CharacteristicsandCriteriaforEnvironmentalDecision.docVIP

Characteristics and Criteria for Environmental Decision-Making: Implications for Materials Policy James R. Kahn, PhD Director, Environmental Studies Program Professor of Economics Washington and Lee University, Lexington, VA, 24450, USA kahnj@wlu.edu and Professor Colaborador Centro do Ciências Ambientais Universidade do Amazonas and Scientific Advisor International Materials Assessment and Application Center United Nations Industrial Development Organization (IMAAC/UNIDO) Prepared for The International Materials Assessment and Application Center United Nations Industrial Development Organization (IMAAC/UNIDO) Rio de Janeiro, Brasil April, 2001 Table of Contents 1.0 Introduction 2.0 Markets and Market Failure 2.1 Externalities 2.1.1 Market Failure, Environmental Externalities and Materials Policy 2.2 Imperfect Information 2.3 Public Goods 2.4 Summary of Market Failure and its Impact on Technological Innovation 3.0 Decision-Making Criteria 3.1 Economic Efficiency 3.1.1 Net economic benefit 3.1.2 Gross Domestic Product 3.5.3 Satellite Accounts 3.2 Equity 3.3 Environmental Justice 3.4 Sustainability 3.5 Ecological Criteria 3.5.1 Representative environmental variables 3.5.2 Green GDP 3.5.3 Satellite Accounts 3.5.4 Aggregate Indices 3.6 Ethics 3.7 Public Participation 3.8 Advancement of Knowledge 4.0 Measuring Economic Efficiency 4.1 Categorizing the Benefits of Environmental Improvement 4.2 Difficulties in the Measurement of the Value of Ecological Services 4.3 Methods for Measuring the Value of Environmental Improvement 4.3.1 Revealed Preference Approaches 4.3.2 Stated Preference Approaches 4.3.3 Benefit Transfer Approaches 5.0 The Use of Multiple Criteria in Decision-making 5.1 Cost-Benefit Analysis 5.1.1 The Choice of the Discount Rate 5.1.2 Determining project or policy alternatives: 5.1.3 Listing the costs and benefits 5.1.4 Scenario Analysis 5.1.5 How to deal with missing values 5.2 Incorporating multiple criteria within