- Email: [email protected]
International Environmental Economics: A Survey of the Issues
Book reviews
799
policymakers like Dam, who had responsibilities in the Nixon and the Reagan administrations, assuming they are more aware of the harmful effects of lobbying than their liberal counterparts? Even so, all politicians, including conservatives, are subject to lobbying since they rely on interest groups to finance election campaigns. ‘‘Statecraft’’ thus seems like a nice idea, but turns out to be wishful thinking. To sum up, Kenneth Dam’s book provides an interesting view on how US economic policymaking is shaped by lobbies, while the essays edited by Vosgerau elegantly analyze the challenges of globalization with an European focus. But both books almost never mention developing nations, and this may be their weakness. Raphae¨l Franck ESSEC Business School, Doctoral Program, Avenue Bernard Hirsch, B.P. 105, 95021 Cergy-Pontoise Cedex, France E-mail address: [email protected] PII: S 0 1 7 6 - 2 6 8 0 ( 0 2 ) 0 0 0 7 7 - 0
International Environmental Economics: A Survey of the Issues Edited by Gu¨nter G. Schulze and Heinrich W. Ursprung (Oxford University Press, New York, 2001) The claim that the liberal world economic order is deleterious to a sustainable quality of the environment has been recently increasingly heard. Moreover, the ‘‘use or abuse’’ of environmental regulations to achieve competitive advantage in international markets (i.e. ‘‘ecodumping’’) is becoming an issue attracting increasing concern. In this excellent and thorough survey, Schulze and Ursprung take a critical global economy view to analyzing environmental problems and policies and attempt to deal with these and other issues. They allow the reader to assess the various claims made in the political debate by systematically confronting claims and models with the hard empirical data and evidence. The issues surveyed and analyzed in this volume are not of a ‘‘mere academic interest.’’ Actually, much of the debate concerning the trade – environment interface has recently become highly politicized and ideological and passionate in nature. This is probably the reason we keep hearing various claims which were not subjected to hard empirical examination. In this context, Schulze and Ursprung’s analytical and critical approach may even have some impact on the ideologically convinced Seattle fighters. The division of the world into sovereign nation states results in serious environmental problems due to the frictions created by national interests at the global level. We lack a coordinating super-national hand to resolve global environmental problems. Independent national environmental policy is clearly suboptimal since it disregards international consequences. Naturally, this problem of frictional interests exists even at a much lower level, when counties, cities, localities or individuals act
800
Book reviews
through their private interests against some broader or national ones (e.g., the NIMBY effect). All the contributions collected in this volume are concerned with environmental problems arising from political failure at the international level. Following an introductory chapter, Chapter 2 systematically surveys the theory of the trade – environment interface and its implications, addressing also questions like the possibility of ‘‘strategic environmental policy,’’ while Chapter 3 confronts Chapter 2’s theories with the empirical evidence. In Chapter 4, the political economy approach to analyzing environmental and trade policy formation in an international context is presented. The next three chapters focus on three specific sectors’ interface with trade and economic integration: agriculture by David Erwin, deforestation by Edward Barbier and hazardous waste by Michael Rauscher, respectively. Sjak Smulders studies the interaction of trade and environmental policies in a second best world by questioning the possibility of an environmental tax double dividend in an international context. Lucas Bretschger and Hannes Egli study environmentally sustainable growth paths in Chapter 9. In the last two chapters, Carsten Schmidt (Chapter 10) and Roger Congleton (Chapter 11) deal with international environmental agreements, focusing on the political and economic conditions needed for the applicability and stability of voluntary multilateral environmental agreements. Although some analyses suffer from conceptual difficulties and insufficient data quality and availability, the authors still overcome these barriers and reach some interesting results. They show that environmental policies hardly affect the pattern of international trade flows, but that trade regimes do have a strong influence on environmental quality. The literature points out that the relationship between pollution intensity and the stage of development seems to behave as an inverted U-shape. Trade liberalization gives rise to a reduction of pollution in developing countries, but may increase pollution in middle income and industrialized countries. There does not exist any available empirical evidence sufficient for clearly supporting the ‘‘pollution haven hypothesis.’’ The authors argue that the benefits of this relocation are too low to justify it. When surveying the empirical literature, one can find that most of the industrialized countries’ international direct investments in dirty industries have gone to other industrialized countries with similar environmental standards. They point to heavily polluting manufacturing as a possible exception to this rule. The survey also suggests that economic integration or globalization can have either positive or negative impacts on the environment. Moreover, the idea that growth, free trade and better environmental quality can be complements is intertwined throughout the book. Globalization can be characterized by positive spillovers between the respective countries (prosperthy-neighbor policies) and, thus, does not necessarily hurt other countries (beggar-thyneighbor policies). Deregulation and privatization of the electricity sector in England and Wales in the 1990s is a good example of the positive spillovers economic liberalization can have. These positive environmental spillovers include switching from expensive coal to cheaper and much cleaner natural gas for generating electricity, which contributes to a substantial drop in emissions of sulfur dioxide (SO2) and nitrogen oxides (NOx), both
Book reviews
801
sources of acid rain, and of carbon dioxide (CO2), which is the cause of global warming. In addition, growing international electricity trade (e.g., US – Canada, interScandinavia trade and inter-European trade) can be tremendously beneficial for the environment due to its decreasing impact on the need of each state (or regime) to build additional polluting electric capacity. These results call for the critics of economic integration to rethink their traditional positions. The authors also convincingly argue that only by understanding the political – economic forces underlying the political process can one ever be in a position to design laws and institutions that will promote the public interest. To sum up, this invaluable ‘‘stockpile of knowledge’’ is highly recommended for any scholar or student of economics, political science and environmental studies who wishes to become familiar with the main issues and the literature of International Environmental Economics. Eli Goldstein Department of Economics, Bar Ilan University, 52900 Ramat-Gan, Israel E-mail address: [email protected] PII: S 0 1 7 6 - 2 6 8 0 ( 0 2 ) 0 0 0 9 7 - 6
799
policymakers like Dam, who had responsibilities in the Nixon and the Reagan administrations, assuming they are more aware of the harmful effects of lobbying than their liberal counterparts? Even so, all politicians, including conservatives, are subject to lobbying since they rely on interest groups to finance election campaigns. ‘‘Statecraft’’ thus seems like a nice idea, but turns out to be wishful thinking. To sum up, Kenneth Dam’s book provides an interesting view on how US economic policymaking is shaped by lobbies, while the essays edited by Vosgerau elegantly analyze the challenges of globalization with an European focus. But both books almost never mention developing nations, and this may be their weakness. Raphae¨l Franck ESSEC Business School, Doctoral Program, Avenue Bernard Hirsch, B.P. 105, 95021 Cergy-Pontoise Cedex, France E-mail address: [email protected] PII: S 0 1 7 6 - 2 6 8 0 ( 0 2 ) 0 0 0 7 7 - 0
International Environmental Economics: A Survey of the Issues Edited by Gu¨nter G. Schulze and Heinrich W. Ursprung (Oxford University Press, New York, 2001) The claim that the liberal world economic order is deleterious to a sustainable quality of the environment has been recently increasingly heard. Moreover, the ‘‘use or abuse’’ of environmental regulations to achieve competitive advantage in international markets (i.e. ‘‘ecodumping’’) is becoming an issue attracting increasing concern. In this excellent and thorough survey, Schulze and Ursprung take a critical global economy view to analyzing environmental problems and policies and attempt to deal with these and other issues. They allow the reader to assess the various claims made in the political debate by systematically confronting claims and models with the hard empirical data and evidence. The issues surveyed and analyzed in this volume are not of a ‘‘mere academic interest.’’ Actually, much of the debate concerning the trade – environment interface has recently become highly politicized and ideological and passionate in nature. This is probably the reason we keep hearing various claims which were not subjected to hard empirical examination. In this context, Schulze and Ursprung’s analytical and critical approach may even have some impact on the ideologically convinced Seattle fighters. The division of the world into sovereign nation states results in serious environmental problems due to the frictions created by national interests at the global level. We lack a coordinating super-national hand to resolve global environmental problems. Independent national environmental policy is clearly suboptimal since it disregards international consequences. Naturally, this problem of frictional interests exists even at a much lower level, when counties, cities, localities or individuals act
