A.J. Meyer Professor of Energy and Economic Development
This article, prepared for the forthcoming 2nd edition of the New Palgrave Dictionary of
Economics, provides an overview of the economics of environmental policy. Included are the
setting of goals and targets, notably the Kaldor-Hicks criterion, and the related method of
assessment known as benefit-cost analysis. Also reviewed are the means of environmental
policy, that is, the choice of specific policy instruments, featuring an examination of potential
criteria for assessing alternative instruments, with focus on cost-effectiveness. The theoretical
foundations and experiential highlights of individual instruments are reviewed, including
conventional command-and-control mechanisms and market-based instruments.
Stavins, Robert N. "Environmental Economics." KSG Faculty Research Working Paper Series RWP04-051, December 2004.