Final answer:
The 'free market' approach to sustainable development, as described by Willis, involves using market mechanisms to value nature, without strong government intervention. Certain methods include markets for pollution rights and environmental taxes to ensure that the cost of using natural resources reflects the social cost of environmental impacts.
Step-by-step explanation:
According to Willis, the 'free market' approach to sustainable development involves valuing nature through market mechanisms. This approach does not emphasize government intervention but rather relies on market-oriented policies. Some methods of 'pricing the earth' may include creating markets for pollution permits or using taxes and subsidies to influence the cost of using natural resources, aiming to internalize the externality costs of environmental damage.
Government intervention in the free market can help to create equity and security by ensuring fair competition, protecting property rights, and addressing market failures such as pollution, which affects the public at large but may not be adequately accounted for in a purely free market scenario.
Proponents of free-market economics assert that a pure free market, where supply and demand determine trade without government interference, is most efficient. However, there are public goods and externalities, like environmental impacts, that require some level of government intervention to ensure they are managed properly for the benefit of society.