Valuing Environmental Amenities, Incentivizing Conservation Behavior & Forecasting Economic Activity

2/28/2014; 8 minutes

Environmental and natural resource economists work on a wide range of policy issues. Much of this work can be cast in terms of characterizing the policymaker's objective function and then asking what policy actions maximize this objective. Usually, but not always, this takes the form of a benefit-cost analysis. The first issue that usually arises when performing such an analysis is that changes in environmental amenities are not typically priced in monetary terms. The second issue is the policy change of interest operates through having firms or households change their behavior. Here economists look at the mechanisms through which different types of incentives actually change behavior. Third, economists forecast the amount of activities likely to take place under a given incentive structure. (#27877)

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