ABSTRACT
The pricing system, which is the heart of a free supply-and-demand economy, is ineffective when it comesto preserving natural environment as long as life support and other values of environment in its natural condition are not considered in making land-use decisions. Because of the irreversibility of many land-use decisions, a pricing system that considers only man-made values tends to force the development of man's fuel-powered systems beyond the optimum, that is, to a point of rapidly diminishing returns for both the developed and the necessary life-support natural environments that must be a part of man's total environment. It is clear that the time has come to extend economic accounting to include what has heretofore been considered to be the “free” work of nature, or, to put it in other words, what economists in the past have considered to be “external” values and costs (and, therefore, not included in the pricing system) must now be “internalized” to achieve a total evaluation. Whether such an extension of the pricing system will be totally effective in preserving the quality of human life and environment in a finite world remains to be seen, but it's worth a try even if only partially effective.
