This concluding chapter highlights eight themes in the history of environmental economics, including the rise of the consumer, the changing definition of econmics, measurement and objectivity, the quest to measure the intangible, theories of surplus value, the relationship between pure and applied science, economic institutions including common property, and economics relationship to politics. It also points the way ahead to three areas where pricing the environment may be extended to new levels, areas that reflect these themes. The areas include the expansion of benefit-cost analysis to account for equity, the expansion of national income accounts like GDP to account for natural capital, and the international pricing of greenhouse gases.

Climate change is a time horizon problem. Economics proposes a carbon tax and leaving the rest to the market. Tax levels are calculated by combining an economic growth model with climate projections. Such models predict very little economic impact, at odds with the alarmist projections of climate science. Economic methodology and selective evidence combine to induce complacency. This was endorsed by a Nobel Prize for William Nordhaus, its leading exponent. Complacency was challenged within economics for not being predicted by extrapolation, disregarding future generations, and modelling the risks incorrectly. Economics bears some responsibility for the problem it tries to solve. It ignores non-rational forms of denial, and falls victim to them itself. With no guidance from economics on how to address climate change, the actual approach chosen is central government precommitment, in line with our own time-horizon model.

Our review of climate economics begins with the Kaya identity, which portrays our emissions pathway not as a smooth glideslope to net zero but as a tug of war between opposing forces. We then review the stunning impact that continued compounded economic growth could have on the ability of future generations to adapt to climate change, particularly in the Global South. The concepts of externalities and market failures are considered, along with the widely held view that a significant element in any climate solution will need to be some form of carbon tax. The recognition that mitigation comes at a cost leads to the question of climate cost/benefit analysis and the notion that the economically optimal quantum of further climate change that rational actors might prefer would not necessarily be zero. We close by pivoting to fat tails and the extent to which opting for some economically optimal amount of climate change may expose the future to small probabilities of utterly unacceptable outcomes and therefore unjustifiable risks.