Annual Review of Resource Economics - Early Publication

In the current era of ecological scarcity and rising global environmental risks, there are increasing calls for limits on damage to the environment. Some scientists advocate imposing planetary boundaries to protect key Earth system processes from human impacts. This article reviews the economic implications of such an approach. From an economic perspective, planetary boundaries represent both a relative and absolute scarcity problem. Imposing such absolute limits may avoid undesirable tipping points, but they are not sufficient for optimal environmental management. The failure to tackle increasing relative ecological scarcity will lead to unsustainable use and could make keeping within limits unattainable. In view of these challenges raised by the planetary boundary approach, economics has three important roles: more robust modeling of the environmental impacts to incorporate risk and uncertainty, valuing ecological capital and its services, and informing local and global policies for improved management of globally important resources and sinks.