Envirodevonomics: A Research Agenda for a Young Field
Environmental quality in many developing countries is poor and generates substantial health and productivity costs. However, existing measures of willingness to pay for environmental quality improvements indicate low valuations by affected households. This paper argues that this seeming paradox is t...
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| Format: | Working Paper |
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Cambridge, MA: Department of Economics, Massachusetts Institute of Technology
2013
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| Online Access: | http://hdl.handle.net/1721.1/81818 |
| _version_ | 1826191751334854656 |
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| author | Greenstone, Michael Jack, B. Kelsey |
| author_facet | Greenstone, Michael Jack, B. Kelsey |
| author_sort | Greenstone, Michael |
| collection | MIT |
| description | Environmental quality in many developing countries is poor and generates substantial health and productivity costs. However, existing measures of willingness to pay for environmental quality improvements indicate low valuations by affected households. This paper argues that this seeming paradox is the central puzzle at the intersection of environmental and development economics: Given poor environmental quality and high health burdens in developing countries, why is WTP so low? We develop a conceptual framework for understanding this puzzle and propose four potential explanations: (1) due to low income levels, individuals value increases in income more than marginal improvements in environmental quality, (2) the marginal costs of environmental quality improvements are high, (3) political economy factors undermine efficient policy-making, and (4) market failures such as weak property rights and missing capital markets drive a wedge between true and revealed willingness to pay for environmental quality. We review the available literature on each explanation and discuss how the framework also applies to climate change, which is perhaps the most important issue at the intersection of environment and development economics. The paper concludes with a list of promising and unanswered research questions for the emerging sub-field of “envirodevonomics.” |
| first_indexed | 2024-09-23T09:00:44Z |
| format | Working Paper |
| id | mit-1721.1/81818 |
| institution | Massachusetts Institute of Technology |
| last_indexed | 2024-09-23T09:00:44Z |
| publishDate | 2013 |
| publisher | Cambridge, MA: Department of Economics, Massachusetts Institute of Technology |
| record_format | dspace |
| spelling | mit-1721.1/818182019-04-10T20:12:29Z Envirodevonomics: A Research Agenda for a Young Field Greenstone, Michael Jack, B. Kelsey economic development, environment, externalities, market failures, climate change Environmental quality in many developing countries is poor and generates substantial health and productivity costs. However, existing measures of willingness to pay for environmental quality improvements indicate low valuations by affected households. This paper argues that this seeming paradox is the central puzzle at the intersection of environmental and development economics: Given poor environmental quality and high health burdens in developing countries, why is WTP so low? We develop a conceptual framework for understanding this puzzle and propose four potential explanations: (1) due to low income levels, individuals value increases in income more than marginal improvements in environmental quality, (2) the marginal costs of environmental quality improvements are high, (3) political economy factors undermine efficient policy-making, and (4) market failures such as weak property rights and missing capital markets drive a wedge between true and revealed willingness to pay for environmental quality. We review the available literature on each explanation and discuss how the framework also applies to climate change, which is perhaps the most important issue at the intersection of environment and development economics. The paper concludes with a list of promising and unanswered research questions for the emerging sub-field of “envirodevonomics.” 2013-10-28T23:56:01Z 2013-10-28T23:56:01Z 2013-09-03 Working Paper http://hdl.handle.net/1721.1/81818 Working paper, Massachusetts Institute of Technology, Dept. of Economics;13-19 application/pdf Cambridge, MA: Department of Economics, Massachusetts Institute of Technology |
| spellingShingle | economic development, environment, externalities, market failures, climate change Greenstone, Michael Jack, B. Kelsey Envirodevonomics: A Research Agenda for a Young Field |
| title | Envirodevonomics: A Research Agenda for a Young Field |
| title_full | Envirodevonomics: A Research Agenda for a Young Field |
| title_fullStr | Envirodevonomics: A Research Agenda for a Young Field |
| title_full_unstemmed | Envirodevonomics: A Research Agenda for a Young Field |
| title_short | Envirodevonomics: A Research Agenda for a Young Field |
| title_sort | envirodevonomics a research agenda for a young field |
| topic | economic development, environment, externalities, market failures, climate change |
| url | http://hdl.handle.net/1721.1/81818 |
| work_keys_str_mv | AT greenstonemichael envirodevonomicsaresearchagendaforayoungfield AT jackbkelsey envirodevonomicsaresearchagendaforayoungfield |