As long as its fundamental tenets are followed, a market economy is supposed to result in an equitable and optimal allocation of society's resources. According to market theory, sellers must bear the full cost of producing the products they sell, and these costs must be reflected in the sales price paid by the buyers. Through price signals, markets are supposed to allocate scarce resources efficiently. Ecological economists believe the global economy has passed from an era in which human labor and technology were the limiting factors in economic growth, to an era where the supply of natural capital is the limiting factor. Yet, natural capital is still valued at its extraction cost, not at its true replacement value.
Governmental subsidies make virgin materials less expensive than other alternatives.
As a result of inappropriate price signals, the regenerative and assimilative capacities of the planet are being exceeded. It is commonly perceived that these problems are isolated and disconnected. However, there are few areas of the world that are not experiencing decline in their natural resource base. Close to 50 percent of the Earth's land surface has been altered from its original state by human activities such as filling wetlands, converting tall-grass prairies into cornfields and converting forests into suburbs. The worst of these, in the Gulf of Mexico, covers almost 8,000 square miles and results from pollution in the Mississippi River.