry economics; 
                                                                                                         and greater emphasis on spatial aspects of 
                   postgraduate students of economics.                                                   pollution policy
                                                                                                     •   New pedagogical features including 
                                                                                                         learning objectives, chapter summaries, 
                                                                                                         further questions and more concise boxed                                                                     Natural Resource and Environmental Economics
                   Roger Perman is Senior Lecturer in Economics,                                         cases
                   Strathclyde University. His major research interests and                          •   New accompanying website at 
                                                                                                              .booksites.net/perman provides a rich 
                   publications are in the field of applied econometrics and                             www                                                                                                          Roger Perman   Yue Ma   James McGilvray   Michael Common                                                            3rd edition
                   environmental economics.                                                              variety of resources for both lecturers and 
                                                                                                         students 
                   Michael Common is Professor in the Graduate School of                             •   Case studies and examples are used 
                   Environmental Studies at Strathclyde University. His major                            extensively, highlighting the application of 
                   research interests are the development of ecological                                  theory                                                                  hael Common
                   economics and policies for sustainability.                                        •   Further readings, discussion questions and 
                   Yue Ma is Associate Professor in Economics, Lingnan                                   problems conclude each chapter                                                                                                                                 
                   University, Hong Kong, and Adjunct Professor of Lingnan                           •   Detailed mathematical analysis is covered 
                   College, Zhongshan University, China. His major research                              in appendices to the relevant chapters
                   interests are international banking and finance, as well as                       •   Writing style and technical level have been 
                   environmental economics for developing countries.                                     made more accessible and consistent
                   The late James McGilvray was Professor of Economics at
                   Strathclyde University. He made important contributions in
                   the fields of input-output analysis, social accounting and
                   economic statistics, and to the study of the economics of                                                     Cover Image ©Getty Images
                   transition in Central and Eastern Europe. 
                                                                                                        www.booksites.net            www.pearsoneduc.com                                                                                                                                                                              www.booksites.net
                Natural Resource 
                and Environmental 
                Economics
                Third Edition
                Roger Perman
                Yue Ma
                James McGilvray
                Michael Common
                    
                                                          Pearson Education Limited
                                                          Edinburgh Gate
                                                          Harlow
                                                          Essex CM20 2JE
                                                          and Associated Companies throughout the world
                                                          Visit us on the World Wide Web at:
                                                          www.pearsoneduc.com
                                                          First published 1996 Longman Group Limited
                                                          Second edition 1999 Addison Wesley Longman Limited
                                                          Third edition 2003 Pearson Education Limited
                                                          © Longman Group Limited 1996
                                                          © Addison Wesley Longman Limited 1999
                                                          © Pearson Education Limited 2003
                                                          The rights of Roger Perman, Yue Ma, James McGilvray and
                                                          Michael Common to be identified as the authors of this work
                                                          have been asserted by them in accordance with the Copyright,
                                                          Designs and Patents Act 1988.
                                                          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, electronic, mechanical,
                                                          photocopying, recording or otherwise, without either the prior written permission of the
                                                          publisher or a licence permitting restricted copying in the United Kingdom issued by the
                                                          Copyright Licensing Agency Ltd, 90 Tottenham Court Road, London W1P 0LP.
                                                          ISBN 0273655590
                                                                
                                                          British Library Cataloguing-in-Publication Data
                                                          A catalogue record for this book is available from the British Library
                                                          Library of Congress Cataloging-in-Publication Data
                                                          Natural resource and environmental economics / Roger Perman ...[et al.].—3rd ed.
                                                                 p. cm.
                                                               Rev. ed. of: Natural resource and environmental economics / Roger Perman,
                                                             Yue Ma, James McGilvray. 1996.
                                                               Includes bibliographical references and index.
                                                               ISBN 0-273-65559-0 (pbk.)
                                                               1. Environmental economics.  2. Natural resources—Management.
                                                             3. Sustainable development. I. Perman, Roger, 1949– Natural resource and 
                                                             environmental economics.
                                                          HC79.E5 P446 2003
                                                          333.7—dc21                                                        2002042567
                                                          10 987654321
                                                          06 05 04 03
                                                          Typeset in 9.75/12pt Times by 35
                                                          Printed and bound by Ashford Colour Press Ltd., Gosport
                                                  Contents
                                                  Preface to the Third Edition                                            xiii
                                                  Acknowledgements                                                         xv
                                                  Notation                                                                xvi
                                                  Introduction                                                            xix
                                         Part I   Foundations
                                    Chapter 1     An introduction to natural resource and environmental 
                                                  economics                                                                 3
                                                  Learning objectives                                                       3
                                                  Introduction                                                              3
                                            1.1   Three themes                                                              3
                                            1.2   The emergence of resource and environmental economics                     4
                                            1.3   Fundamental issues in the economic approach to resource 
                                                  and environmental issues                                                 10
                                            1.4   Reader’s guide                                                           12
                                                  Summary                                                                  14
                                                  Further reading                                                          15
                                                             
                                    Chapter 2     The origins of the sustainability problem                                16
                                                  Learning objectives                                                      16
                                                  Introduction                                                             16
                                            2.1   Economy–environment interdependence                                      17
                                            2.2   The drivers of environmental impact                                      28
                                            2.3   Poverty and inequality                                                   41
                                            2.4   Limits to growth?                                                        44
                                            2.5   The pursuit of sustainable development                                   48
                                                  Summary                                                                  52
                                                  Further reading                                                          52
                                                  Discussion questions                                                     54
                                                  Problems                                                                 54
                                    Chapter 3     Ethics, economics and the environment                                    56
                                                  Learning objectives                                                      56
                                                  Introduction                                                             56