ABSTRACT
In Chapter 4 the focus was on developing a theoretical framework that would direct us to the conditions under which a socially optimal level of environmental quality could be attained. One of the major revelations in that chapter (see Section 5) was that environmental resources are externality-ridden. For this reason, the socially optimal level of environmental quality cannot be achieved through the unbridled operation of private markets. What this suggests is, as discussed earlier, a clear case of market failure and consequently a justification for public intervention.
