




































Ecology, Economy and Society–the INSEE Journal 8(1): 153-156, January 2025 

BOOK REVIEW 
 

Managing the Commons: Roles of Governance, 
Markets, and Communities 
 

Kishore K. Dhavala  
 

M.N. Murty and Surender Kumar, eds. 2023. Three Pillars: Government. 

Market and Communities for Environment Management. India: Academic 
Foundation. 338. ISBN 978-9332706286. 
  

The book is a comprehensive 
edited volume that synthesizes 
some of the authors’ research 
papers, published in reputed 
journals, into a cohesive volume. 
Both authors are well-known 
environmental and resource 
economists. Their work spans a 
broad spectrum of topics, 
including the economics of 
natural resources, environmental 
sustainability, and policy 
interventions for effective 
environmental management. The 
authors consider the three 
institutions—governments, markets, 
and communities—as three 
pillars of environmental 
management and regulation. The 
authors emphasize that each of 
these institutions, in isolation, 

                                                      
 Associate Professor, School of Ecology and Environment Studies, Nalanda University, 
Chabilapur Road, Rajgir, Bihar 803116; k.dhavala@nalandauniv.edu.in   

Copyright © Dhavala 2025. Released under Creative Commons Attribution © 
NonCommercial 4.0 International licence (CC BY-NC 4.0) by the author.  

Published by Indian Society for Ecological Economics (INSEE), c/o Institute of  Economic 
Growth, University Enclave, North Campus, Delhi 110007.  

ISSN: 2581–6152 (print); 2581–6101 (web).  

DOI: https://doi.org/10.37773/ees.v8i1.1377 

mailto:k.dhavala@nalandauniv.edu.in
https://doi.org/10.37773/ees.v8i1.1377


 Ecology, Economy and Society–the INSEE Journal [154] 

may be inadequate to propel the economy from a state of scarcity and 
poverty to collective prosperity and sustainable development. Unlike a 
traditional focus on government regulations, it considers broader 
government activities such as commodity taxation, commodity pricing, and 
subsidies. The significance of community involvement, particularly in 
developing countries with weak regulatory enforcement, is emphasized.  

The authors lay a strong foundation in the initial chapters by introducing 
and emphasizing the significance of governments, markets, and 
communities in achieving environmental sustainability. This conceptual 
framework serves as a guiding principle throughout the book, offering 
readers a roadmap for understanding the collaborative efforts that are 
required for effective environmental stewardship. The authors begin by 
highlighting the potential pitfalls of a free and unregulated market, 
acknowledging its efficiency but cautioning that such a trajectory may lead 
to unsustainable development and environmental degradation.  

The book consists of 13 research articles published by the authors and their 
co-authors. The reprinted articles are organized into three categories: 
environmental policy instruments, budgetary policy instruments, and 
actions targeting environmental problems. The first eight chapters establish 
the central role of the government/regulator in formulating and enforcing 
regulatory frameworks and policy instruments that shape the national 
environmental framework. In their narrative, the government is not just a 
regulator but a proactive force in steering environmental practices. The 
book goes beyond traditional command and control instruments and 
explores how governments can intervene effectively through direct 
budgetary environmental policy instruments, such as pollution taxes 
(Pigouvian taxes), standards, quantity restrictions, and public expenditure. 
These budgetary policies not only ensure efficient environmental 
management but also ensure increased revenue and equity. Chapter 2 
discusses the effectiveness of pollution taxes (Pigouvian taxes), subsidies, 
property rights, liability, and bargaining approaches in optimizing resource 
allocation for environmental externalities. The chapter presents a flexible 
and practical theoretical model for the adoption of abatement technologies 
by firms in the context of Pareto optimality and extant property rights 
arrangements. Chapter 3 provides an empirical study of the theoretical 
concepts presented in Chapter 2, as it investigates the potential use of 
economic tools, pollution taxes, and bargaining strategies. A case study on 
thermal power plants in the state of Andhra Pradesh, India, is examined, 
and the output distance function is used to estimate coal-fired plants’ 
technical efficiency and shadow prices for pollutants like SPM, SO2, and 
NOx. The authors measure political activity as an externality that affects 



[155] Dhavala 

 
 

industrial performance and observe that in the presence of a good and 
responsible government, economic instruments are very effective in dealing 
with environmental management.  

