This is the first Australian textbook in the important and growing field of environmental politics and policy. Using the management of the Murray-Darling Basin as a central case-study, The Political Economy of Environmental Policy shows how and why environmental problems generate political conflict. It also brings relevant perspectives from political theory to bear on environmental issues, emphasizing in particular their collective nature, and the uses of social choice and game theory in understanding them. It underlines the dilemmas faced by decision makers and discusses the strengths and weaknesses of modern decision theories when applied human impacts on the natural environment. This is a textbook intended for students commencing the study of environmental policy or politics at first year university or higher.