RFF Press, Washington D. C. ISBN 1-891853-12-0
As research in environmental policy has accumulated, and the number of applications of policy instruments for environmental and natural resource management has grown, so has the arsenal of different instruments available for the policy maker. This development has continued up to a point where it now becomes difficult for the individual researcher or policy maker to survey this vast field. With this in mind, there are many that have reason to be grateful for Thomas Sterner's effort in his new book, Policy Instruments for Environmental and Natural Resource Management. This book not only details the economic principles behind environmental policy, but also presents a wide range of examples of practical policy design in areas such as road transportation, industrial pollution and the management of natural resources and ecosystems.
In the preface Thomas Sterner states that the book is intended for academicians, like university professors, graduate and undergraduate students, as well as analysts who advice policy makers. In particular, the book turns towards people of these categories in countries who have not to date made extensive use of market-based policy instruments. Presumably, this includes countries in the developing world and former planned economies. The book is non-technical in the sense that only a small amount of mathematical formulas are presented to not deter reader with a less solid background in maths.
The book is divided into seven sections. The first part (entitled: The Need for Environmental and Natural Resource Policy) details the causes behind environmental degradation and introduces important concepts in environmental economics, such as externalities and public goods. The section also gives an outline of bioeconomics and the evolution of rights. The material is similar to other textbooks, and should be well known to the environmental economist. Part 2 (Review of Policy Instruments) presents the most important policy tools in the economists tool box, including direct regulation, taxes, tradeable permits, subsidies and property rights related instruments. This material is presented in an accessible, non-technical manner. Part 3 (Selection of Policy Instruments) concentrates on how to choose between different policy instruments, taking into account aspects such as efficiency, uncertainty, equilibrium effects, cost distribution, etc. This section should be particularly useful for analysts who advice policy makers. The information in this section is also neatly summarized in a “Policy Selection Matrix” in Chapter 18.
In Parts 4, 5 and 6 the book becomes really unique and interesting for an academic audience. In these sections the author analyses a wealth of examples of policy design in areas such as road transportation, industrial pollution and the management of natural resources and ecosystems. Part 4 (Policy Instruments for Road Transportation) describes the policy experience in areas such as road pricing, fuel taxation and vehicle standards. In Part 5 (Policy Instruments for Industrial Pollution) the attention is turned to a “classic” area for environmental policy. The examples from both developed and developing countries are numerous. Policies for natural resource management is the focus of Part 6 (Policy Instruments for the Management of Natural Resources and Ecosystems), which deals with water, waste, fisheries, agriculture, forestry and ecosystems. Readers of JFE are perhaps most interested in the chapter on forestry (Chapter 30), and I would have to argue that this chapter is rather short, although that cannot be regarded as a major shortcoming of the book as a whole. However, a reader with a deeper interest in forest policy might want to complement with the book by Boyd & Hyde (1989).
What then can be said about the usefulness of the book for its intended audiences? Well, for at least one of the intended audiences, analysts who advice policy makers, this book is simply indispensable. It is also very useful as a reference text for researchers who specialize in environmental policy. I would perhaps not suggest this book as a textbook for undergraduate students, partly because of its sheer size and partly because the wealth of examples diverts attention from the need for undergraduates to focus on basic economic principles. It's better suited for graduate students, but then I would supplement it with a more technical volume, such as the book by Baumol & Oates. Overall, my impression is that the main field of application of the book is as a reference text on environmental policy instruments, and it should be of particular interest for people in developing countries and former planned economies. For the forest economist interested in forest policy the forest chapter feels somewhat like an appetizer, but the book gives a good opportunity to learn about policy instruments applied to other areas that could be applicable to forest related problems. Put simply, a good source of inspiration.
Deptartment of Forest Economics
Swedish University of Agricultural Sciences