Everyone's a Winner

This chapter introduces some of the fundamental concepts and analytical approaches of environmental economics. It explores environmental economics as a subfield of microeconomics. Environmental economics’ core analytical approach involves assigning monetary value to nonmarket goods and balancing the marginal benefits of economic activity against the marginal costs of the inevitable environmental impacts. The chapter familiarizes readers with foundational concepts such as market equilibrium, willingness to pay, productive efficiency, producer and consumer surplus, market failure, externalities, and the determination of the socially efficient quantity of pollution.