Willingness to pay (WTP) and willingness to accept (WTA), for a change in the quantity of an environmental good, can be represented by corresponding Hicksian welfare measures. The paper suggests a simple method of approximating WTP and WTA given the information about the marginal willingness to...

This paper investigates the implications of the materials balance for optimal environmental policy. We find that neglecting the materials–emissions relationship – as is common in models of optimal environmental regulation – implies biases, whose sign depends on the regulatory instrument...