Markets,Resources, Environments

Orthodox economists argue, in this country as elsewhere in the developed world, that many of the issues of environmental damage and resource use over which governments, corporations and community groups tussle could be resolved if appropriate markets for environmental goods were established. This paper argues that markets are commonly not appropriate mechanisms to resolve environmental disputes: much of the problem is to determine the effects rather than to allocate them; when the rate of discount of the future is positive, the social need is different from the sum of rational individual decisions; and markets ignore equity. Furthermore, the limits on sustainability seem to be quantitative rather than qualitative - to rest on the magnitude of resource discovery, or on the rate of improvement of environmental quality per dollar invested for example. Again, the central question concerns the data rather than a means of allocating costs and benefits. These difficulties in using market mechanisms imply that legal systems may be preferable as means of regulating environmental use.