The Addison-Wesle Series in Economics Abel/Bernanke Macroec れ 0 〃れ CS Bade/Parki FO ″れ d 0 ofEconomics Bierman/F rnandez Game T 20 盟″ん ECO れ om た Binger/Ho man Microec れ 0 襯た s 盟″ん C 記 c Boyer Principl Tr の〃 0 われ ECO れ 0 〃 2 CS Branson Macroe れ 0 〃 C Theory の PO ″彑 Bruce Public ・れ ce and the 員襯た 2 れ ECO れ 0 ~ れ Byrns/Sto e ECO れ 0 ・ CS Carlton/P rloff 0 施 m れイ″ / 記 0 2 れたロれ Caves/FrankeI/Jones ん e ロ ~ / 0 ECO れ 0 〃 CS ″ 0 れ / ECO れ 0 〃 2 / CS 砿 e ECO れ 0 襯 / 立 ollison んわ orEco れ 0 〃 CS Smith cracu 0 ~ れた Theoru ECO れ 0 〃れ CS 励 eo 〃〃″ ca 朝れ , an PO ″ c. 彑 例 / Eco れ om / . ・ 施れイ彑襯 e れな Gordon Ghiara m Gerber Fusfeld ECO れ 0 Ekelun Mo Ehrenber ofDe 襯 員れ Eco DO 、 ん盟れ Cooter/Ul E れど / ro Chap man Essent ロな砿 Eco れ 0 襯 / Gregory ー CO れ 0 〃 CS Gregory/Stuart R ″ SS / れれ d SO リ一 ECO れ 0 ~ れた P 催ん ~ 初れ ce れ S わ c ル HartwicWOIewiIer The Eco れ om 沁砿Ⅳル ral Resource 僑 2 Hubbard 0 れ e. 彑 , the F ⅲ 2 れ ci 記 S. 襯 , and the ECO れ 0 襯彑 Hughes/Cain 員襯たれ ECO れ 0 襯た〃なね Husted/Melvin 加 m れ ECO れ 0 襯た s JehIe/Reny 員 d れ ce イノ / croeco れ 0 〃れ C Theor1J KIein M ん 2 襯た記 Me 0 for ECO れ 0 ~ れ ~ CS Krugman/Obstfeld 加″ 0 れ記 ECO れ 0 襯た s Laidler The De 襯れイん rMO れ Leeds/von AIImen The Eco れ 0 襯沁砿 S, 〃な Lipsey/Courant/Ragan EconomlCS Melvin 加われ記 MO れ e. 彑れ d 尹加ロれ ce Miller ECO れ 0 襯た s TO 面彑 Miller れ d ⅲ 0 MO 施 ECO れ 0 〃 CS MiIIer/Benjamin/North The Eco れ 0 襯 / 砿ル″ c lssues Miller/Benjamin 2 Eco れ 0 襯 / ofMacro な Mills/Hamilton Ur わロれ ECO れ 0 〃 CS Mishkin The Eco れ 0 襯た s ofMO れ , Ba れれ切 dF れ ci 記 M ん e な Parkin EconomlCS Perloff MicroeconomlCS Phelps 〃 e 記 Eco れ 0 襯沁 Riddell/ShackeIford/Stamos/ Schneider Eco れ 0 襯 ~ : TOOI for 併″たロ U れれ市れ 0 SOC Ritter/Silber/UdeII PrincipIes 砿 0 れ , Ba れん加切 an イ F 加れ ci 記 M な Rohlf 加〃 0 イリ c ″ 0 れん ECO れ 0 襯に Re 0 がれ 0 Ruffin/Gregory 怦加が砿 ECO れ 0 襯 / Sargent R われ記 E ズ〃 ec ″ 0 加″ 0 れ Scherer Schotter Microecono,t721CS StocWWatson 加 0 イ″ c ″ 0 れね ECO れ 0 襯 cs Studenmund 豆れ 0 ECO れ 0 襯 cs Tietenberg E れ i•o れ襯 2 記 d Ⅳ 4 ル ra / Resource ECO れ 0 〃れ CS Tietenberg E れ 0 れ〃 ~ e れ一 IECO れ 0 〃 CS イ PO ″ c 彑 Todaro/Smith ECO れ 0 襯た De あ〃 men ー Waldman/Jensen / れイ / 0 れたわ Theory andPractice Weil Eco れ om た Growth Williamson ノロ croeco 〃 0 〃れ CS

