* Short, concise, and well focused

* Communicates serious economic theory with unusual clarity

Environmental policy is high on the political agenda in many countries. Considering the various dimensions of environmental quality as public goods, Sandmo identifies the failures of the market mechanism in the face of environmental problems and shows how economic policy should be designed to overcome them. Specific topics covered include the assessment of environmental benefits and costs, the choice between taxes and quotas as policy tools, the principles of environmental taxation in a second-best world, the various notions of the double dividend from environmental tax reform, and international aspects of environmental policy as well as its political economy ramifications. The treatment is mainly theoretical, but the emphasis throughout is on showing how theory can be relevant to the rational design of economic policy.

Readership: Teachers and researchers in public and environmental economics looking at the use of fiscal instruments in environmental policy as well as graduate students and government economists who work in this area.

Agnar Sandmo, Professor of Economics, Norwegian School of Economics and Business Administration.