ABSTRACT
Economists like to proceed from a model framework to simplify reality and create a reference point for their specific analysis. For many years, however, the models used by mainstream economists tended to overlook the interactions between the economy and the environment. The benefits of economic activity were exaggerated and accounted for, while environmental costs were ignored. In Chapter 9 we discussed a product’s life cycle (from the ‘cradle’ to the ‘grave’), and began to draw a dividing line between modern environmental economics and traditional neoclassical economics (for a reminder see Key Points 9.3). Environmental economics began to gain credence in the 1960s, so there is now a fifty-year history to this school of thought. The sustainable development agenda has given it added momentum and it is clear that the environment can no longer be ignored as a key part of economic analysis. Indeed today there is little debate about its importance as part of the mainstream curriculum, since it is the environment that provides resources at the beginning of a product’s life cycle, and absorbs waste at the end of the cycle.