Efficiencu れイ CO - Efi 尼 c ″れお 5 353 ANATOMY 0F AN OIL SPILL SUIT: THEAMOCO 朝ル On 17 March 1978 , the 襯 0C0 Ca 市 2 , an 0i1 transport ship traveling in a bad storm, lost steering control and, after unsuccessful towing attempts, drifted onto the rocks off the shore of Portsall, France, on the Brittany coast. UItimateIy, the ship broke in two and discharged 220 , 000 tons of crude 0 ⅱ and 4 , 000 tons Of bunker fuels along the cost of a resort area, 0 months prior to the opening Of the tourist season. Before the end of the year of the grounding, a mountain of claims had been filed involving France, a consortium Of resort owners and fishermen, Am0CO (the owner of the vessel), Bugsier (the owner 0f the tug), Shell OiI (the owner of the oil being carried at the time), and Astilleros Espafioles (the Spanish company that built the 襯 0C0 Ca イた ). After extensive and expensive preparations by all parties, the trial began in May 1982. During March 1984 a preliminary 叩 inion was issued finding Amoco and the shipbuilder jointly liable. The process then turned to the separate issue of the magnitude of the damages to be awarded. On 21 February 1989 , a judgment of 670 million francs (approximately $ 120 mil- lion) was levied against Amoco and Astilleros. The verdict was immediately appealed. The trial judge, now retired from the bench, summed up the situation: SO カ e we 尾 , twelve e ″ the acc れ 4 ツ卲 e れ ye ″ the 5 ″″〃必″ん the がれたアな加〃 0 e われ砿れ例襯 0 0 襯例ーれイ s ″り e けね e れ or 襯 0 / 記 fees 盟″ん 0 0 れ e ce れ / ん 2 れ ch れ ge イん . 2 case 襯 ch 0 れ盟砿ん the Co of 員〃〃な 面 each 〃 r 加 c ゆ記〃 expected ん叩〃 e 記 those 〃 ec な砿 the 〃れ記 me 面 盟ん c ん市 ee. な raises the 〃 os 豆わ市 , 記襯 0 ″川切加 , わ配 the ん 0 case co ″ん e ね be 〃 d れ . Source: Frank J. McGarr, "lnadequacy of Federal Forum for Resolution of 0 ⅱ Spill Damages," a talk given at a conference on 0 ⅱ spills at Newport, Rh0de lsland, on 16 May 1990. Judge McGarr was the trial judge for theAmoco C 市 2 case. citizen suits would have no ro 厄 tO play. Noncompliance iS a necessary condition for a success- ful suit. ln the early 1980S when public enforcement decreased, private enforcement—citizen suits—increased tO take up the slack. Lax public enforcement appears t0 have played a signif- icant role in the rise Of citizen suits. AII attorneys' fees incurred by the citizen group in any successful action under the Clean Water Act must be reimbursed by the defendants. Reimbursement of attorneys' fees has affected both the level and focus 0f litigation activity. ByIowering the costs 0f bringing citizen suits, attorney fee reimbursement has allowed citizen groups tO participate far more Often in the enforcement process than otherwise would have been possible. Because courts only reim- burse for appropriate claims (noncompliance claims that are upheld by the court), citizen groups are encouraged tO litigate only appropriate cases.

