Environmental Amenities, Private Property and Public Policy

Abstract

Environmental amenities, like beautiful vistas and famous natural landmarks, are highly valued by many people, but it is difficult to determine what would constitute an optimal supply of them. Since enjoyment of an amenity by one person does not preclude enjoyment by many others, and it is impractical to limit such enjoyment to those who pay, individuals have an incentive to understate their demand for environmental amenities, thus leading to their underproduction. On the other hand, interest groups might spur government to overestimate the unarticulated demand. Furthermore, much demand is not policy relevant, since individuals with a moderate taste for particular amenities might be more than surfeited by the supply that others voluntarily provide. Building upon this framework, the author contends that commonly employed methodologies for ascertaining the value of amenities are seriously flawed, and that attempts to provide very high levels of amenities without commensurate public expenditures may damage private property rights.

Keywords: environment, environmental amenity, public choice, existence value

JEL Classification: K110, K320, Q560