Introduction

Although the analysis of environmental and resource problems is considered a comparatively new field in economics, formal economic analysis of natural-resource scarcity can be traced back to classical political economy and the foundation of economic ideas. Contemporary approaches to problems such as pollution, optimal depletion rates and common-property exploitation are, however, substantially different from the classical concern with the scarcity of arable land and diminishing returns in agriculture. Not only has environmental economics benefited from general developments in modern economics, but it has also been subject to important non-economic influences, namely environmentalism, ecology and thermodynamics. On the one hand, incorporating these influences presents a fundamental challenge to conventional economic analysis; on the other, they can be assimilated into more integrated alternative economic approaches for analysing the trade-off between resource use and environmental problems.