The Political Economy of Environmental Scarcity

Abstract

In this chapter, we review some of the principles which should govern environmental policy, we study some of the implications of these principles and we indicate why the political process often deviates from them. The center of the stage is dominated by the opportunity cost principle which requires that the opportunity costs of using the environment as a receptacle of waste as well as a public consumption good have to be taken into account. In a decentralized economy, these costs have to be attributed to the subsystems of the economy, for instance through the polluter-pays principle. Additional requirements for environmental policy are the precautionary principle and the principle of interdependence. The chapter also briefly looks at environmental legislation in the last thirty years.