Spatial Environmental and Natural Resource Economics

Abstract

Environmental and natural resource economics has long wrestled with spatial elements of human behavior, biophysical systems, and policy design. The treatment of space by academic environmental economists has evolved in important ways over time, moving from simple distance measures to more complex models of spatial processes. This chapter presents knowledge developed in several areas of research in spatial environmental and natural resource economics. First, it discusses the role played by spatial heterogeneity in designing optimal land conservation policies and efficient incentive policies to control pollution. Second, it describes the roles space plays in non-market valuation techniques, especially the hedonic and travel cost approaches which inherently use space as a means to identify values of non-market goods. Third, it explains a set of quasior natural-experimental empirical methods which use spatial shocks to estimate the effects of pollution or environmental policy on a wide range of outcomes such as human health, employment, firm location decisions, and deforestation. Finally, it describes spatial models of human behavior including locational sorting and the interaction of multiple agents in a land use/conservation setting. The chapter ends with a discussion of some promising future areas for further evolution of the modeling of space in environmental economics.