Economics and Environmental Degradation

This chapter explains why economics has to play a central role in dealing with environmental problems and how environmental economicsEnvironmental economics may serve as a valuable complement to natural sciencesNatural sciences in finding solutions to environmental challenges. In particular, it is expounded how economic processes are generically embedded in ecological cycles and how pollution has serious effects on ecosystemsEcosystem and human well-being. This chapter then describes that the market system usually fails to address environmental problems in an adequate way so that environmental policyEnvironmental policy is needed to internalize the external effectsExternal effects caused by pollution.