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This study develops the economic rationale for the inclusion of new environmental financial assets, tradable pollution rights, in a well‐diversified portfolio. These new assets are generated and their valuation determined in the market‐incentive environmental regulatory approach called emissions trading, especially the cap‐and‐trade variant. This approach has been gaining wide acceptance and approval. A leading example is the sulfur dioxide market where tradable allowances are assets that may be held by private investors. Transactions in this market have reached volumes indicative of a high degree of liquidity. Comparable tradable rights in other pollutants are under active development. We explain the design and workings of these markets and demonstrate empirically, on the basis of time series data, that sulfur dioxide allowances have rates of return and yield distributions that make them candidates for inclusion in asset portfolios. We conjecture that other tradable pollution rights will exhibit similar properties when sufficient data are available. Financial analysts and accountants are likely to play an increasing role in advising investors about the role of these assets in a well‐diversified portfolio.

Nature and landscape and the quality of soil, water and air are indicated as the environment. On the basis of exclusiveness and rivalry the environment is a public good. Modern mechanized and intensified agriculture has reduced qualities of this environment. These consequences are negative external effects of contemporary agriculture, and in this sense a typical example of market failure. Government intervention is, because of x‐inefficiency and allocation inefficiency, not without problems. An alternative would be to apply a decentralized decision‐making process. The “club” theory offers a theoretical basis from which it can be deduced that co‐operation by farmers in the shape of an environmental co‐operative is a Pareto efficient alternative to Government interventions. For legitimacy, effectiveness and efficiency it is important that covenants, transferable pollution rights or permits and management agreements are a coherent part of the instruments of an environmental co‐operative.

Tanneries present heavy environmental impacts due to air emissions. Specific quality objectives are fixed by European Directives concerning air and, in particular, volatile organic compounds. The purpose of this paper is to present a proposal for the management of air emissions with a view to achieve quality standards in the Italy's largest tannery district by means of a tradable emissions permits (TEPs) system.

A methodological approach is presented and analysed. The proposed system is based on the “bubble” configuration, which appears to be an effective and feasible application based on the total maximum daily load criterion, supported by the air quality standards or the environmental risk assessment (ERA) procedure.

The TEP system favours technological improvements in the reduction of emissions. The system may not provide a solution to the unpleasant odours deriving from the tanneries, but its application supported by ERA will make it possible to define the admissible levels of air pollution and improve the general state of air quality.

Although the study is not exhaustive and requires further investigation in the economic, legal, administrative and air pollution sectors, it does give the basic elements for a preliminary analysis. The evident lack of experimental data concerning weather and climatic features, intrinsic to exposure assessment, has been pointed out.

This study proposes a methodological pathway aimed at defining the system of tradable permits by verifying the existence and availability of the necessary data. The proposed TEP system can be extended to other homogeneous industrial districts with an appropriate selection of one or more critical parameters.

The study on output allocative efficiency considering the emission trading is meaningful to allocate emission quota in order to promote production efficiency of industry. This chapter studies the output allocation problem with constraints to profit and pollution goals, and proposes three types of output allocative efficiency measures, including the comprehensive output allocative efficiency, the profit-oriented output allocative efficiency based on pollution constraint, and the pollution-oriented output allocative efficiency based on profit constraint, which aim to maximize the total profit and (or) minimize the total pollution. The proposed measures are used to evaluate the output allocative efficiencies of 32 paper mills along the Huai River in China, and different parameters are tested with sensitivity analysis to examine the changes of optimal output combination. This chapter helps the enterprise to optimize the decision of production and helps the government to formulate a reasonable plan of pollution control and treatment.

The purpose of this paper is to critically discuss the main advantages of introducing environmental regulation tools such as tradable permits markets.

Current climate policies, the negotiations under way at the international level, and past experiences with emissions trading in the USA and Europe are critically reviewed.

The creation of emissions trading schemes such as the European Union emissions trading scheme plays a key role in the preservation of the global public good that constitutes the climate.

This paper calls for the wider development of emissions trading schemes in climate change policy, given a careful design and regulatory appraisal from past experiences.

This paper reveals that the introduction of a tradable permits market (such as in Europe on 1 January 2005) which provides incentives to take early abatement measures, may be seen as a decisive first step to fight climate change.

Examines the economic factors that influenced chemical based agriculture in Australia and the adverse environmental effects of agrochemicals. Reports how technological change, government policies and institutions affected the environment through chemicals. Discusses the effectiveness of alternative policy measures in mitigating these adverse consequences.

Purpose – This chapter shows that in the presence of tourism, the traditional policy prescription, free trade in goods and the standard Pigouvian tax on pollution, is not optimal for a small open economy.

Methodology/approach – The general-equilibrium analysis is employed to study environmental regulations for a small open economy with tourism.

Findings – Foreign tourists consume mainly local non-traded goods in the tourist-receiving economy. Inbound tourism converts formally non-traded goods into tradables, generating a tourism terms-of-trade effect. Owing to this favourable effect, positive tariffs and stricter pollution taxes can actually improve welfare of domestic residents. The optimal rates of tariffs and pollution taxes are derived and explained for the economy with tourism. These positive rates are confirmed by simulations.

Originality/value of chapter – The presence of tourism can alter the welfare implications of the traditional trade policy.

A tax based on land value is in many ways ideal, but many economists dismiss it by assuming it could not raise enough revenue. Standard sources of data omit much of the potential tax base, and undervalue what they do measure. The purpose of this paper is to present more comprehensive and accurate measures of land rents and values, and several modes of raising revenues from them besides the conventional property tax.

The paper identifies 16 elements of land's taxable capacity that received authorities either trivialize or omit. These 16 elements come in four groups.

In Group A, Elements 1‐4 correct for the downward bias in standard sources. In Group B, Elements 5‐10 broaden the concepts of land and rent beyond the conventional narrow perception, while Elements 11‐12 estimate rents to be gained by abating other kinds of taxes. In Group C, Elements 13‐14 explain how using the land tax, since it has no excess burden, uncaps feasible tax rates. In Group D, Elements 15‐16 define some moot possibilities that may warrant further exploration.

This paper shows how previous estimates of rent and land values have been narrowly limited to a fraction of the whole, thus giving a false impression that the tax capacity is low. The paper adds 14 elements to the traditional narrow “single tax” base, plus two moot elements advanced for future consideration. Any one of these 16 elements indicates a much higher land tax base than economists commonly recognize today. Taken together they are overwhelming, and cast an entirely new light on this subject.