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Ecological Interaction as a Source of Economic Irreversibility

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  • James R. Kahn
  • Robert V. O'Neill

Abstract

Irreversibility can be either physical or economic in origin. For example, the extinction of a species is physically irreversible. On the other hand, contamination of lake‐bottom sediments by mercury is not physically irreversible (the mercury and/or sediments can be physically removed), but the cost is so high that it can be said to be economically irreversible. This paper argues that economic irreversibility associated with environmental change is much more common than typically discussed in the economics literature. The source of the problem is the inherent complexity of ecological relationships. The paper discusses the origin and policy importance of these indirect irreversibilities.

Suggested Citation

  • James R. Kahn & Robert V. O'Neill, 1999. "Ecological Interaction as a Source of Economic Irreversibility," Southern Economic Journal, John Wiley & Sons, vol. 66(2), pages 391-402, October.
    • Handle: RePEc:wly:soecon:v:66:y:1999:i:2:p:391-402
    DOI: 10.1002/j.2325-8012.1999.tb00254.x
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    1. Kenneth J. Arrow & Anthony C. Fisher, 1974. "Environmental Preservation, Uncertainty, and Irreversibility," Palgrave Macmillan Books, in: Chennat Gopalakrishnan (ed.), Classic Papers in Natural Resource Economics, chapter 4, pages 76-84, Palgrave Macmillan.
    2. Avinash K. Dixit & Robert S. Pindyck, 1994. "Investment under Uncertainty," Economics Books, Princeton University Press, edition 1, number 5474.
    3. Arrhenius, E. & Waltz, T.W., 1990. "The Greenhouse Effect: Implications For Economic Development," World Bank - Discussion Papers 78, World Bank.
    4. Burton A. Weisbrod, 1964. "Collective-Consumption Services of Individual-Consumption Goods," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 78(3), pages 471-477.
    5. Porter, Richard C., 1982. "The new approach to wilderness preservation through benefit-cost analysis," Journal of Environmental Economics and Management, Elsevier, vol. 9(1), pages 59-80, March.
    6. Simpson, R David & Sedjo, Roger A & Reid, John W, 1996. "Valuing Biodiversity for Use in Pharmaceutical Research," Journal of Political Economy, University of Chicago Press, vol. 104(1), pages 163-185, February.
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