120 劭叩 / 催 / ル R 0 ce Eco れ 0 襯 / cs. れ 0 耀盟 TABLE 7.1 Estimates of Ultimately Recoverable 0 ⅱ from Enhanced 0 ⅱ Recovery with 10 Percent Minimum Rate of Return (price in constant 1997 do 「 s ) 怦た 2 〃邵 B r $ 32.78 $ 38.79 $ 62.06 $ 84.62 More than $ 84.62 観″襯 eRec 側催 ( 7 ″ e な丿 21.2 29.4 41.6 49.2 51.1 Source: U. S. Congress, Office 0f Technology Assessment (OTA), E れんロれ ce イ 0 ″ ec 側 e P 釀血 I 加 the ″ 2 イ S / (Washington, D ℃ . : OTA, 1978 ) : p. 7. Updated tO 1997 dollars using Consumer Price lndex. cEx 1972 ) , pp. 70 ー 72 ; Earl Cook, "Limits to Exploitation of Nonrenewable Resources," science 191 ( 20 February 1976 ) : 667 ー 82. Sources: PauI R. EhrIich and Anne H. Ehrlich, P 叩記われ R 0 レ尾 E れどか 0 れ m54 2nd ed. (San Francisco: W. H. Freeman, Of exhaustion estimates are SO proximate. demand. lt is therefore neither very surprising, nor very interesting, that the study team's time 0f growth. NO correction is made for additions to reserves or for the effects of higher prices on index. This exponential index assumes that consumption will grow over time at a constant rate tends tO underestimate the time tO exhaustion by an even greater amount than does the static I e 加 d which The Beyond the 〃襯添 study used an index called the exhaustion. and lead would reveal the same pattern: The static index tends to underestimate the time until years. ln 1974 , 40 years later, the index stood at 57. A similar calculation for crude 0i1 , iron ore, static reserve index for c 叩 per was 40 , indicating that the reserves would be exhausted in 40 These assumptions generally are not even 叩 proximately accurate. For example, in 1934 the expected tO prevail). periOd (current reserves and potential reserves are assumed equal for the prices that can be neither increase nor decrease) and ( 2 ) no additions tO the reserves occur in the intervening consumption Of the resource remains at current levels until the time Of exhaustion (). e. , it can resource is exhausted. This is a correct calculation Of the time tO exhaustion がれ d 0 れが ( 1 ) the result Of the calculation is supposed tO be interpreted as the number Of years remaining until the known as the StatiC reserve index, the ratiO Of current reserves tO current consumption. The The number of years a given resource will last is commonly estimated by computing what is THE PITFALLS 0F MISUSING RESERVE DATA

D な〃われ砿 0 イ Reso c 185 Poverty, p 叩 ulation growth, and the sufficiency of food production are related problems, as we stated in the chapter on population growth. High poverty levels are generally conducive tO high p 叩 ulation growth, and high population growth rates may increase the degree 0f income inequality. Furthermore, excessive population levels and poverty together increase the difficulty Of achieving fOOd sufficiency. Because we have already examined population con- trol strategies in Ch 叩 ter 6 , we shall now focus on strategies to increase the amount Of f00d available tO the poorest people. What can be done? Domestic odu ( on ⅲ LDCs The first issue tO be addressed concerns the relative merits Of increasing domestic production in the less developed countries asopposed tO importing more from abroadÄhere are several reasons for believing that many developing countries can profitably increase the percentage Of their consumption that is domestically produced. One Of the most important is that f00d imports use up precious foreign exchange. MOSt developing countries cannot pay for imports with their own currencies. They must pay in an internationally accepted curren , such as the U. S. dollar, earned through the sale Of exports. more orelgn exchange is used for agricultural imports, less is available for imports such as capital goods, which could raise the productivity (and, hence, incomes) 0f 10Ca1 workers. The lack of foreign exchange has been exacerbated during periods of high 0i1 prices. Many developing nations must spend large portions 0f export earnings merely tO import energy. ln 1993 , for example, fuel imports made up one third of all imports for Kenya. That leaves little for c 叩 ital goods or agricultural