ABSTRACT
The quality of natural environments has become an especially important social issue in various settings throughout the world. Environmental economics is the subject of a significant body of literature— some of which addresses forestry and forestry related activities. Production and consumption activities which occur outside the forestry sector can generate external costs which affect forestry. Many forestry professionals are aware of the extreme environmental consequences associated with congestion of recreation areas in such places as Yosemite Valley and the Great Smoky Mountains. Economics research is needed to assess production and consumption activities occurring within the forestry sector that have adverse effects on non-forestry environments. Regulation and prohibition can be policy instruments used by governments to correct market failures which lead to environmental pollution. Most economists tend to view environmental degradation as a problem of market failure rather than a problem of increased population or of industrial development.
