加〃〃 D れ記怦叩催 R ん s S 襯 5 63 子・ 2 SHRIMP FARMING EXTERNALITIES IN THAILAND ln the Tha Po village on the coast of Surat Thani Province in Thailand, more than half of the 1 , 100 hectares of mangrove swamps have been cleared for commercial shrimp farms. Although harvesting shrimp iS a lucrative undertaking, mangroves serve as nurseries for fish and as barri- ers for storms and soil erosion. Following the destruction of the local mangroves, Tha po ⅵ 1- lagers experienced a decline in fish catch and suffered storm damage and water pollution. Can market forces be trusted tO strike the efficient balance between preservation and development for the remaining mangroves? Calculations by two economists, Dr. Sathirathai and Dr. Barbier, demonstrated that the value 0f the ecological services that would be lost from further destruction of the mangrove swamps exceeded the value Of the shrimp farms that would take their place. Preservation of the remaining mangrove swamps would be the efficient ChOice. Would a potential shrimp-farming entrepreneur make the efficient choice? Unfortunately, the answer iS no. ThiS study estimated the economic val ue Of mangroves in terms Of 10Ca1 use Of forest resources, off-shore fishery linkages, and coastal protection to be in the range of $ 27 , 264 t0 $ 35 , 921 per hectare. ln contrast, the economic returns tO shrimp farming, once they are corrected for input subsidies and for the costs ofwater pollution, are only $ 194 to $ 209 per hectare. However, shrimp farmers are heavily subsidized and dO not have tO take into account the external costs of pollution, their financialreturns are typically $ 7 , 706.95 to $ 8 , 336.47 per hectare. ln the absence of some sort Of external control imposed by collective action, devel 叩 ment would be the normal, if inefficient, result. The externalities associated with the ecological services provi ded by the mangroves support a biased decision that results in fewer social net benefits, but greater private net benefits. Source: Suthawan Sathirathai and Edward B. Barbier, "Vaulting Mangrove Conservation in Southern ThaiIand' CO 2 襯〃 ora Eco れ 0 た 0 ″ 19 ( 2 ) , ApriI 2001 , pp. 109 ー 122. ℃ 0 襯 0 れ辺 ro り e ″ S04 肉 are those that are owned in common rather than privately. Entitlements to use common-property resources may be formal, protected by specific legal rules, or they may be informal, protected by tradition or custom. Common-property regimes exhibit varying degrees 0f efficiency and sustainability, depending on the rules which emerge from collective decision making. While some very successful examples Of common-property regimes exist, unsuccessful examples are even more COI mon. 2 One successful example Of a common-property regime involves the system Of allocating grazing rights in Switzerland. Though agriculturalland is normally treated as private property 2The 朝 0 cases which follow and many others are discussed in Ostrom, Elinor. Cra 市れ 0 / わ for 立 GO 怩 m ー 加 0 / ″セれ S. 2 s (San Francisco: ICS Press, 1992 ). She argues that common-pool problems are sometimes solved by voluntary organizations rather than by a coercive state. Among the cases considered are communal tenure in meadows and forest, irrigation communities, and fisheries.

