This chapter develops the general conceptual framework used in economics to approach environmental problems and examines the relationship between human actions, as manifested through the economic system, and the environmental consequences of those actions. It builds criteria for judging the desirability of the outcomes of this relationship. These criteria provide a basis for identifying the nature and severity of environmental problems, and a foundation for designing effective policies to deal with them. The chapter explores that the economic point of view is contrasted with alternative points of view. These contrasts bring the economic approach into sharper focus and stimulate deeper and more critical thinking about all possible approaches. The economic system will not always sustain efficient allocations. Specific circumstances that could lead to inefficient allocations include externalities; improperly defined property rights systems, imperfect markets for trading the property rights to the resources, and asymmetric information. When these circumstances arise, market allocations typically do not maximize the surplus.