Foundations of Environmental Economics : An Introduction to the Economic Analysis of National and International Environmental Challenges

This textbook provides a solid introduction to the theoretical and empirical aspects of environmental economics and their links to environmental policy. In this second edition, all chapters have been updated and restructured, and new sections have been added to reflect a greater focus on climate policy.

Starting from the need to balance the social costs of pollution against the financial costs of emission abatement, the book discusses the major issues that arise in the context of environmental policy – such as the potential and limitations of monetary valuation of the environment (and in particular the contingent valuation method) and the design of environmental policy. With regard to the choice of environmental policy instruments, the book focuses on the price-based instruments preferred by economists, i.e., environmental taxes and emissions trading, discussing in detail not only their many advantages but also their drawbacks.

The second edition especially focuses on green industrial policy as a complementary measure to price-based instruments, the distributional effects of environmental policies, and the resulting challenges for political feasibility. Moreover, the book deals extensively with international environmental problems, in particular climate protection, which is a global public good that will be underprovided when certain countries refuse to cooperate and contribute. Approaches to overcoming this underprovision are described in far more detail than in the first edition, both theoretically and empirically – in particular by assessing the functions of the many international environmental agreements in this field. Finally, a new chapter considers adaptation strategies, especially in the water sector, as an additional pillar of climate policy.

Wolfgang Buchholz has studied Mathematics, Economics and Political Science at the Universities of Freiburg and Tübingen, where he got his Ph.D. in Economics in 1982 and finished his Habilitation in 1987. In 1988 he became an Associate Professor of economics at the University of Regensburg. After an interplay as a professor at the newly founded European University in Frankfurt (Oder) between 1992 and 1996 he returned to Regensburg – now as a full professor of public and environmental economics. His main fields of research are international environmental economics, the theory of public goods, intertemporal evaluation and discounting, social protection and distribution policy and the links between economics and ethics. Since 2002 he is Research Professor at the ifo Institute (Leibniz Institute for Economic Research at the University of Munich).

Christiane Reif joined Hochschule Landshut, University of Applied Science, in 2023 as Professor of Economics at the Faculty of Business Administration. Previously, she worked for the Headquarters of the Fraunhofer-Gesellschaft first as Advisor for Industrial Solutions and later as Representative for Structural Transformation and Accompanying Research (2021-2023). From 2019 to 2020 she was a Researcher and Project Manager at the Center for Economics of Materials at the Fraunhofer Institute for Microstructure of Materials and Systems IMWS. During her time at ZEW – Leibniz Centre for European Economic Research as Researcher and Senior Researcher in 2009-2019, she led research projects on environmental economics and sustainability.

Dirk Rübbelke is Professor of Economics at Technische Universität Bergakademie Freiberg. Before he joined TU Bergakademie Freiberg, he was IKERBASQUE Research Professor at BC3 in Bilbao (2010-2014), Senior Research Fellow at CICERO in Oslo (2008-2010) and Juniorprofessor at Chemnitz University of Technology (2002-2008). He was the first CURE-Visiting Professor of Sustainability – Economics and Policies at Ruhr University Bochum (2022-2023) and is Research Associate at ZEW – Leibniz Centre for European Economic Research, Mannheim, and Fellow Member in the CESifo Research Network, Munich. Dirk Rübbelke did research and taught at internationally renowned universities and research centres. These are, inter alia, Australian National University in Canberra, Hebrew University Jerusalem, Jadavpur University in Kolkata, Max Planck Institute for Tax Law and Public Finance in Munich and University of Nottingham.