Economic Theory and the Environment

We are all concerned about the environment. Most of us feel that perhaps steps need to be taken to ensure that we do not damage our environment to a dangerous degree. However, we seem highly unsure about what exactly is the problem, and even more unsure about what exactly should be done about it. It is the purpose of this chapter to demonstrate that the essence of the problem is an economic one, and in light of that to consider what might be appropriate policies to deal with environmental problems in general and to consider two particular case studies.