The basic argument underpinning environmental economics is that there are environmental costs of economic growth that go unaccounted in the current market model. These negative externalities, like pollution and other kinds of environmental degradation, could then result in market failure. Environmental economists thus analyse the costs and benefits of specific economic policies, which also involves running theoretical tests or studies on possible economic consequences of environmental degradation.
Environmental economics also requires a transnational approach. An environmental economist could identify aquatic depopulation, resulting from overfishing, as a negative externality to be addressed. The United States could impose regulations on its own fishing industry, but the problem wouldn’t be solved without similar action from many other nations that also engage in overfishing. The global character of such environmental issues has led to the rise of non-governmental organizations (NGO’s) like the International Panel on Climate Change (IPCC), which organizes annual forums for heads of state to negotiate international environmental policies. The Book is providing practical and working knowledge of how environmental policy analysis is developed. This is a true textbook, detailing the tools required to conduct that analysis and also discusses weaknesses in the existing methods, underlining areas for future improvement. This approach allows readers to get a sense of what is known and what is not known about environmental economics.