Economics and the
There is a growing interest in the use of economics to better understand the ways in which Australian society interacts with the environment. Two driving forces buoy this interest. First, higher real incomes and increased educational standards have been reflected in growing levels of community concern on environmental issues. This has been reflected in the political agenda. Second, while most environmental resources are renewable, such has been their rate of use (either directly as a harvest or indirectly as the external effect of other actions) that stocks have been depleted, some irreversibly.
Together, the increase in demand for the environment and the decrease in supply have resulted in growing relative scarcity of environmental resources. Once these resources were considered to be either 'free', or a liability in that they created a barrier to the development of other resources. Now they are regarded by most as having value. Environmental resources are used as inputs into the production of goods and services (for example, shelter belts on farms). They are consumed directly (such as protected natural areas as tourism and recreation sites).The environment contributes to the utility of people who have no direct contact with the resource (including the 'existence value' of endangered species).
The relative scarcity of environmental resources has attracted the attention of economists interested in applying their analytical tools to allocation and distribution issues. Particular attention has been given to resource-use choices where scarcity has become most apparent – sometimes because of lobby-group/media amplification of the situation. Key points of focus have included water and air pollution, global warming, remnant vegetation, forests, biodiversity (including species protection), salinity and rivers.
The conventional approach taken by economists to matters environmental centres on the concept of 'market failure' arising through the presence of externalities – where the impact of one person's actions affect the wellbeing of a third party – or public goods – where it is impossible to exclude users and one person's use of the good does not impact on its availability to others.Therefore much of the economic research in the area has focused on the development of strategies for government intervention. This has