GEF

Unit 7  |  The Economics of Sustainability 152 of operating a coal mine are included, as well as the income earned by selling the coal. However, the cost of water pollution, ecosystem damage, air pollution, and climate change from burning the coal is not factored into the market value. Second, ecological economists focus on the fact that there are few market incentives to promote sustainable production and consumption. In classical economics, the primary incentive of businesses is to minimize costs in order to maximize profits. The market incentive for consumers is to acquire the high- est quantity or quality of product at the lowest possible price. As a result, markets normally do not encourage activity that increases sustainability. For instance, if factory owners choose to install smokestack scrubbers that reduce air pollution, there is no direct market reward for improving air quality. In contrast, ecological econo- mists propose the creation of a marketplace in which there are powerful incentives for positive behavior. The incentive to minimize costs would mean less harmful behavior. Market incentives such as lower energy costs may encourage sustainable production.