れ ECO れ om た Po ″″ c 記ホ s 5 襯 e 325 cost-benefit analysis of their expected impact. The analysis concluded that the proposed 0.01 gplg standard would result in $ 36 billion ()n 1983 dollars) in benefits (from reduced adverse health effects), at an estimated cost to the refining industry of $ 2.6 billion. AIthough the regulation was unquestionably justified on efficiency grounds, the EPA wanted tO allow flexibility in how the deadlines were met, without increasing the amount of lead used. AIthough some refiners could meet early deadlines with ease, others could do so only with a significant increase in cost. Recognizing that meeting the goal did not require that every refiner meet every deadline, the EPA initiated an innovative program to provide additional flexibility in meeting the regulations (Example 16.4 ). The program was very successful in reducing both lead emissions and the concentration 0f lead in the ambient air. From 1982 ー 2001 , emissions of lead decreased by 93 percent and the concentrations in the ambient air fell by 94 percent. Lessons from Theory and Practice, ” EC0わ0彑ん盟 Q ″邵 16 ( 1989 ) : 361706. nomic CO- 叩 eration and Development, 1992 ) : 21 ー 34 ; and R0bert W. Hahn and Gordon L. Hester, "Marketable Permits: T. Jones and J. Corfee-Morlot, eds. C ″ m 2 劭れ 4 De 豆加 0 Tra 施た R の初″ S. 襯 , (Paris: Organization for Eco- Sources: Nussbaum, Barry D. , "Phasing Down Lead in Gas01ine in the U. S. : Mandates, lncentives, Trading and Banking ” in scheduled on 31 December 1987. means Of facilitating the transition tO this new regime, the lead-banking program ended as deadlines in court, the traditional response, became unnecessary. Designed purely as a the deadlines, even in the face of equipment failures or "Acts of God"; furthermore, fighting the up rights for sale. Acquiring these credits made it possible for other refiners tO comply with Refiners had an incentive to eliminate the lead quickly, because early reductions freed banking was allowed. 1987. Prices of rights, which were initially about 0.75 cents per gram of lead, rose to 4 cents after rights could be used in that period or any subsequent period up to the end of the program in same quarter), but the EPA subsequently allowed banking. Once banking was initiated, created lnitially, no banking of rights was allowed (). e. , rights had to be created and used in the could sell their rights to other refiners. issued rights declined over time. Refiners who did not need their full share of authorized rights ated in order t0 take advantage Of the program, but their impact was very small. ) The number of ies. (Because Of a loophole in the regulations, some new "alcohol-blender" refineries were cre- amount 0f lead in gasoline produced during the period) were allocated to the 195 or so refiner- Under the 加 d eo 怦四 ra 襯 a fixed number of "lead rights" (authorizing the use of a fixed GETTING THE LEAD OUT: THE LEAD PHASEOUT PROGRAM

C ん叩 r 7 レなわ砿 e F リル尾 4 7.7 THE DANGERS 0F PROGNOSTICATION Our view 0f the future can be limited by our understanding 0f the past and present, as well as 0f the technological possibilities that lie around the corner. Often that understanding is not what it should be, and the forecasts based on it can seem rather absurd in retrospect. ln 1486 , for example, a committee headed by Fray Hernand0 de Talavera was established by King Ferdinand and Queen lsabella t0 advise them on the merits 0f funding Christopher C01um- bus's plan t0 sail t0 the West lndies. F0110wing four years ofwork, the committee reported its con- clusion that a voyage Of the type contemplated was impossible because ( 1 ) the Western Ocean was infinite and probably not navigable; ( 2 ) even if the Antipodes (the expected landfall) were reached, the return journey would be impossible; and ( 3 ) there probably were no Antipodes tO be reached, because most Of the world was presumably covered by water—St. Augustine said SO. ln 1835 Thomas Tredgold, a British railroad designer, declared, "Any general system of conveying passengers—at a velocity exceeding 10 miles an hour, or thereabouts—is extremely improbable. " The chief geologist of the U. S. Ge010gical Survey reported in 1920 that only 7 billion barrels Of petroleum remained t0 be recovered with existing techniques. He predicted that, at the con- temporary annual rate Of consumption Of a half billion barrels, American 0il resources would be exhausted in 14 years—by 1934. However, when that fateful year arrived, 12 , not 