HE SUBDISCIPLINE OF ENVIRONMENTAL ECONOMICS EMERGED in the 1960s in the wake of the publication of Rachel Carson’s Silent Spring and the
increased awareness of environmental issues among the general public, media, and government. Much of conventional economic thinking concerning environmental degradation focuses on the general concept of “market failure,” as expressed in several interrelated issues: externalities, public goods, property rights and issues of common property, and open access resources. Although some of these concepts had been in currency for some time (for example, the English economist Arthur Pigou had discussed the concept of externalities in the 1930s although he did not cast his analysis in terms of environmental degradation), they became central pillars of the new discipline. Despite the new focus on the environment, the subdiscipline was the intellectual child of neoclassical economics and, as such, relied on many of the theoretical constructs of this traditional economic analysis.