Search

Economic valuation of the environment is disputed due to the number of anomalies. Matters related to information problem, preference formation and the role of social sphere in defining what becomes individually rational are mentioned.

The standard policy recommendation to limit pollution is to use taxes or tradeable quotas on emissions. A general emphasis on emissions does not, however, take proper account of the characteristics of the material flow through the economy. An analysis of the relationships between transaction costs and features of this flow shows that it may be less costly to tax inputs into the economy. The paper focuses on the advantages of a mass flow perspective in environmental economics, the trade-off between the precision of an environmental regulation and its implementation costs, and develops criteria for choosing between input and emission-related instruments., I. INTRODUCTION Economists have traditionally argued for taxes or tradeable permits as superior to other pollution control instruments because they lead to an efficient allocation of control responsibility. For the [...]