800
Book reviews
through their private interests against some broader or national ones (e.g., the NIMBY effect). All the contributions collected in this volume are concerned with environmental problems arising from political failure at the international level. Following an introductory chapter, Chapter 2 systematically surveys the theory of the trade – environment interface and its implications, addressing also questions like the possibility of ‘‘strategic environmental policy,’’ while Chapter 3 confronts Chapter 2’s theories with the empirical evidence. In Chapter 4, the political economy approach to analyzing environmental and trade policy formation in an international context is presented. The next three chapters focus on three specific sectors’ interface with trade and economic integration: agriculture by David Erwin, deforestation by Edward Barbier and hazardous waste by Michael Rauscher, respectively. Sjak Smulders studies the interaction of trade and environmental policies in a second best world by questioning the possibility of an environmental tax double dividend in an international context. Lucas Bretschger and Hannes Egli study environmentally sustainable growth paths in Chapter 9. In the last two chapters, Carsten Schmidt (Chapter 10) and Roger Congleton (Chapter 11) deal with international environmental agreements, focusing on the political and economic conditions needed for the applicability and stability of voluntary multilateral environmental agreements. Although some analyses suffer from conceptual difficulties and insufficient data quality and availability, the authors still overcome these barriers and reach some interesting results. They show that environmental policies hardly affect the pattern of international trade flows, but that trade regimes do have a strong influence on environmental quality. The literature points out that the relationship between pollution intensity and the stage of development seems to behave as an inverted U-shape. Trade liberalization gives rise to a reduction of pollution in developing countries, but may increase pollution in middle income and industrialized countries. There does not exist any available empirical evidence sufficient for clearly supporting the ‘‘pollution haven hypothesis.’’ The authors argue that the benefits of this relocation are too low to justify it. When surveying the empirical literature, one can find that most of the industrialized countries’ international direct investments in dirty industries have gone to other industrialized countries with similar environmental standards. They point to heavily polluting manufacturing as a possible exception to this rule. The survey also suggests that economic integration or globalization can have either positive or negative impacts on the environment. Moreover, the idea that growth, free trade and better environmental quality can be complements is intertwined throughout the book. Globalization can be characterized by positive spillovers between the respective countries (prosperthy-neighbor policies) and, thus, does not necessarily hurt other countries (beggar-thyneighbor policies). Deregulation and privatization of the electricity sector in England and Wales in the 1990s is a good example of the positive spillovers economic liberalization can have. These positive environmental spillovers include switching from expensive coal to cheaper and much cleaner natural gas for generating electricity, which contributes to a substantial drop in emissions of sulfur dioxide (SO2) and nitrogen oxides (NOx), both
Book reviews
801
sources of acid rain, and of carbon dioxide (CO2), which is the cause of global warming. In addition, growing international electricity trade (e.g., US – Canada, interScandinavia trade and inter-European trade) can be tremendously beneficial for the environment due to its decreasing impact on the need of each state (or regime) to build additional polluting electric capacity. These results call for the critics of economic integration to rethink their traditional positions. The authors also convincingly argue that only by understanding the political – economic forces underlying the political process can one ever be in a position to design laws and institutions that will promote the public interest. To sum up, this invaluable ‘‘stockpile of knowledge’’ is highly recommended for any scholar or student of economics, political science and environmental studies who wishes to become familiar with the main issues and the literature of International Environmental Economics. Eli Goldstein Department of Economics, Bar Ilan University, 52900 Ramat-Gan, Israel E-mail address: [email protected] PII: S 0 1 7 6 - 2 6 8 0 ( 0 2 ) 0 0 0 9 7 - 6