7 , billion bar- rels had been produced and there was an additiona112 billion barrels 0f proved reserves. Economists are certainly not immune from the dangers Of prognostication. ln T カ 2 CO 記 Q ″ - ″ 0 れ . れ 4 Conceming e 、怦 00 ss 砿 e Ⅳわれれ d the 怦励わ E. ズん 2 ″ 0 れ砿 0 CO 加 published in 1865 , Stanley Jevons concluded that the r 叩 id increase in coal consumption coupled with the finite nature Of the supply Of coal would cause progress tO stop in the near future. ln his discussion ofJevons's work, JOhn Maynard Keynes notes in passing that Jevons had a similar fear Of an increasing scarcity Of p 叩 er. Jevons 叩 parently acted on those fears for, some 50 years after his death, his children had not used up the stock of p 叩 er he had accumulated. Sources: Glen Hueckel, "A Historical Approach tO Future Economic Growth," Science 191 ( 14 March 1975 ) : 925 ー 31 ; Harry U SPiegel, ed. , The D 叩 men ー砿 ECO れ 0 た励 0 レ 0 を (New York: Wiley, 1952 ) : 490 ー 525 ; Edward Cornish et al. , The S ル 砿 e F レ (Washington, DC: WorId Future Society, 1977 ) : 106 ー 08. depleted, a precipitous coll 叩 se Of the economic system will result, manifested in massive unemployment, decreased fOOd production, and a decline in population as the death rate soars. There iS no smooth transition, gradual slowing Of activity; rather, the economic sys- tem consumes successively larger amounts Of the depletable resources until suddenly they are gone. The characteristic behavior Of the system is overshoot and collapse (see Figure 1.1 ). The second conclusion of the study is that piecemeal approaches to solving the individual problems will not be successful. TO demonstrate this point, the authors arbitrarily double their estimates Of the resource base and allow the model tO trace out an alternative vision

XII Detailed Co 例な 70 々 POTENTIAL REMEDIES 164 EXAMPLE 9.1 USING ECONOMIC PRINCIPLES TO CONSERVE WATER CALIFORNIA EXAMPLE 9.2 PROTECTING INSTREAM USES THROUGH ACQUIRING WATER RIGHTS EXAMPLE 9.3 WATER PRICING ZURICH, SWITZERLAND 169 EXAMPLE 9.4 POLITICS AND THE PRICING OF SCARCE WATER 170 Waterin the Long Run: Desalination Summary 171 Further Reading 172 Additional References 172 Discussion Questions 173 Agriculture 174 INTRODUCTION 174 GLOBAL SCARCITY 175 Examining G10bal Sca 「 ci ツ 176 Outlook fo 「 the Future 178 The Ro 厄 of Agriculture Policies 182 A Summing up 183 DISTRIBUTION OF FOOD RESOURCES 184 Defining the Pr0blem 184 Domestic Prod uction in LDCS 185 The Underevaluation Bias 186 EXAMPLE 10.1 THE PRICE RESPONSIVENESS OF SUPPLY: THAILAND 187 EXAMPLE 10.2 PERVERSE GOVERNMENT INTERVENTION: THE CASE OF COLOMBIA Feeding the P00 「 189 EXAMPLE 10.3 THE DISTRIBUTION DILEMMA: INDIA'S GREEN REVOLUTION 190 FEAST AND FAMINE CYCLES 191 Summary 193 Further Reading 193 Additional References 194 Discussion Questions 194 Biodiversity I: Forest Habitat 195 INTRODUCTION 195 DEFINING PROFIT-MAXIMIZING MANAGEMENT 196 Special Attributes Of the Forest 196 The BioIogical Dimension 197 The Economics of Forest Harvesting 199 165 166 188

196 劭叩 r 〃召わ市 r. 豆秀 Fo 豆〃ロわ″ state, 95 percent 0f the land area is covered by forest. ln 1995 the comparable figure for the world was 31.7 percent. 1 A glance at some 0f the vital signs Of the forest resource does not inspire confidence that it is being managed either efficiently or sustainably. 2 Deforestation is currently proceeding at an unprecedented rate. ln 1998 the WorId Resources lnstitute reported that 185 million hectares 0f tropical forests, an area about the size Of Mexico, were destroyed from 1980 through 1995 , as trees were cut for timber and to clear land for agriculture and development. 3 Deforestation poses a significant threat to biodiversity because it destroys forest habitat. Pressures on forest habitat come from logging activities and from the conversion of forested land tO Other uses (such as residential development or agriculture). Logging activities not only remove trees that serve as habitat, but the accompanying activities (such as road build- ing) can degrade surrounding habitat as well. The threat posed by conversion involves a dif- ferent, but no less significant, set of economic forces. ln the remainder Of this chapter we show how economic forces can not only explain these high rates Of deforestation, but can also provide some basis for protecting against this partic- ular threat to biodiversity. We begin by characterizing what is meant by an "efficient alloca- tion" Of the forest resource when the value of the