ABSTRACT
This chapter identifies the key tenets of Environmental Economics and discusses them within the context of small states. It focuses on some broad environmental characteristics, namely a country's polluting activities, exposure of local population to pollution and governance in protecting the environment, with the purpose being to establish whether the characteristics are related to population size. The chapter aims to illustrate findings via a case study that describes the situation in Malta with regard to its reliance on the natural environment, the challenges and issues that it faces as well as policy interventions aimed at protecting the environment. It explores the notion that the analytical approach provided by Environmental Economics is particularly pertinent for small countries, due to the various peculiarities associated with the states, notably because of a higher degree of market failure. The chapter examines the relationship between country size and two broad environmental issues, namely negative externalities and governance.
