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The 'materials balance approach' to pollution: its origin, implications and acceptance

In their seminal paper on "production, consumption and externalities" (AER, 1969), Ayres and Kneese initiated a research program on comprehensive analysis and management of residuals and pollution based on two pillars: the study of the residuals-generating materials flow subject to the mass balance principle and the concept of pervasive (pollution) externality. The present paper aims at (i) recalling the origin of that program, (ii) sheding some light on its principal implications from today's perspective and (iii) giving a tentative assessment on how it has been received by environmental and resource economists over the last decades. It is argued that while the externality approach to pollution gained widespread acceptance, the research community was rather reluctant in following Ayres and Kneese's 'material balance approach'. It is shown that neglecting the mass balance principle may - but need not always - lead to flawed policy advice.

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Paper provided by Universität Siegen, Fakultät Wirtschaftswissenschaften, Wirtschaftsinformatik und Wirtschaftsrecht in its series Volkswirtschaftliche Diskussionsbeiträge with number 105-03.

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Length: 31 pages
Date of creation: 2003
Date of revision:
Handle: RePEc:sie:siegen:105-03
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  1. Eichner, Thomas & Pethig, Rudiger, 2001. "Product Design and Efficient Management of Recycling and Waste Treatment," Journal of Environmental Economics and Management, Elsevier, vol. 41(1), pages 109-134, January.
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