ABSTRACT
For many environmental economists, working within the framework of neo-classical theory, environmental problems are best conceived as cases of ‘market failure’—the failure of actual markets to display the efficiency of resource allocation which ‘ideal’ markets can be demonstrated to achieve. Hence the solution to such problems consists in removing such inefficiencies, especially those due to externalities: costs and benefits which have not been incorporated into actual market transactions. One favoured means for doing this has been the use of some form of cost-benefit analysis (CBA).