harvested timber is the only concern. Starting simply, we first model the efficient decision to cut a single stand ()r cluster of trees) With a common age by superimposing economic considerations a biological Of tree growth. This model is then expanded to demonstrate not only how the multiple values of the forest resource 0 ″ influence the harvesting decision, but also why they currently dO not. We then turn to the sources of the second threat—the conversion of forested land to other uses. A simple model 0f the allocation Of land tO competing uses is used both to explain cur- rent trends and tO illustrate some possibilities for correction. ◆ DEFINING PROFIT-MAXIMIZING MANAGEMENT Special Attributes Of the ー 0 肥 Although forests share many characteristics with other living resources, they also have some unique aspects. Trees provide a saleable commodity when they are harvested. However, left standing, they are a capital asset, providing for increased growth the following year and a stream Of environmental services such as watershed protection and wildlife habitat. Each year, the forest manager must decide whether to harvest a particular stand of trees or to wait. ln contrast tO many Other living resources, however, the time period between initial investment (planting) and recovery Of that investment (harvesting) is especially long. lntervals of 25 years or more are common in forestry, but not in many Other industries. IOECD, OECD E れ川れ襯 e れ / D ロ . ・ Co 襯〃 e れ市″襯 7997 (Paris: ()rganization for European co-operation and Development, 1997 ) : 111. 21n this context, s 加″ refers to harvesting no more than would be replaced by growth; sustainable harvest would preserve the interests of future generations by assuring that the volume of remaining timber was not declining over time. This is stronger than required by the criterion of weal sustainability, which only requires that future gener- ations be as well 0 lt would conceivably be possible to make future generations better off even if the volume ofwood were declining over time by providing a compensating amount of some con 第 odi or service they value even more. 3Wor 旧 Resources lnstitute, ル 0 ″尾 . ・ 7998 ー 99 (New York: ()xford University press, 1998 ) : 185.

460 劭叩 r 幻 The Q for S 加 D el 叩襯例ー Howarth, Richard B. , and Richard B. Norgard. "lntergenerational Resource RightS"' んれ dEC0 れ 0 襯た s 66 (February 1990 ) : 1 ー 11. McNeeIey, Jeffrey A. , et al. "Strategies for Conserving Bi0diversitY," E れ ro れ e 32 (April 1990 ) : 16 ー 20 , 3640. parris, T. M. ℃ omparative lnternational lndicators 0f Sustainable Development," E れ ro れ襯ー 38 , NO. 4 ( 1996 ) : 3. pearce, David, et al. "Measuring Sustainable Devel 叩 ment: Progress on lndicators"' E れ ro れ襯例ね I れ d D 叩襯ー Eco れ om / cs 1 , NO. 1 ( 1996 ) : 85 ー 102. pezzey, JOhn. "Sustainable Development Concepts: An Economic Analysis," working P 叩 er. Washingt011' DC: World Bank Environment Department, 1992 ). Redclift, Michael. S 加 le De I 叩襯 e れた E ゆ I 加 the CO ra 市 c 朝れ s (New York: Methuem 1987 ). Toman, Michael A. "Economics and 'SustainabilitY': Balancing Trade-0ffs and lmperatives" んれ d ECO- れ 0 襯 / cs 70 ( 1994 ) : 399713. Turner, R. Kerry. S ね加 E れ ro れ襯例 I Ma れ ge 襯例た Principles ロれイ Practice (Boulder, CO: Westview Press, 1988 ). Van den Bergh, J. C. J. M. , and M. W. H0fkes. "Economic M0dels 0f Sustainable Devel 叩 ment," in J. C. J. M. Van den Bergh, ed. 〃れ 00 ん砿 E れ ro れ襯例 1 れ d Resource Ec 伽 0 襯た s (Cheltenham, UK: Edward Elgar): 1108 ー 1122. world Resources lnstitute. Ⅳロル I E れ襯例な : F ⅲれ c 加 4 R 0 レ尾 e CO e 耀われん鑽 De あ〃襯 e れ一 (Washington, DC: World Resources lnstitute, 1989 ). DISCUSSION QUESTIONS 1. Discuss the mechanism favored by Daly tO control population growth. What are its advantages and disadvantages? Would it be appropriate tO implement this policy now in the United States? For those who believe that it would be, what are the crucial reasons? For those whO believe it is not 叩 propriate, are there any circumstances in any countries where it might be appropriate? Why or why not? 2. "Every molecule Of a nonrenewable resource used t0day precludes its use by future generations. Therefore, the only morally defensible policy for any generation is tO use only renewable resources. ” Discuss. 3. generations can cast neither VOtes in current elections nor d()llars in current market deci- sions. Therefore, it should not come as a surprise tO anyone that the interests Of future generations are ignored in a market economy. ' Discuss.

