Fundamentals of Environmental Economics

The degradation of the environment is the product of the independent decisions of billions of individual users of environmental resources. The underlying causes of environmental degradation accordingly lie in the determinants of those individual decisions: the available information on the environmental effects of resource use; preferences of consumers; the technology available to producers; the rate at which users discount the future effects of current actions; the property rights that define their endowments; the set of relative prices that determine market opportunities associated with those endowments; the cultural, religious and legal restrictions on individual behaviour that prescribe the range of admissible actions, and so on. While the decisions of resource users may be privately rational, they appear to be socially damaging–compromising the interests of present as well as future generations.