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1 This PDF is a selection from an out-of-print volume from the National Bureau of Economic Research Volume Title: Economic Analysis of Environmental Problems Volume Author/Editor: Edwin S. Mills, ed. Volume Publisher: NBER Volume ISBN: Volume URL: Publication Date: 1975 Chapter Title: Front matter to "Economic Analysis of Environmental Problems" Chapter Author: Edwin S. Mills Chapter URL: Chapter pages in book: (p )
2 Economic Analysis of Environmental Problems
3 NATIONAL BUREAU OF ECONOMIC RESEARCH UNIVERSITIES-NATIONAL BUREAU CONFERENCE SERIES 1. Problems in the Study of Economic Growth (in mimeograph) 2. Conference on Business Cycles 3. Conference on Research in Business Finance.4. Regularization of Business Investment 5. Business Concentration and Price Policy 6. Capital Formation and Economic Growth 7. Policies to Combat Depression 8. The Measurement and Behavior of Unemployment 9. Problems in International Economics 10. The Quality and Economic Significance of Anticipations Data 11. Demographic and Economic Change in Developed Countries 12. Public Finances: Needs, Sources, and Utilization 13. The Rate and Direction of Inventive Activity: Economic and Social Factors 14. Aspects of Labor Economics 15. Investment in Human Beings 16. The State of Monetary Economics 17. Transportation Economics 18. Determinants of Investment Behavior 19. National Economic Planning 20. Issues in Defense Economics 21. The Role of Agriculture in Economic Development 22. The Technology Factor in International Trade 23. The Analysis of Public Output 24. International Mobility and Movement of Capital 25. Conference on Secular Inflation 26. Economic Analysis of Environmental Problems
4 Economic Analysis of Environmental Problems Edited by Edwin S. Mills A Conference of the Universities National Bureau Committee for Economic Research and Resources for the Future, Inc. National Bureau of Economic Research NewYork 1975 Distributed by Columbia University Press New York and London
5 I Copyright 1975 by the National Bureau of Economic Research, Inc. and Resources for the Future, Inc. All rights reserved. Printed in the United States of America. Library of Congress Cataloging in Publication Data Main entry under title: Economic analysis of environmental problems. (Universities National Bureau conference series; 26) Papers and comments from the conference held at the University of Chicago, Nov , Includes index. 1. Environmental policy United States Congresses. 2. Environmental policy Mathematical models Congresses. 3. Pollution Congresses. I. Mills, Edwin S. II. Universities National Bureau Committee for Economic Research. III. Resources for the Future. IV. Series. I-1C11O.E5E ' ISBN
6 NATIONAL BUREAU OF ECONOMIC RESEARCH Arthur F. Burns, Honorary Chairman I. Wilson Newman, Chairman Moses Abramovitz, Vice Chairman John R. Meyer, President Thomas D. Flynn, Treasurer Douglas H. Eldridge, Vice President- Executive Secretary Gary Fromm, Director. NBER-Washington OFFICERS Victor R. Fuchs, Vice President-Research: Co-director. NBER-West Edwin Kuh, Director, Computer Research Center Robert E. Lipsey, Vice President-Research Harvey J. McMains, Vice President; Director. fiber-new York Sherman J. Maisel, Co-director, fiber-west Geoffrey H. Moore, Vice President-Research Edward K. Smith, Vice President DIRECTORS Atherton Bean, international Multijoods Corporation Andrew F. Brimmer, Harvard University Arthur F. Burns, Board of Governors of the Federal Reserve System Wallace I. Campbell, Foundation for Cooperative Housing Erwin D. Canham, Christian Science Monitor Emilio G. Collado. Exxon Corporation Solomon Fabricant, New York University Frank L. Fernbach, United Steelworkers of America Eugene P. Foley, Montrose Securities. Inc. David L. Grove, international Business Machines Corporation Walter W. Heller, University Minnesota Vivian W. Henderson, Clark College AT LARGE John R. Meyer, Harvard University Geoffrey H. Moore, National Bureau of Economic Research J. Wilson Newman, Dun & Bradstreet, Inc. James J. O'Leary, Untied Stares Trust Company of New York Rudolph A. Oswald, American Federation of Labor and Congress of Industrial Organizations Alice M. Rivlin, Congressional Budget Office Robert V. Roosa, Brown Brothers Harriman & Co. Eli Shapiro, The Travelers Corporation Arnold M. Soloway, Jamaicaway Tower. Boston. Massachusetts Lazare Teper, International Ladies' Garment Workeri Union Theodore 0. Yntema, Oakland University Moses Abramovitz, Stanford Gardner Ackley, Michigan Charles H. Berry, Princeton Francis M. Boddy, Minnesota Otto Eckstein, Harvard Walter D. Fisher, Northwestern R. A. Gordon, California, Berkeley J. C. LaForce, California, Los Angeles DIRECTORS BY UNIVERSITY APPOINTMENT Robert 3. Lampman, Wisconsin Maurice W. Lee, North Carolina Almarin Phillips, Pennsylvania Lloyd 0. Reynolds, Yale Robert M. Solow, Massachusetts Institute of Technology Henri Theil, Chicago William S. Vickrey, Columbia DIRECTORS BY APPOINTMENT OF OTHER ORGANIZATIONS Eugene A. Birnbaum, American Management Association Thomas D. Flynn, American Instituie of Certified Public Accountants Nathaniel Goldfinger, American Federation of Labor and Congress of Industrial Organizations Harold G. Halcrow, American Agricultural Economics Association Walter E. Hoadley, American Finance Association Philip M. Klutanick, Committee for Economic Development Paul W. McCracken, American Statistical Association Roy E. Moor, National Association of Business Econonmisis Douglass C. North, Economic History Association Willard L. Thorp, American Economic Association Robert M. Will, Canadian Economics Association Percival F. Brundage Frank W. Fetter Gottfried Haberler DIRECTORS EMERITI Albert 3. Hettinger, Jr. George B. Roberta Murray Shields Boris Shishldn Joseph H. Willits Gary S. Becker Charlotte Boschan Phillip Cagan Stanley Diller Solomon Fabricant Milton Friedman Gary Fromm Victor R. Fuchs 1. Royce Ginn SENIOR RESEARCH STAFF Raymond W. Goldsmith Michael Gort Michael Grossman F. Thomas Juster John F. Kain John W. Kendrick Irving B. Kravis Edwin Kuh William M. Landes Hal B. Lazy Robert E. Lipsey Sherman J. Maisel Benoit B. Mandelbrot John R. Meyer Robert T. Michael Jacob Mincer lisa Mintz Geoffrey H. Moore M. Ishaq Nadiri Nancy Ruggles Richard Ruggles Anna J. Schwartz Edward K. Smith George J. Stigler Robert 3. Willis Victor Zarnowitz
7 Relation of the National Bureau Directors to Pub licat ions Reporting Conference Proceedings Since the present volume is a record of conference proceedings, it has been exempted from the rules governing submission of manuscripts to, and critical review by, the Board of Directors of the National Bureau. (Resolution adopted July 6, 1948, as revised November 21, 1949, and April 20, 1968)
8 RESOURCES FOR THE FUTURE, INC Massachusetts Avenue, NW., Washington, D.C Board of Directors: Gilbert F. White, Chairman, Harrison Brown, Roberto de 0. Campos, Edward J. Cleary, Joseph L. Fisher, Luther H. Foster, F. Kenneth Hare, Charles J. Hitch. Charles F. Luce, Laurence I. Moss, Frank Pace. Jr., Emanuel R. Piore, Stanley H. Ruttenberg, Lauren K. Sotli, Janez Stanovnik, Maurice F. Strong, Julia D. Stuart, P. F. Watzek Honorary Directors: Horace H. Albright, Erwin D. Canham, Hugh L. Keenleyside, Edward S. Mason, William S. Palcy, John W. Vandcrwilt Acting President: Marion Clawson Secretary. Treasurer: John E. Herbert Resources for the Future is a nonprofit corporation for research and education in the development, conservation, and use of natural resources and the improvement of the quality of the environment. It was established in 1952 with the cooperation of the Ford Foundation. Part of the work of Resources for the Ftiturc is carried out by its resident staff; part is supported by grants to universities and other non profit organizations. Unless otherwise stated, interpretations and conclusions in RFF publications arc those of the authors; the organization takes responsibility for the selection of significant subjects for study, (he competence of the researchers, and their freedom of inquiry.