Ⅳ襯か e Cr ″ん rDec なわれ口石れ 0 19 2.7 NATURE KNOWS BEST m れロ C , 35 ( 1979 ) : 661 ; Barry Commoner, The C ん豆れ 4 夜尾 (New York: AIfred A. Knopf, 1972 ). ment Funds," CO れ豆 0 れ記 Q レ 2 邵れ ac. , 35 ( 1979 ) : 223 , "Endangered Species Act," Co れ 0 尾 s 豆 0 れ記 Q ″ 4 催 Sources: "Endangered Species Curbs," CO れ g 尾 s 豆 0 れ Q 催用 m ロ c , 34 ( 1978 ) : 707 ; "Public Works Energy Devel 叩 - abstract conflict between alternative sets Of values can have very practical implications. tO the neaby Hiwasee River. Nonetheless, this issue serves to illustrate that the seemingly the dam tO be a poor investment, and the snail darter was subsequently successfully transplanted lronically, this clash Of principles need not have taken place. An economic analysis showed Clrcumstances. Of the cost, it should be preserved. The extinction of a species is never justified regardless of the imum interference suggests that regardless Of the importance of the snail darter and regardless darter, bOth as a species and as a member of the larger ecological system. The principle of min- The economic approach stacks up the worth of the project against the worth of the snail for the snail darter. on an energy and water appropriations bill, an exemption from the Endangered species Act turn Of events, however, in this twisted saga came in 1979 when Congress passed, as a rider cient to stop construction of the dam. The Supreme Court in 1978 upheld the act. The final darter an endangered species, which, under the Endangered species Act of 1973 , was suffi- 1975 , with the dam 75 percent complete, the Secretary of the lnterior declared the snail Etnier, Jr. , discovered a previously unknown species of perch called the snail darter. During Congress in 1967. During the summer of 1973 , a Tennessee ichthyologist, Dr. David A. lico Dam was an ambitious water project on the LittIe Tennessee River authorized by haps best illustrated by the controversy over the Tellico Dam and the snail darter. The TeI- The conflict between the economic approach and that proposed by Commoner is per- Don't interfere with the ecosystem is the underlying message. the 〃 0 れ e. か . イ 3 / screened for 市市れ 0e0 co 襯〃 0 れ e れなれれ e 0 れ e な likely ん厖 0 e れ c ″″ e れ / れ 4 ル ral eco e 襯な″ん e be e " ⅲ the れ肱″ん厖 e れ 50 カ ea CO リ e 砿 0 ん″ 0 れ . Thus, the 川 c ル尾砿〃 r e れ一加加 the 0 れたわれ砿 ″れ ge 襯 e れな肱尾れ co 襯〃″ん the 盟ん 0 screened 0 ″ー 0 r the んれ . 加 0 加の acc ″襯″ co 襯〃ズ 0 れたわれ砿 co 襯〃 p な , ・ 0 〃 0 ル Of ecology: nature knows best. Commoner elaborates on this view: larly among ecologists. ln The C ん豆れ 0 Circle, Barry Commoner poses what he calls the third law The view that the environment should be managed by humans is rather controversial, particu-

430 劭叩 r 20 D 2 ん〃襯例 4 P のロれイ 2 E れ盟れ襯ー Some crude attempts have been made tO assess whether or not growth in the industrial- ized countries has made the citizens Of those countries better Off. Results Of these studies sug- gest that because growth has ultimately generated more leisure, longer life expectancy, and more goods and services, it has been beneficial. However, more recent studies suggest that the benefits from growth have been steadily diminishing over time. One study found that fur- ther growth in the United States now lowers economic well-being Of the average U. S. citizen; at this stage 0f affluence the negative aspects were estimated tO outweigh the positive aspects. Our examination 0f the evidence suggests that the notion that all 0f the world's people are automatically benefited by economic growth is naive. Growth has demonstrably bene- fited the poor in the developed countries, mainly through transfers from more well-off members Of society. The outlook for the less industrialized nations is, at best, mixed. Solving many Of their future environmental problems will require raising the standards Of living. However, it is probably not possible for them to follow the path 0f devel 叩 ment pioneered