Incompatibility of environmental and economic decision-making

Other Names:
Environmentally insensitive economics
Inappropriate economic theory
Failure to recognize the environment as the resource base for all economic activity
Limited assumptions of neoclassical economics

Economic progress continues to be measured as though the social and natural environments were of no consequence. Little account is taken for the manner in which the degradation of the environment subtracts from human welfare and impairs sustainable development. The discipline of economics, and the economic policies sustained by it, has treated the environment as a free good when in fact it is a scarce commodity. It has been made scarce by ignoring the ecological requirements for a sustainable planetary society, running natural wealth down instead of conserving it.


The world economy is experiencing a continuing trend towards liberalization and deregulation. Privatization of much state-controlled activity is part of this trend. This raises concern that control over polluting activities is also looser, as private investors may pay even less attention to environment and health considerations than the state did in the past.

The input of economics to environment-related issues leaves much room for improvement. Insufficient data as well as research evidence make it difficult to quantify environmental impacts. Evaluation issues, lack of data, and political considerations make it difficult to rank priorities across health, social and economic objectives. Besides, interactions between economic policy and the environment are often very complex and the dynamics difficult to trace, so that clear policy lessons are hard to derive.

Many of the environmental problems result from the continuous unfolding of socio-economic processes that have yet to be properly controlled or managed. The continued poverty of the majority of the planet's inhabitants and the excessive consumption by the minority are the two major underlying causes of continued environmental degradation. These causes, combined with rapidly changing political, social, institutional, financial and technological developments, present policy makers with intractable problems without easy or obvious solutions.


Although high-level government officials have issued many declarations and other resolutions endorsing the concept of sustainable development, in reality little progress has been made in improving collaboration between the environment, health and economic sectors. Despite being strongly endorsed by the Helsinki Conference and in Environmental Health Action Plan for Europe, collaboration with economic sectors has been one of the most difficult areas in the development of National Environmental Health Action Plans (NEHAPs) in most countries. The various sectors of the economy ought to see the environment and health sectors as the most important partners in attaining the objectives of sustainable development. Conversely, unless economic sectors are mobilized as key partners in implementing NEHAPs, the environment and health sectors will make little progress towards their objectives. What is needed is to demonstrate that sound environmental health policies complement and support overall socioeconomic development.

Related Problems:
Undomesticated men
Related UN Sustainable Development Goals:
GOAL 7: Affordable and Clean EnergyGOAL 8: Decent Work and Economic GrowthGOAL 13: Climate ActionGOAL 15: Life on LandGOAL 16: Peace and Justice Strong Institutions
Problem Type:
F: Fuzzy exceptional problems
Date of last update
16.11.2017 – 20:08 CET