Externalities and Public Goods: Uses and Limits of Neoclassical Analysis of Environmental Issues
- 1 Program of Environmental Sciences, University of São Paulo, São Paulo, Brazil
- 2 Faculty of Law, University of São Paulo, São Paulo, Brazil
- 3 Faculty of Law, University of São Paulo, São Paulo, Brazil
Abstract
The article aims to present and discuss the explanatory power of the concepts of externalities and public goods constructed by mainstream Economics. It departs from a literature review to back a critical discussion of the relations between bare economic concepts and the environmentalist approach. It encompasses presenting the economic notions of externalities and public goods as basic notions to understand the relations between the Economy and the environment. Since legal literature and normative texts frequently misuse these concepts, the text provides a clear and linear presentation backed by a survey of the historical and recent literature. Thereafter, the article proposes a discussion of the limits of Economics as enough to explain and solve environmental problems. Economic theory cannot adequately cover many structural aspects of nature and the complex relations between humankind and the environment. The definitional economic problems—scarcity and material maintenance of human societies—fall short of biological, ecosystemic, and climatic dimensions of environmental questions.
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