by the industrial- ized nations without triggering severe glObal environmental problems; the solution would become the problem. New forms 0f development will be necessary. The less industrialized countries must overcome a number Of significant barriers if devel- 叩 ment is tO become a reality. At the locallevel, rising populations face increasingly limited access tO land or productive assets. At the nationallevel, corruption and development policies discriminate against the poor. G10bally, their situation is worsened by rising debt burdens, falling export prices for the products they sell, and the flight of capital that could be used to create jObS and income. HOW can the barriers be overcome? What new forms Of development can be introduced? By what means can they be introduced? We shall deal with these questions in the next ch 叩 ter. FURTHER READING Dasgupta, Partha.An 加 4 加Ⅳ〃 - 召 e 加 0 れ dD ″ル″ 0 れ (Oxford: Oxford University Press, 1993 ). A seminal work that deals comprehensively with the forces that create and accentuate poverty and their interaction With economic growth. ADDITIONAL を庇 ENC を 5 Ahlburg, Dennis A. , ed. The / 〃け砿 P 叩″″ 0 れ Growth 0 れⅣ 2 ″ - 召 e 加加 D el 叩加 Co ″れ s (Berlin: Springer, 1996 ). BarteImus, P. 。℃ reen Accounting for a Sustainable Economy—Policy Use and Analysis of Environmen- tal Accounts in the Philippines," Eco あグ c 記 Economics 29 ( 1999 ) ( 1 ) : 155 ー 170. Brown, Gardiner Jr. , and Barry FieId. 'The Adequacy of Measures for Signaling the scarcity of NaturaI Resources," in Scarcity イ G 盟 Co れ豆 V. Kerry Smith, ed. (Baltimore, MD: Johns Hop- kins University Press, 1979 ). Carraro, C. , M. Galeotti, et al. "Environmental Taxation and UnempIoyment: Some Evidence on the の oub 厄 Dividend Hypothesis' in Europe," 面レ記砿 P ″わ″ c Economics 62 ( 1996 ) ( 1 ー 2 ) : 141 ー 181.

270 劭叩 7 イ S ″ 0 れ 4- So ce ん oc 記か po 〃〃 on the stringency, but in rather well-defined ways. Atkinson and Lewis find, for example, that within a middle range of possible ambient standards, the divergence between the CAC alloca- tion and the least-cost allocation becomes larger as the ambient standard target becomes harder tO meet. 10 However, two studies concentrating on the most stringent range Of control ()s opposed t0 the middle ranges 0f control examined by Atkinson and Lewis) have found that the relative divergence between the CAC and least-cost allocations declines as the ambient standard becomes tougher t0 meet. Spofford finds this to be the case for both particulates and sulfur oxides; MaIoney and YandIe find it to be true for hydrocarbon control.ll Apparently, the CAC air pollution policy approximates the least-cost allocation only at sufficiently high degrees Of control that any control flexibility is effectively eliminated. Air Qu Despite the deficiencies of the CAC approach, it カ produced better air quality in the United States. With the exception of nitrogen oxides, which increased, most pollutatnt emissions have declined, despite large increases in economic output during this period. Some have declined dramatically (see Figure 14.1 ). How typical has the U. S. experience been? ls pollution declining on a worldwide basis? The Global EnvironmentaI Monitoring System (GEMS), operating under the auspices of the 10S. E. Atkinson and D. H. Lewis, "A Cost-Effectiveness AnaIysis ofAIternative Air Quality ControI Strategies,' 面″ rn 記 砿 Env か 0 れ m 例 / Eco れ 0 襯 / cs れイ Ma れ 20e 襯 2 1 , No. 3 (November 1974 ) : 237 ー 50. 11See W. 0. Spofford, Jr. , "Efficiency Properties of Alternative Source ControI policies for Meeting Ambient Air Qual- ity Standards: An EmpiricaI AppIication to the Lower Delaware valley," Discussion paper D -118 (Washington, DC: Resources for the Future, 1984 ) ; and M. T. Maloney and B. Yandle, "Estimation of the Cost of Air Pollution ControI Regulation," 面″記砿 E れ ro れ襯 / Eco れ 0 襯沁 and れ emen / 11 ( 1984 ) : 244 ー 63. FIGURE 14.1 Comparison of 1970 and 2001 Emissions 140 120 100 0 80 0 60 40 20 250 ・ 1970 ロ 2001 200 の uo. ト s ℃ ue の noq ト CO N Ox VOC S 02 PM Pb い 9 % ) ( + 15 % ) ( ー 38 % ) ← 44 % ) ( ー 76 % ) ( ー 98 % ) Source: "Latest Findings on National Air Quality: 2001 Status and Trends" at http://epa.gov/oar/aqtrnd()l/ (Accessed November 13 , 2002 ). 50 0 0

