Public Policies, Markets, and Externalities

  • François Bonnieux
  • Hervé Guyomard
Part of the Springer Series on Environmental Management book series (SSEM)


The absence of externalities is one of the conditions required for competitive markets to achieve efficient resource allocations. Externalities occur in situations where the activities of one economic agent affect or spill over into the technology, consumption set, or preferences of another agent. Externalities, which may be positive (in that case, they have beneficial external effects) or negative (in that case, they have adverse external effects), are one example of market failures. They mainly arise from the fact that environmental goods and services often have no market. The environment is considered as a free resource, which is zero priced and therefore overused. When interaction between private agents does not result in an efficient resource allocation, government intervention is required in order to internalize external effects. Nevertheless, even in the absence of market failure, government intervention may also be justified mainly for equity or national industry protection reasons. This chapter addresses only the problem of externalities and environmental policy strategies, emphasizing those relevant for agriculture activities and resources.


European Union Agricultural Policy Negative Externality Marginal Abatement Cost Extensive Margin 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.


Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.


  1. Anderson, M. NAFTA and environmental quality: Issues for Mexican agriculture. Sullivan, J., ed.Environmental Policies: Implications forAgricultural Trade. USDA-ERS, Foreign Agricultural Economic Report No. 252. Washington, DC: USDA-ERS; 1994:58–74.Google Scholar
  2. Antle, J.M.; Just, R.E. Effects of commodity program structure on resource use and the environment. Just, R.E.; Bockstael, N., eds.Commodity and Resource Policies in Agricultural Systems.Berlin: Springer-Verlag; 1991:97–128.CrossRefGoogle Scholar
  3. Baumol, W.J.; Oates, W.E.The Theory of Environmental Policy.Cambridge: Cambridge University Press; 1988.CrossRefGoogle Scholar
  4. Bonnieux, F.; Gloaguen, Y.; Rainelli, P.; Vernier-sch, D. Paiements directs et préservation de l’environnement: Application au cas des zones humides de Basse Normandie. Lehman, B.; Popp, H.W.; Stucki, E., eds.Direct Payments in Agricultural and Regional Policies: Proceedings of the 30th EME Seminar; 1992 November 11–13; Chateau-d’Oex, Switzerland. Konstanz: Hartung-Gorre; 1993:199–216.Google Scholar
  5. Bonnieux, F.; Rainelli, P.; Vermersch, D. A consistent policy for the reduction of nitrate pollution from livestock rearing. Albisu, L.M.; Romero, C., eds.Environmental and Land Use Issues: An Economic Perspective.Kiel, Germany: Wissenschaftsverlag Vauk Kiel KG; 1995:287–300.Google Scholar
  6. Buchanan, J.M.; Tullock, G. Polluters’ profits and political response: Direct controls versus taxes.Amer. Econ. Rev.65:139–47; 1975.Google Scholar
  7. Commission of the European Union, Directorate-General for Economic and Financial Affairs. EC Agricultural Policy for the 21st Century.Eur. Econ.4; 1994.Google Scholar
  8. Crabtree, R. Effectiveness of standard payments for environmental protection and enhancement. Lehman, B.; Popp, H.W.; Stucki, E., eds.Direct payments in Agricultural and Regional Policies: Proceedings of the 30th EAAE Seminar;1992 November 11–13;Chateau-d’Oex, Switzerland. Konstanz: Hartung-Gorre; 1993:144–156.Google Scholar
  9. Field, B.C.Environmental Economics: An Introduction.New York: McGraw-Hill Inc.; 1994.Google Scholar
  10. Haley, S. Assessing environmental and agricultural policy linkages in the European Community. Sullivan, J., ed.Environmental Policies: Implications for Agricultural Trade. USDA-ERS, Foreign Agricultural Economic Report No. 252. Washington, DC: USDA-ERS; 1994:102–112.Google Scholar
  11. Kageson, P.Economic Instruments in European Environmental Policy.Stockholm: European Environmental Bureau; 1993.Google Scholar
  12. Kuch, P.; Reichelderfer, K. The environmental implications of agriculture support programs: A United States perspective. Becker, T.; Gray, R.; Schmitz, A., eds.Improving Agricultural Trade Performance Under the GAIT. Kiel, Germany: Wissenschaftsverlag Vauk Kiel KG; 1992: 215–231.Google Scholar
  13. Mahé, L. P.; Rainelli, P. Impact des pratiques et des politiques agricoles sur l’environnement.Cah. Econ. Sociol. Rural.4:9–31; 1987.Google Scholar
  14. Munk, K. J. The scope for integrating agricultural and environmental policies. Unpublished paper presented at the conference on agriculture and environment; 1995 May 4–5; Club de Bruxelles, Brussels.Google Scholar
  15. OECD.Water Resource Management: Integrated Policies.Paris: OECD; 1989.Google Scholar
  16. OECD.Economic Instruments for Environmental Protection.Paris: OECD; 1990.Google Scholar
  17. Pigou, A.The Economics of Welfare.1sted. London: Macmillan; 1920.Google Scholar
  18. Randall, A.Resource Economics: An Economic Approach to Natural Resource and Environmental policy.New York: John Wiley and Sons; 1987.Google Scholar
  19. Reichelderfer, K. Environmental protection and agricultural support: Are trade-offs necessary? Allen, K., ed.Agricultural Policies in a New Decade: Resources for the Future and National Planning Association. Washington, DC: Resources for the Future and National Planning Association; 1990:201–230.Google Scholar
  20. Rendleman, C. M.; Reinert, K. A.; Tobey, J. A. Market-based systems for reducing chemical use in agriculture in the United States. Environ. Resour. Econ. 5:51–70; 1995.CrossRefGoogle Scholar
  21. Sidgwick, H.Principles of Political Economy.New York: Macmillan; 1887.Google Scholar
  22. Turner, K.; Jones, T., eds.Wetlands Market and Intervention Failures: Four Case Studies.London: Earthscan Publications Ltd.; 1991.Google Scholar
  23. Ward, K.M.; Duffield, J.W.Natural Resource Damages: Law and Economics.New York: John Wiley and Sons; 1992.Google Scholar
  24. Zilberman, D.; Mara, M. Agricultural externalities. Carlson, G.A.; Zilberman, D.; Miranowski, J. A., eds.Agricultural and Environmental Resource Economics.New York: Oxford University Press; 1993:221–267.Google Scholar

Copyright information

© Springer Science+Business Media New York 1999

Authors and Affiliations

  • François Bonnieux
  • Hervé Guyomard

There are no affiliations available

Personalised recommendations