Bedfellows put heads together on green ideal

Environmental policy is increasingly dictated by trans-boundary and global legal agreements on the uses of natural resources and regulations covering emissions of pollutants. A true understanding of these activities cannot be obtained without some appreciation of the economic factors driving such agreements, the economic impacts of agreements and international law.

Law and economics have been productive intellectual bedfellows for some decades. P. K. Rao seeks to provide an introduction to this joint venture of two disciplines in the context of international agreements that either have explicit environmental goals or which have potentially significant environmental implications.

The book opens with an overview of the economics of sustainable development and a synopsis of the economics of common property resources and pollution. These chapters read well but lack familiarity with the more rigorous literature, for example World Bank work on defining and measuring sustainability. Other sections seem inconsistent with real-world behaviour. "Coaseian bargains", whereby polluters and polluted bargain over the "right" amount of pollution, are common, contrary to Rao's discussion. The current focus on paying for ecosystem services - downstream water users paying upstream forest owners to conserve their forests - is one example. Rao gives a useful introduction to game theory, but a central tenet of this - that international agreements tend to be about what the signatories would have done anyway - is under-emphasised.

The book deals with international law, and there are helpful summaries of the main environmental treaties. But the questions relating to such treaties are not really addressed. For example, what evidence do we have that any of these treaties "work"? Just as problematic, why do we have treaties on climate change but not on deforestation?

Rao's book is suitable as an introduction to a fascinating subject. However, it lacks rigour in places and contents itself a little too much with description and generalised statements about the need for integrated approaches.

David Pearce is professor of environmental economics, University College London.