Environmental economics, the bioeconomy and the role of government

Abstract

The bioeconomy serves the goals of resource saving and of reducing environmental pollution and is, therefore, in accordance with principles of sustainable development. Since private markets alone fail to serve these goals successfully, the government is called for to promote the bioeconomy in order to ensure a sustainable development of the economy.In this chapter the concept of sustainability, which is essentially an intertemporal concept, is introduced. Thereafter, the basic principles of resource economics, i.e., the optimal use of natural resources over time, are discussed using a simple intertemporal model. Reasons for market failure in the environmental sector are discussed along with various governmental instruments and policies to address the different kinds of market failure.