imports. Although this pressure on foreign exchange supports a need for greater reliance on domes- tic agricultural production, it would be incorrect tO carry that argument tO its logical extreme by suggesting that all nations should become self-sufficient in f00d production. The reason why self-sufficiency is not always efficient is suggested by the の一の尸朝襯〃″市れ ge. Nations are better Off specializing in those products for which they have a comparaåve advantage. If its comparative advantage is not in f00d but in textiles, for example, a given coun- try would be better 0ff producing and exporting textiles, and using the earnings t0 purchase food (TabIe 10.2 ). The opportunity costs 0f producing textiles and wheat (measured in hours 0f labor per unit 0f output) are given for a hypothetical LDC and a devel 叩 ed country (DC). SUPPOSe we are considering an eight-hour day in each country. If the average worker in each country were tO spend four hours Of each day on each activity, then 8 units Of textile ( 4 by the LDC and 4 by the (C) and 51 / 3 units of wheat ( 11 / 3 bY the LDC and 4 bY the DC) would be produced by the 朝 0 countries each day. ()e sure you can see hOW these numbers can be derived from the table). SUPPOSe, however, that the LDC in this case were tO specialize in textiles ()Y allocating all eight hours tO textile production), whereas the DC specialized in wheat. lt is easy t0 verify that TABLE 10.2 A HypotheticaI Example Of the Law Of Comparative Advantage Less Devel 叩 ed Country Developed Country 〃 0 ″ね怦 0 血 ce 7 U れ″砿既 1 1 〃 0 ″ toProduce 7 U れ″砿 e 3 1

288 劭叩 r ノ 5 c R れの滬 / 襯 0 ん催た 0 市 c われ ADIRONDACK ACIDIFICATION About 180 lakes in the Adirondack Mountains of New York State, mostly at higher altitudes, which had supported natural or stocked brook trout populations in the 1930S , no longer sup- ported these populations by the 1970S. ln some cases entire communities Of six or more fish species had dis 叩 peared. The location Of these lakes, some distance east Of any local emission sources, makes it quite clear that most 0f the acid deposition is coming from outside 0f the region. These lakes have rel- atively little capacity tO neutralize deposited acid because they are in areas with little or no lime- stone or Other forms Of basic rock that might serve tO buffer the acid. This is a prime recreational area, particularly for fishing. MOSt Of the sites are within the boundary 0f the 6-million acre Adirondack Park, the last substantially undevel 叩 ed area 0f its size in the northeastern United States. lts remoteness, mountainous terrain, and multitude Of lakes provides an accessible outdoor recreation experience for the 55 million people whO live within a day's traveling distance. Acidification has substantially reduced the recreational value 0f the area. Using a version 0f the travel-cost method discussed in Ch 叩 ter 3 , Mullen and Menz conclude that the annualloss to New York resident anglers is in the neighborhood of at least $ 1 million in 1976 dollars. One possibility for restoring these lakes would be t0 add lime (calcium carbonate) t0 buffer the effects of the acid. Would liming be efficient? ln their investigation Menz and Drisc011 found that a 5-year lake neutralization program would cost in the neighborhood of $ 2 to $ 4 million. Given the $ 1 million estimate Of ロれれ″記 losses tO recreational fishing, some neutralization would 叩 parently be efficient. The exact number 0f lakes t0 be limed would have t0 be deter- mined by comparing the marginal cost Of liming each lake with the marginal gain tO recreation that would result. The authors are quick tO point out that although liming may be used tO restore damaged lakes, it is not a substitute for controlling emissions. Sources: U. S. General Accounting Office, れれ記な砿な CO れ ce / c Ra れ " Report No. GAO 沢 CED -85-13 , 11 (December 1984 ) : 13 ; John K. MuIIen and Frederic C. Menz, "The Effect ofAcidification Damages on the Economic value of the Adirondack Fishery tO New York Anglers,' m 催たれ面″砿た″″″ ra / Eco れ om / 67 , No. 1 (February 1985 ) : 112 ー 19 ; Frederic C. Menz and Charles