Environmental economics addresses the issues that arise on the boundaries between economic systems and natural systems, such as pollution and natural resource de­ pletion and degradation. Like any other branch of applied economics, it has drawn its tools and techniques from the wide range already available in economics gener­ ally, selecting, adapting and extending these to meet its own particular requirements in its own particular context. Here, as elsewhere in economics, public policy analy­ sis requires quantitative assessments of the economic impact of different policy choices. Perhaps the most distinctive contribution of environmental economics has been the development of techniques for the economic valuation of environmental goods and services in the absence of markets for such goods and services, or in the presence of markets that are at best imperfect or incomplete. Nevertheless policy analysis still relies on one or another of three broad groups of methods used in eco­ nomics generally. One is project appraisal, which at the micro level provides an evaluation ofthe costs and benefits ofinvestment options to inform the choice among them, while at the macro level policy analysis rests either on computable general equilibrium (CGE) models or on economy-wide macroeconometric models. All models are simplifications, designed to focus attention on the important fea­ tures ofthe problem at hand, and neglecting other features that might for a different problem assume greater importance.

Table of Contents:
1. Introduction.- 2. The macroeconomic effects of specific portfolios of projects.- 2.1. Introduction.- 2.2. The macroeconomic effects of projects which lead to savings on fuels and other raw materials.- 2.3. The effects of some portfolios of projects on inflation.- 2.4. Conclusions.- Appendix: A simple, quantitative analysis of the effects of a policy of saving on fuels at the level of the European Union.- Notes.- 3. Existing methods for the social appraisal of projects in situations of unemployment.- 3.1. Introduction.- 3.2. Methods without a welfare-theoretical foundation.- 3.3. Methods with a welfare-theoretical foundation.- 3.4. The consistency between project appraisal and macroeconomic analysis and policy.- 3.5. Implications for the development of an improved method.- Notes.- 4. A method to calculate and evaluate the macroeconomic effects of projects, including small projects.- 4.1. Introduction.- 4.2. The calculation of the effects of a project.- 4.3. Potential errors related to the estimates when large projects or portfolios of projects are analysed.- 4.4. Potential errors related to the estimates when small projects are analysed.- 4.5. The advantages of the method of this study as compared with the conventional macroeconometric method.- 4.6. The evaluation of the effects.- Appendix: The treatment of indirect taxes.- List of symbols.- Notes.- 5. The calculations done with the Freia model.- 5.1. Introduction.- 5.2. The Freia model.- 5.3. The base-run.- 5.4. The calculation of the Ht and the Ut.- 5.5. The extent to which the calculations fulfil the conditions of additivity.- 5.6. The differences between the effects of increases in government investment and development aid in different years.- 5.7. The period to which the analysis refers.- 5.8. Comparison of the calculations made for this study with calculations by the Central Planning Bureau.- 5.9. Evaluation of the errors.- Notes.- 6. The macroeconomic effects of wind energy in the Netherlands.- 6.1. Introduction.- 6.2. Characteristics of the project from a microeconomic point of view.- 6.3. The macroeconomic effects of the project.- 6.4. Conclusions.- Notes.- 7. Converting the method into a dual method.- 7.1. General outline of the method.- 7.2. Shadow prices based on the Freia model.- 7.3. Conclusions.- Notes.- 8. International aspects and the debate about import substitution.- 8.1. Effects on the world economy.- 8.2. Some comments on the debate about the effects of import substitution on the domestic economy.- Notes.- 9. Summary and conclusions.- References.