CO e われイん 02 イ M れ 20em5 ー 147 UtiIities are responding to this problem by adopting load-management techniques to pro- duce a 1 ore balanced use Of thiS capacity over the year. ()ne economic load-management technique is called peak-load 〃加 0. Peak-load pricing attempts to impose the full (higher) marginal cost Of supplying peak power on those consuming peak power by charging higher prices during the peak periOd. Although many utilities have now begun tO use simple versions Of this approach, some are experimenting With very innovative ways Of implementing rather refined versions Of this system. One innovative system, for example, transmits electricity prices every five minutes over regular power lines. ln a customer's household, the lines attached tO one or more appliances can be controlled by switches that turn the power Off any time the pre- vailing price exceeds a limit established by the customer. Other, less sophisticated pricing systems simply inform consumers in advance What prices Will prevail in predetermined peak periods. Studies by economists at the Rand Corporation in California8 indicate that even the rudi- mentary versions Of peak-load pricing work. Based on the actual experience with time-of-day rates by more than 6 , 000 commercial and industrial customers, Rand found that business customers saved themselves and utilities on average $ 1 , 000 per year for an added metering cost 0f only $ 50. Working with an additional sample 0f over 3 , 000 , the authors found that res- idential customers also saved by shifting some Of their demand tO less expensive periods. The greatest shifts were registered by the largest residential customers and those with several electrical appliances. lnterestingly, this study found the gains from peak-load pricing in the United States t0 be somewhat lower than those reported for European customers, whO have been exposed tO peak-load pricing for a longer period Of time. Studies 0f the European experience have found that a significant proportion Of the tOtal amount Of electricity consumed can be shifted tO a periOd Of excess c 叩 acity, particularly in the industrial sector. 9 Attributing the large European response in part tO the longer time Europeans have had tO ad 叩 t tO this system, the authors speculate that the longer-term response by U. S. customers could turn out tO be quite a bit greater than that already recorded. A third innovation in the utility sector involves procedures for internalizing the environ- mental costs. Those who have typically been assigned the responsibility for regulating utility prices have focused almost exclusively on holding prices down by choosing the che 叩 est sources Of power. Unfortunately, only generating and distribution costs were considered; the damage caused by emissions was ignored. The resulting choices turned out not tO be the cheapest when all costs were considered. TO rectify this imbalance in the procedures for choosing generating sources, some states have begun explicitly incorporating environmental costs in their decision-making process. New York state, for example, adds 1.4 cents per kilowatt-hour tO the estimated 8Jean paul Acton, et al., 行襯 e -0 D E c 〃た″犬 for the U れ″ & , Report R3086- HF (Santa Monica' CA: Rand Corporation, 1983 ) , and R011a Edward park, et al. , 2 0 e ね Time-0f-Day E c 〃た″彑加 e B 加 s C ね m 催 s ゴれ液記 na s な砿 D 0 襯れし S. ″″ s. , Report R-3080-HF/MD/RC (Santa Monica' CA: Rand Cor- poration, 1983 ). 9Bridger Mitchell, Willard G. Manning, Jr. , Jan paul Acton, P た - ん怦た加 E 叩 ea れん SO し & E ゆ催たれ ce (Cambridge,MA: Ballinger, 1978 ).