Market versus non-market values: where to draw the line?

The policy of environmental protection is based on a debate about values. This debate is shaped by a more fundamental issue concerning the boundaries between the public and the private spheres and between economic and social values as key references to environmental protection. This paper discusses the different criteria to define these boundaries in four parts. The first discusses the different types of market failure that are at the root of state intervention. The second analyses the theory of externalities and its flaws. The third evaluates the effect of state intervention in the light of welfare theory. Finally, the fourth insists on institutional changes that are needed in order to implement a coherent policy.