ABSTRACT
This chapter looks at the market failures and government policies that are at the centre of many environmental degradation problems facing developing countries. It discusses the challenges facing environmental economists in redirecting policies for sustainable development. The chapter argues that an understanding of the economic functions performed by the environment is a necessary component of strategies aimed at ensuring the sustainable and efficient management of natural resources in developing economies. It describes four important techniques — environmental cost-benefit analysis, resource accounting, economy-environment linkages and applied sustainability research — for integrating sound natural resource management principles into all levels of economic policy-making in developing countries. The chapter also argues that economics has a vital role to play in the struggle towards the sustainable use of natural resources, economic development and poverty alleviation.
