Environmental resource issues involving water need to consider third-party external costs (and benefits) – water pollution being one example. Natural resource economics can be applied to this issue and set in the context of water production and consumption in urban areas. Furthermore, the price, value, and cost of zero priced or ‘free’ natural resources such as water generate many complex economic and political decisions to understand and deal with the widening water ‘crisis’ in cities. For instance, cooperation and agreement on the economic value of water requires economic thinking on both local and global scales, especially as water has less regard for the national administrative boundaries they cross.
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