The Equity-Efficiency Trade-Off in Environmental Policy: Evidence from Stated Preferences
Land Economics, Vol. 86, No. 3, 423-443, 2010
47 Pages Posted: 6 Feb 2009 Last revised: 11 Jul 2012
Date Written: August 1, 2010
Abstract
The design of environmental policy raises several equity issues, in particular the distribution of benefits and costs. At the same time, it has often been argued that there is a trade-off in environmental policy between equity and efficiency, which brings these issues firmly to the attention of environmental economics. In this paper we use a simple choice experiment to elicit individual preferences over equity-efficiency trade-offs in the context of two environmental problems, local air pollution and global climate change. We find that equity matters to people as much as efficiency does in the design and delivery of environmental policy.
Keywords: Air pollution, allocative efficiency, climate change, choice experiment, environmental equity, polluter-pays principle
JEL Classification: D63, Q52
Suggested Citation: Suggested Citation