The environment is now accepted as a major policy concern for the economics profession in the 1990s as well as an intensely political one for Australian society and the global community. The economic basis of the environmental problem and the need to change the way individuals and the community make choices with respect to environmental services, preferably through markets, has been widely acknowledged, if often reluctantly, by non-economists (Hare, 1990), and perhaps too fully accepted by some economists. Few fields of economic activity do not interact with environmental factors and the range of relevant economic theory is now very wide. Rather than attempt to be all embracing, this survey covers some areas of major theoretical interest and some issues of particular practical importance to Australia. The major theoretical issues are, first, the intergenerational incidence of costs and benefits; second, the valuation of environmental resources; and third, property rights and economic instruments. Issues of particular practical interest covered are the international environment issues, including global climate change. I deal with each separately although in practice they are part of the overarching economic-environmental issue, the link between economic activity and the environment. I start, however, with a few introductory comments on decision making.
