As
late as 300 years ago, nearly everyone was fatalistic about nature.
Whatever transactions people undertook left all but their immediate
environment and the social order in which they nested pretty much
undisturbed. People lived in self-contained groups, which left them few
options, but to adapt to the idiosyncrasies of their natural
surroundings. The intellectual ferment of the eighteenth-century
enlightenment changed this. Over about two centuries the idea that the
social order may influence nature-for good- spread over the world. A
broad consensus that this same order may also influence nature for ill
was reached only in the last half of the twentieth century. Although the
field of environmental economics probably dates back to the late 1950s
and early 1960s, its roots are in the externality theories of Marshall
and Pigou, the Public goods theories of Wicksell and Bowen, the general
equilibrium theory of Walras, and the applied field of benefit-cost
analysis, foreshadowed by Dupuit but cultivated to maturity by
economists in the water resource agencies of the US Government.
|
|
As
in general economics the history of environmental economics can be
viewed as a sequence of thought experiments or models and organized
empirical observations directed at a common set of questions about
economic scarcity. The need for distinctive analytical treatment of
natural resources was realized by pre-World War II, economists Smith
(1776), Ricardo (1817) and Marx (1865) because the services they offer
are gratis. Payments to the owners of the resources are therefore rents
or unearned increments. Natural resource was regarded as another factor
of production similar, aside from their free provision by nature, to
heterogeneous capital, which never gets out of the market process. The
criterion was thereby blind to the life support and amenity services of
the environment and presumed that present consumption of resource stocks
did not impact on future consumption and production opportunities. Not
until the early twentieth century did economists begin to explore
systematically the tension between present-value maximization as if the
entire economy were a single, fully informed, incentive-compatible firm
indifferent to the foreclosure of its future options and to the
depletion and non-market features, which pervade natural resource
issues. Economists recognized external effects of economic transactions
for a long time. The 1920s saw a series of articles in the Economic
Journals dealing with the possible external economies that were
associated with investment in decreasing cost industries. The field
really took off in the 1970s with the important contributions emerging
from the “think tank” Resources for the Future, and has been booming
ever since. In the 1990s the payoff was seen in terms of influence on
environmental policy.
Mostly
environmental economics involves adapting concepts developed in other
branches of economics (particularly Public finance and Industrial
organization) and applying them to environmental problems, but there are
some aspects of environmental economics like non-market valuation, which
are unique to this field but have the potential to be applied in other
branches of economics. Non-market valuation involves developing methods
of measuring the demand for goods for which there is no market, for
example, measuring the value of the ecosystem service that a forest
provides is a non-market valuation. The markets for this service do not
exist but it provides benefit to the ecosystem and hence a value is
placed on this service.
|