However, CGE models have all but conquered the world of American policy analysis. The Pigouvian agenda requires a monetary value for every significant externality. Yet many environmental externalities involve risks of irreversible damages, large but uncertain costs, impacts on future generations, or values, such as human life, that cannot meaningfully be monetized. Based in part on that analysis, EPA set the standard at more than three times the technologically feasible minimum level. Advocacy of laissez-faire.
Economic theory confronts the world with a tangled mixture of description and prescription.
While it seeks to value externalities and thus make markets more perfect, it also critiques taxes and policies that deviate from unregulated market outcomes. The implication is typically that the government is misusing resources that could be better allocated by the market. In particular, too much, or the wrong things, are being done to protect the environment. There is an urgent need for a more realistic economics of the environment, with theories and analyses that can help to create environmentally sustainable economic activity. The struggle against autistic economics is far more than an academic debate.