T. Driscoll, "An Estimate of the Costs of Liming to Neutralize Acidic Adirondack sur- face Waters, ” VI' 邵 R 0 レ尾 R ea 尾ん 19 , No. 5. (October 1983 ) : 1139 ー 1149. emit them from tall stacks. By the time the pollutants hit the ground, according to this the- ory, the concentrations would be diluted, making it easier to meet the ambient standards at nearby monitors. This approach had several consequences. First, it lowered the amount of emission reduction necessary tO achieve ambient standards; with tall stacks, any given amount of emis- sion would produce lower nearby ground-level concentrations than an equivalent level of emission from a shorter-stack source. Second, the ambient standards could be met at a lower

154 劭叩 / 催 8 刃れ催 Lind, Robert C. , et al. D な co ″れ″れ for 行襯 e ロれ R なん加 E れ 0 Po ″ c (Washington, DC: Resources for the Future, 1982 ). MitcheII, Bridger M. Willard G. Manning, Jr. , and Jan Paul Acton, Pea ん - ん oadP c 加 European ん e 0 れ s for し & E. ゅれ ce (Cambridge, MA: BaIIinger, 1978 ). MitcheII, Robert Cameron, and Richard T. Carson, "Property Rights, Protest, and the Siting of Haz- ardous Waste Facilities, ”員襯 e c れ Eco れ 0 襯た R 盟 76 (May 1986 ) : 285 ー 90. Moreira, J. R. , and J. GoIdemberg. "The AIcohol Program," Energ1J Po ″ cy , VoI. 27 , No. 4 ( 1999 ) : 229-245. Myers, N. , and J. Kent, Perverse S ″房 / 市 : 〃 0 肥ズ Do ″ s Ca れ U れ施尾 the E れ ro れ襯 e れ the Eco れ 0 襯 (Washington, D. C. : lsland Press, 2001 ). Nichols, A. L. , and R. J. Zeckhauser. "Stockpiling Strategies and Cartel Prices," 召 e ″面″ m 記砿 Eco れ 0 襯 - ics 7 (Spring 1976 ) : 66 ー 96. OIiver, M. , and T. Jackson. "The Market for Solar Photovoltaics," Energy Po ″ cy , Vol. 27 , No. 7 ( 1999 ) : 371 ー 385. SaIant, S. W. , "Exhaustible Resources and lndustrial Structure: A Nash-Cournot Approach to the World OiI Market," Jo ″記砿 Pol 市 c 記 Eco れ 0 襯 84 ( 1976 ) : 1079 ー 93. Teisberg, Thomas, "A Dynamic Programming Model of the U. S. Strategic Petroleum Reserve, ” Be 〃面リた れ砿 Eco れ 0 襯 / cs 12 (autumn 1981 ) : 52676. Toman, MichaeI, and MoIIy K. MacauIey. 'Risk Aversion and the lnsurance Value of Strategic 0 ⅱ Stock- piling," Resources dE れ e 8 ( 1986 ) : 151 ー 65. U. S. Agency for lnternational Devel 叩 ment (AID). DecentraIized 〃市叩 0 加盥 D D el 叩襯例 / ホ s なれ化怦 00m 襯 (Washington, DC: AID, 1986 ). West, RonaId E. , and Frank Kreith. Eco れ 0 襯たれ口 s な砿 Sol er 襯記 E れ S 襯 s (Cambridge, MA: MIT Press, 1988 ). DISCUSSION QUESTIONS 1. ShouId benefit-cost analysis play the dominant role ⅲ deciding the proportion of U. S. electrical energy tO be supplied by nuclear power? Why or why not? 2. One economist (Lerner [ 1980D proposed that the United States impose a tariff on oil imports equal to 100 percent of the import price. This tariff is designed to reduce dependence on foreign sources as well as t0 discourage OPEC from raising prices (because, as a result of the tariff, the delivered price would rise twice as much as the OPEC increase, causing a large subsequent reduction in con- sumption). Should this become public policy? Why or why not?

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 ).

F 催 ea 市れ 0 129 the quantity declines smoothly t0 zero. If a renewable, constant-cost substitute is available, the quantity 0f the depletable resource extracted will decline smoothly t0 the quantity available from the renewable resource. ln both cases, all of the available depletable resource would be eventually used up and marginal user COSt would rise over time, reaching a maximum When the last unit of depletable resource was extracted. lntroducing technological progress and exploration activity tends tO delay the transition tO renewable resources. Exploration expands the Size Of current reserves; technological progress keeps marginal user cost from rising as much as it otherwise would. If these effects are suffi- ciently potent, marginal extraction cost could actually decline for some periOd Of time, causing the quantity extracted tO rise. When property-right structures are properly defined, market allocations Of depletable resources can be efficient. Self-interest and efficiencyarenot