1. Neoclassical economics is founded on the premise that markets efficiently distribute resources and that people act rationally to maximize their own self-interest. This point of view values the environment and its resources based on how valuable they are in supplying people with products and services, and it presupposes that the market will set the price for these resources based on their demand and scarcity. The external costs of resource depletion and environmental degradation, which are not reflected in market pricing, are not taken into account by the neoclassical paradigm. Since society as a whole bears the costs of pollution and resource depletion rather than the individuals who benefit from their use, this causes an undervaluation of natural resources and an overuse of the environment.
2. The ecological economics view is an alternative to the neoclassical view. This viewpoint acknowledges the economy's dependency on the environment and its resources and views it as a component of the biosphere. Environmental economics places value on the environment and its resources not just for their capacity to produce products and services, but also for their inherent worth and the ecosystem services they offer. In contrast to the neoclassical perspective, ecological economics acknowledges the external costs of resource depletion and environmental degradation and works to include environmental factors into economic decision-making.
3. The term "Hubbert's Bubble" describes the phenomenon of a sharp rise and subsequent collapse in the output of a non-renewable resource, like oil. It bears the name of geologist M. King Hubbert, who foresaw a peak in American oil production in the 1970s and a subsequent fall in the 1950s. According to Hubbert's Bubble, the amount of non-renewable resources that can be produced is constrained by their supply, and once their peak production is achieved, they will become more difficult to come by and more expensive to use.
4. An idea known as the "Tragedy of the Commons" illustrates how a shared resource, such as a common pasture, fishery, or groundwater basin, is overused and depleted. The tragedy arises when individuals acting in their own self-interest exploit the resource carelessly, causing degradation and ultimately causing the resource to collapse. Since the benefits of overuse are enjoyed by individuals while the costs of overuse are shared by all users, this results in a "commons dilemma" wherein individual incentives cause unsustainable resource use.
5. Human activity, including population expansion, economic development, and consumption habits, is the only factor that significantly strains our biodiversity and natural resources. The demand for natural resources rises as economies and human populations continue to expand, which causes habitat destruction, overfishing, pollution, and climate change. Invasive species introduction and disease transmission are also caused by human activity, which can have catastrophic effects on ecosystems and biodiversity.