ABSTRACT
In rethinking natural resource and environmental policy, two facts must be recognized. First, incentives matter to all human behavior. Second, information costs are positive in both the private and political sectors. The market process generates information on the subjective values that humans place on alternative resource use as individuals engage in voluntary trades. The very information and knowledge necessary for trade-offs made using scientific management are subjective and are only revealed through human action. The idea of scientific management has also misguided public policy because it ignores the incentives of decision makers in the political sector. The economic analysis of markets focuses on incentives in the form of prices that determine the benefits and costs that decision makers face. The incentive structure in the political sector is complicated because the bottom line depends on the electoral process where votes matter, not efficiency.