9 Funds for the economic research conference program of the National Bureau of Economic Research are supplied by the National Science Foundation
10 UNIVERSITIES-NATIONAL BUREAU COMMITTEE FOR ECONOMIC RESEARCH This committee is a cooperative venture of universities and the National Bureau. Its guiding objective is the encouragement of economic research on problems susceptible of objective treatment and of sufficiently broad scope to merit attention by institutions serving a scientific and public interest. Participating universities and their present representatives are: Brown, Jerome Stein Buffalo, Daniel Hamberg California (Berkeley), Daniel McFadden California (Los Angeles), J. C. LaForce Carnegie-Mellon, Robert Lucas Chicago, Lester C. Telser Columbia, Robert Mundell Cornell, Ta Chung Liu Duke, T. Dudley Wallace Harvard, John V. Lintner Illinois, George G. Judge Indiana, Franz Gehrels Iowa State, Dudley G. Luckett Johns Hopkins, Carl F. Christ Maryland, Barbara Bergman Massachusetts Institute of Technology, Richard S. Eckaus McGill, A. Vicas Michigan, Harold T. Shapiro Michigan State, Victor Smith Minnesota? James M. Henderson Daniel Creamer Walter S. Salant New School for Social Research, Thomas Vietorisz New York, M. Ishaq Nadiri North Carolina, Henry A. Latané Northwestern, Robert Eisner Ohio State, Jon Cunnyngham Pennsylvania, Jere R. Behrman Pittsburgh, S. H. Chou Princeton, Edwin S. Mills Purdue, Pairic H. Hendershott Queen's, Marlin F. J. Prachowny Rochester, Walter Y. Oi Stanford, Moses Abrarnovitz Texas, David A. Kendrick Toronto, Richard Bird Vanderbilt, Anthony Tang Virginia, Richard T. Selden Washington (St. Louis), Werner Hochwald Washington (Seattle), Richard W. Parks Wisconsin, Leonard W. Weiss Yale, Richard Ruggles The National Bureau of Economic Research representative is Robert E. Lipsey Members at large are: Irma Adelman Secretary: Christine Mortensen George J. Stigler The officers of the Universities National Bureau Committee are: Edwin S. Mills (Princeton University), Chairman; Leonard W. Weiss (University of Wisconsin), Vice Chairman; and Christine Mortensen (National Bureau of Economic Research), Secretary. The members of the Executive Committee are: Irma Adelman (University of Maryland), Richard Bird (University of Toronto), Robert Eisner (Northwestern University), Robert E. Lipsey (National Bureau of Economic Research), Dudley G. Luckett (Iowa State University), Edwin S. Mills, and Leonard W. Weiss.
11
12 Contents Introduction Edwin S. Mills 1 Theoretical Analysis Optimum Investment in Social Overhead Capital Hirofumi Uzawa 9 Comment: Robert Dorf man 22 Macroeconomic Aspects of Environmental Policy Karl Göran-Mäler 27 Comment: Cohn Wright 56 The Technology of Public Goods, Externalities, and the Exclusion Principle Charles Plott and Robert Meyer 65 Comment: Robert Haveman 90 The Instruments for Environmental Policy l'vallace Oates and William Baumol 95 Comment: Charles Upton 128 The Resource Allocation Effects of Environmental Policies George Tolley 133 Comment: Gardner Brown, Jr. 163 Empirical Analysis of Domestic Problems Operational Problems in Large Scale Residuals Management Models Walter Spoff ord, Clifford Russell and Robert Kelly 171 Comment: J. Hayden Boyd 234 xi
13 XZZ CONTENTS n Input-Output Analysis and Air Pollution Control Robert Kohn 239 Comment: Frederick Peterson 272 Studies of Residuals Management in Industry Blair Bower 275 Comment: Paul MacA voy 321 Acute Relationships Among Daily Mortality, Air Pollution, and Climate Lester Lave and Comment: Thomas Hodgson Eugene Seskin "People or Ducks?" Who Decides? John Jackson 351 Comment: Richard Quandt 389 International and Comparative Analysis On the Economics of Transnational Environmental Externalities Ralph C. d'arge 397 Appendix A Note on Transfrontier Externalities Transactions Costs, and Long-Run International Adjustment Firms and Factors of Production: Ralph C. d'arge and William Schulze 417 Comment: Larry Westphal 427 Management of Environmental Quality: Observations on Recent Experience in the United States and the United Kingdom Maynard Hufschinidt 435 Comment: A. Myrick Freeman 453 Index 461
14 Economic Analysis of Environmental Problems
15
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