necessarily. incompatible. When the extraction Of resources imposes an external environmental COSt, however, mar- ket allocations will not generally be efficient. The market price Of the depletable resource would be t00 10W , and t00 much Of the resource would be extracted t00 rapidly. ln an efficient market allocation, the transition from depletable tO renewable resources is smooth and exhibits none Of the overshoot and coll 叩 se characteristics 0f the 召 the 〃襯添 view 0f the world. Whether the actual market allocations 0f these various types 0f resources are efficient remains tO be seen. TO the extent that they are efficient, a laissez-faire policy would represent anappr 叩 riateresponse by the ・ government. On the Other hand, if the mar et is not c 叩 able Of yielding an efficient allocation, then some form Of government inter- vention may be necessary. ln the next few chapters we shall examine these questions for a number Of different types 0f depletable and renewable resources. FURTHER READING Bohi, Douglas R. , and Michael A. Toman. れ 2 2 加Ⅳ 0 れ r 例 e Resource Supplu (Washington, DC: Resources for the Future, 1984 ). A reinterpretation and evaluation 0f existing research that attempts tO weave together theoretical, empirical, and practical insights concerning the manage- ment Of depletable resources. Chapman, Duane. "Computation Techniques for lntertemporal Allocation 0f Natural Resources, 襯催たれ JO ″ m 記砿 gr / c レ〃記 ECO れ 0 襯た s 69 , NO. 1 (February 1987 ) : 134 ー 42. Shows how t0 find numerical solutions for the types Of depletable resource problems considered in this ch 叩 ter. Conrad, Jon M. , and C01in W. Clark. ル記 R 0 化 Eco れ 0 襯 / c & ・ル andProblems (Cambridge, UK: Cambridge University press, 1987 ). Reviews techniques 0f dynamic optimization and shows h0W they can be 叩 plied tO the management Of various resource systems. Fisher, Anthony C. 0 ce れ d Env 0 れ襯 e れ I ECO れ 0 襯た s (Cambridge, I-JK: Cambridge UniversitY press, 1981 ). This volume presents a careful heuristic devel 叩 ment 0f the major mathematical results in optimal resource use for depletable and renewable resources. lt also has chapters on pre- serving natural environments and on pollution. This text is written for graduate students or upper- level undergraduates. Toman, Michael A. " 'Depletion Effects' and Nonrenewable Resource SUPPIY"' んれ Economics 62 (November 1986 ) : 341 ー 53. An excellent, nontechnical discussion 0f the increasing-cost case with and without exploration and additions tO reserves.

市″ 0 れ記 Re ル r 例 c 115 Kelley, AlIen C. "Economic Consequences of population Change in the Third world," 面″ rn 記 ofEco- れ 0 襯 / c ん″ era ル 26 (December 1988 ) : 1685 ー 728. Excellent review of a complex literature. lncludes a detailed bibliogr 叩 hy. Kelley, AIIen C. , and Robert M. Schmidt. P 叩記われ and 加 co 襯 e 朝れ ge : c 例ー Evidence (Washing- ton, DC: World Bank, 1994 ). An excellent review of the theory and evidence underlying the rela- tionship between population growth and economic development that is complemented by some original empirical studies that reveal distinct new emerging patterns. Schultz, T. PauI. Economics 砿 P 叩″れ (Reading,MA: Addison-Wesley, 1981 ). lntended for undergrad- uates, an intensive introduction tO the field. Gives a sense of the controversies existing in the field. Simon, JuIian L. Po 〃記われれ dD 2 あ〃襯行れ Poor Co ″れ否 . ・立 c イ Es (Princeton, NJ: prince- ton University Press, 1992 ). A collection of essays from the primary pr 叩 onent of the idea that mod- erate ()s opposed tO zero or high) population growth may be helpful to developing countries. ADDITIONAL REFERENCES Becker, Gary. "An Economic Analysis of Fertility," in De 襯 00r 叩ん c れ d Eco れ 0 襯た C, んれ加 D ツ - 叩 e CO 盟〃た s (Princeton, NJ: Princeton University press, 1960 ) : 209 ー 31. Caldwell, John C. "Fertility in Africa," in ″″ Decline 加 the ん e D e あイ Co ″れ〃 s , Nick Eber- stadt, ed. (New York: Praeger, 1981 ) : 97 ー 118. Commission on P 叩 ulation Growth and the American Future, R ea 尾ん R 印な , vols. I—VII, Elliot R. Morss and Richie H. Reed, eds. (Washington, DC: Government Printing Office, 1972 ). Davis, Kingsley, et. al. , 召 elo R ce 襯ー″″加〃 / 記 Soc ″ . ・ Ca , Co れ 4 ″ e れ c , po ″ - c 5 (New York: Cambridge University Press, 1987 ). Easterlin, Richard A. P 叩記朝れ , ん F 化れん 0 れ S 盟加の加 Eco れ 0 襯た G 盟 (New York: C01umbia University Press, 1968 ). Easterlin, Richard A. "The Economics and Sociology of Fertility: A Synthesis," in た記 S ル市砿 C んれグれ R ″″ , Charles Tilly, ed. (Princeton, NJ: Princeton University Press, 1978 ) : 57 ー 133. EasterIin, Richard A. , ed. 