... should be preserved in all its glory, and therefore trees should not be cut down simply for short-run economical gain. The rain forests of the world are dwindling in size at a phenomenal and alarming rate. Deforestation causes an estimated seventeen million hectares of rain forest to be lost globally every year.1. This deforestation of the rain forest can be explained in environmental economics, through the concept/theory of market failure. It states that the depletion of tropical rain forests occurs at a suboptimal rate as economic decisions made by individual countries (e.g. Ecuador) do not take into account all the relevant social costs (and benefits). Oil companies are one of the major causes of deforestation. The effects of oil companies in Ecuador in the past is startling and nothing short of an environmental nightmare. No matter what the oil companies say/have said oil spills and other types of accidents are inevitable (as ...

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