Monthly Archives: August 2006

The Ethics of Environmental Economics

How are ethical issues treated in environmental economics textbooks? Is it possible to recognize some trends in the treatment of ethical issues from the older to the most recent textbooks?

These are the questions to which Ralf Eriksson offers an answer in his article On the Ethics of Environmental Economics as Seen from Textbooks in Ecological Economics, March 2005, v. 52, iss. 4, pp. 421-35. He examines the most widely used textbooks in environmental economics, that is, Baumol and Oates (1979) , Callan and Thomas (2000), Field and Field (2002), Goodstein (1999), Kahn (1998), Perman, Ma, McGilvray and Common, (1999), Tietenberg (1996), and Pearce and Turner (1990).

Eriksson (2005, 434) finds great differences in the quality of the presentation of what is considered by the textbook authors the ethical basis of environmental economics. Some authors give a consistent, systematic, explicit picture of such basis while others offer a somewhat inconsistent miscellaneous collection of ideas. As for the trends in the treatment of ethics in environmental economics textbooks, the restricted number of older textbooks makes it virtually impossible to draw strong conclusions.

I have complemented Kahn (2005) with chapter 2 of Perman, Ma, McGilvray and Common (1999). As a brief introduction on the relationship between economics and ethics, I found useful the entry Economics and ethics by Charles K. Wilber for the Elgar Handbook to Economic Methodology.

Teaching resource scarcity

When is a resource said to be scarce? What is the difference between relative and absolute scarcity? Can resource scarcity be measured? These are some of the key questions about scarcity examined during the course in resource economics I will be teaching this Fall. As readings I chose Krautkraemer, J. 2005. Economics of Natural Resource Scarcity: the State of the Debate , Resource for the Future Discussion Paper 05-14 and Baumgärtner, Stefan, Becker, Christian, Faber, Malte and Manstetten, Reiner. 2005. Relative and absolute scarcity of nature forthcoming in Ecological Economics. I think that taken together these two articles offer an excellent critical introduction to the issue of resource scarcity, stimulating students’ reflection on the theme.

Corporate social responsibility?

Stavins in his column on the Environmental Economics Blog suggests we should think about corporate social responsibility by answering to four key questions: may companiesí managers sacrifice profits in the social interest given their responsibility to shareholders? It is possible to sacrifice profits in a competitive environment if competitors donít? Even if it were possible should profits be sacrificed? Finally, do some firms today really sacrifice profits or are they rather increasing them in the long run by increasing public goodwill through corporate social responsibility? See also John Whiteheadís comment.