Economic policies must recognize the need for a combination of different strategies based on extremely varied viewpoints by broadening the analysis to include other disciplines. Economics must also come to terms with the fact that it is not an exact science with immutable laws, but a social science that has to reconcile all aspects of society's development. This overlooked feature has its roots in the notion that one cannot continue to assume capital and labour will substitute for natural resources ad infinitum. A socio-economic approach to environmental policy is essentially based on a sociological concept of society and not on an economic concept of trade. Economics must therefore replace its strict rationality with the notion of the bounded rationality of human behaviour - man wants to be rational but is imperfectly so, with individual preferences largely depending on the social context.
Transactions extend beyond market forces to information flow within society.
However, the flow is increasing since incentives and technical advances that make workers more cost effective are tending to make people more individualistic. So it is costing more to ensure that the democratic rules governing collective decision making prevail, and developing environmental policies involves higher consensus costs. To handle these cost increases, governments have allied themselves with pressure groups. But as the number and variety of groups increase, they are finding it increasingly difficult to give each group something in return. So they now surround environmental decisions with precautionary measures such as impact studies and expert reports, and the lack of clear information and transparency results in hostile consumers.