Citation:
The Benefits of Environmental Improvement: Theory and Practice, A. Myrick Freeman III, (Baltimore: Johns Hopkins University Press, 1979), 272pp.
The Benefits of Environmental Improvement: Theory and Practice is required and/or recommended reading for multiple economics courses at CU Boulder. The first three chapters will be of interest to those who are attempting to frame environmental problems in primarily economic terms. These chapters are devoted to the concept of benefits; the difficulties in measuring environmental effects, particularly environmental benefits; and how the concept of benefits is related to welfare change. Freeman discusses the concept of benefits and how those benefits might affect environmental policy-making. The author discusses methodology for deriving estimates and ways of expressing benefit information. In examining the problems associated with measuring environmental effects Freeman acknowledges the problem of ambient quality; the types of effects to be measured; the need for measurement and the relative merits of regression analysis for such measurement. In chapter three the author examines the relationship between the concept of benefits and welfare changes. Specifically, he addresses the welfare effect of: income and price changes, changes in factor prices, and changes in quantity. Further, Freeman examines: the expenditure function, individual welfare changes as well as aggregation and both social welfare and measurement.
The next three chapters are devoted to measuring benefits both from market data and non-market data and will prove useful to those interested in economic measurements of environmental benefits. Chapter four considers; environmental quality as a factor input and the evidence of indiviuals' demands for environmental quality. Chapter five focuses upon revealed willingness to pay and revealed preferred quantities as the methods available for measuring benefits from non-market data. Chapter six focuses on the asserted relationship between property values and benefit estimation. Freeman considers property values, amenities and interurban wage differences as possible indicators of relative environmental benefits. The author considers hedonic prices in relation to air quality. Approximating benefits from the implicit price function is examined.
Chapters seven, eight and nine are focused upon three distinct benefits, namely: the value of longevity, recreation benefits and productivity benefits. These chapters will be of interest to those who wish to offer economic justifications for improvement in the natural environment. Chapter seven examines approaches to valuing longevity of which choice and willingness to pay are two. Freeman examines probability vectors versus life expectancy. Chapter eight sees recreational benefits defined and approaches to estimating both the demand for a recreational site and participation explained. Additionally, the relationship between congestion and recreation demand is examined. Chapter nine offers a theory of productivity benefits and possible empirical application. Freeman offers an appendix which acts as a guide to the literature on empirical estimates of productivity benefits.
In the concluding chapter, Freeman offers his estimation of the state of the art of evaluating the benefits of environmental improvement, pointing out both the overlaps and the gaps. Finally, the author offers his recommendations.
The Benefits of Environmental Improvement: Theory and Practice examines the possibility and practical difficulties involved in the application of traditional economic theory to the valuing of environmental benefits. Freeman asserts that such an application is not only possible, but fruitful as well.