Economic activity that harms the environment creates present or
future losses to humans in the form of damaged health, lower
productivity, depleted natural resources, and reduced enjoyment
of nature. Environmental economics seeks to quantify these
losses and determine the most efficient way to reduce them, as
well as to compare the cost of environmental damage to the cost
of mitigation. To analyze the costs and benefits of reduced
environmental damage, economists must compare changes in
economic well being today with changes in economic well being in
the future. This involves judging the extent to which future
generations will have higher income and better methods for
mitigating pollution affects. Of the three factors of production
in classical economics, land, labor, and capital, land may be
the most difficult to define. Does it refer to just the land
itself? Or is land a generic term referring to all natural
resources? Air, sunshine, and water, necessary to make land
productive, are all part of the surround