Our economic system, which provides all the goods and services we use from day to day, is underpinned by our planet’s ecological systems. The biosphere supplies us with energy and resources and acts as a sink for our wastes. In short, the economic system relies upon and cannot operate without the biosphere. The discipline of environmental economics has emerged as one way to help society use natural resources more efficiently and reduce flows of waste and pollution.
Many economists suggest that a root cause of environmental degradation is the simple fact that several aspects of the environment are not properly valued in economic terms. For example, resources that are commonly owned — such as the air, oceans and many fisheries — are vulnerable to overexploitation for this reason. Nobody has to pay to use them so people abuse them. It is argued that when such resources are given proper price tags, decisions can be made about using them by balancing the relative costs and benefits in economic terms — so-called cost–benefit analysis.
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