Chapter 4 explores a methodology that allows industries to increase the 
production of good outputs and reduce their by-products (bad outputs) 
simultaneously. The authors provide a theoretical concept called directional 
distance function, which allows industries to achieve technical and 
environmental efficiency. A case study of coal-fired power plants in Andhra 
Pradesh was examined. Based on the estimated results of the directional 
distance function and Morishima elasticities, the authors observed that with 
the available resources and technologies, thermal power plants in Andhra 
Pradesh could increase their output (electricity) by 6% and reduce bad 
outputs (SPM, SO2, NOx) simultaneously by the same percentage. Chapter 
5 uses data from US-based electric power companies to examine the 
productivity and profitability of power plants in the presence of emissions 
trading using the input distance function. This study developed a 
hypothetical framework for calculating the productivity and profitability 
measures of a firm, and tested it with 67 electricity-generating plants in the 
US with and without SO2 emissions as a bad output. The authors observed 
that productivity is higher when bad outputs are modelled as weakly 
disposable compared to freely disposable. Chapter 6 focuses on urban air 
pollution; the chapter introduces the Integrated Urban Air Pollution 
Assessment Model (IUAPAM), which can be used to evaluate urban air 
pollution in cities across India. Chapter 7 explores the potential of 
commodity taxes to control environmental externalities arising from 
consumption and production. The authors advocate for harmonizing 
environmental and standard budgetary policies for optimal taxation. 
Chapter 8 discusses how commodity taxes on carbon-intensive goods can 
help control greenhouse gas emissions. The authors propose an institutional 
framework for second-best domestic and international carbon taxes, in line 
with the many-person and many-country Ramsey model. The chapter 
emphasizes the need to align environmental and standard budgetary policies 
in the face of environmental externalities and argues that the effectiveness 
of commodity taxes depends on well-designed environmental policies. 

Chapters 9 through 12 offer insights into both the theoretical and empirical 
dimensions of community initiatives aimed at addressing environmental 
challenges. Authors believe that communities are not passive entities, but 
that they act as active participants and custodians of their environment. The 
authors argue that community collective actions, facilitated by customs, 
legal rights, and local and global agreements, can play a crucial role in 
supplementing government regulations and market actions. Chapter 9 



 Ecology, Economy and Society–the INSEE Journal [156] 

focuses on the role of local communities and explores the constraints and 
possibilities of voluntary collective action for the efficient management of local 
commons. The chapter emphasizes the significance of external agencies as 
catalysts and explores mutually beneficial sharing arrangements between 
governments and village communities. The chapter enriches the narrative by 
acknowledging the active role of communities in environmental stewardship. 
Chapter 10 highlights the role of participatory institutions in managing 
common property resources and emphasizes shifting the ownership from the 
state to people’s participation. The chapter reinforces the idea that 
development with preservation is attainable through participatory models. 
Chapter 11 examines the political economy of industrial pollution abatement. 
The authors provide empirical evidence, showcasing the impact of locally active 
groups in controlling industrial pollution in India. The chapter adds a political 
dimension to the environmental discourse, emphasizing the need for active 
citizen engagement. Chapter 12 discusses the growth, environment, and 
poverty nexus. It examines predictions of market failure, the impact of income 
growth on poverty and the environment, and the role of institutions in 
breaking the downward spiral. The chapter offers comprehensive insights into 
the complex interactions between economic growth, environmental 
sustainability, and the alleviation of poverty. Chapter 13 focuses on the sugar 
industry in India and provides empirical evidence for the Porter hypothesis. By 
analysing panel data, the authors demonstrate that environmental regulations 
can incentivize polluting industries to increase their production efficiency. The 
final chapter discusses the social time preference rate (the rate at which society 
values its current consumption over future consumption) for investment 
projects in India. The chapter contributes to the theoretical underpinnings of 
intertemporal decision-making, providing insights for policymakers evaluating 
long-term investment projects. Applying the generalized Ramsey Growth 
Model, the authors consider impatience, wealth effects, and precautionary 
effects on the discount rate. Based on Indian economic data, the authors 
estimated an 8% social time preference rate for India.  

In conclusion, the edited volume offers a meticulous exploration of the 
multifaceted roles played by governments, markets, and communities in 
environmental management. Each chapter contributes a unique perspective, 
blending theoretical concepts with empirical evidence. The integrated approach 
presented in the book enriches the discourse on sustainable development, 
offering valuable insights for students, researchers, and policymakers engaged 
in environmental policy and management. As the world grapples with the 
challenges of climate change and resource depletion, this edited book advocates 
for collaborative and holistic approaches to ensure a sustainable future. 

Conflict of Interest Statement: No potential conflict of interest was reported 
by the author. 