戸 0 〃″″ 0 れ 2 れイ Eco れ 0 た C ん 2 れ ge 加のツ叩加 Co ″れケ s (Chicago: Univer- sity of Chicago Press, 1980 ). Eberstadt, Nick. ″″ Decline 加 the ん e Developed Co ″れ s (New York: Praeger, 1981 ). Espenshade, Thomas J. 豆加 0 加 C ん″市例 . ・ New Es ″襯砿 R e れ I E. ゆ e れ市ル s (Washington, DC: Urban lnstitute Press, 1984 ). Goldberg, David. "Residential Location and FertiIity, ' ⅲ P 叩記われイ D 卲叩 m 例た The 立 ch for Selective e れれ , RonaId Ridker, ed. (BaItimore, MD: Johns H 叩 kins University Press, 1976 ) : 387728. Hardee-Cleaveland, Karen, and Judith Banister, "Fertility PoIicy and lmplementation in China, 1986 ー 88 , " Po 〃記われ dD 叩襯 e た 14 (June 1988 ) : 245 ー 286. J0hnson, D. Gale, and Ronald D. Lee. PO 〃″″ 0 れ Growth Eco れ 0 襯た D 卲叩襯 e れたなイ Evi- den 化 (Madison: University 0f Wisconsin Press, 1987 ). Kuznets, Simon. P 叩″な″ 0 れ , C 叩″記 , Gro 盟 . ・立 cte E (New York: W. W. Norton, 1973 ). Lapham, R0bert J. , and W. Parker Mauldin, "Contraceptive Prevalence: The lnfluence of Organized Fam- ily Programs," S ル否加 Fa 襯 P れれ加 16 ( 1985 ).

72 劭叩 r イ怦叩催カな , E. e 記液 , ロれイ E れれ襯例 / 怦襯 s suggests hOW they might be resolved—by realigning individual incentives tO make them com- patible with collective objectives. AS self-evident as this 叩 proach may be, it is controversial (see Example 4.4 ). The controversy involves whether the problem is our improper values or the improper translation Of our quite proper values intO action. Economists have always been reluctant tO argue that values Of consumers are warped, because that would necessitate dictating the "correct ” set Of values. BOth capitalism and democracy are based on the presumption that the majority knows what it is dOing, whether it is casting ballots for representatives or dOllar votes for goods and services. RELIGION AS THE SOURCE 0F ENVIRONMENTAL PROBLEMS One Of the many alternative explanations Of the sou. rce Of environmental problems was advanced by historian Lynn White, Jr. His thesis, simply put, is that the environmental crisis is due tO the teachings 0f Judaism and Christianity, which in Western culture have created a warped view 0f the proper relationship between humans and their environment. The basis for this thesis is to be found in the first book of the Old Testament: e れ God 既可襯 2 襯加 0 ″ r ~ 襯ロ ye , ″催 0 ″ r ″ん e れ s , ・れ d / e 襯 面襯加われ the 乃砿 e d the わか砿 e air, れ d 側催 the cattle, andover 〃 the ea んれイ 0 r every c 尾印加 0 肱加 0 肱 creeps ″〃 0 れ the r 肱 " / Ge れ . ノッ TWO aspects Of this passage are crucial tO his argument: ( 1 ) GOd created man in His own image, and ( 2 ) man was given dominion over the 0ther forms 0f life. B0th 0f these aspects make man the dominant force on earth and, according t0 White, suggest that "it is GOd's will that man exploit nature for his pr 叩 er ends. ' White also makes the point that, among the world's reli- gions, thiS iS a unique View Of the human-environment relationship. His policy solution follows directly: 0 sc たれ ce れ d 襯 0 ch れ 0 あ尾れ 00 加ね get 0 ″ー砿 epr おー eco んグ c c - sis ″れ龍 we れれ 2 I われ , 加ん 0 ″ r 0 0 れ e ゆ . 720 デ . White believes that we must adopt new values which reject the primacy of humans and ele- vate the stature Of natu re. This view provides a stark contrast tO the economics 叩 proach, which suggests that the problem is neither the primacy Of humans nor warped values but an imperfect translation of those values intO practice. Sources: Lynn White, Jr. , "The Historical R00ts of Ec010gic Crisis," Science 155 (March 10 , 1967 ) : 1203 ー 1207 ; E. F. schu- macher, "Buddhist Economics," in S 襯な Bea ″″ル / (New York: Harper Col 叩 hon Books, 1973 ) : 50 ー 58 ; Keith Thomas, 2 れイ 2 ル″ ra / の (New York: Kn 叩 f, 1983 ) : 17 ー 25.