Environmentalism in the United States historically has been divided into its utilitarian and preservationist impulses, represented by Gifford Pinchot and John Muir, respectively. Pinchot advocated conservation of natural resources to be used for human purposes; Muir advocated preservation and protection from humans, for natures own sake. This schism left an unsatisfactory state of affairs which would only be reconciled in the post-war period. Meanwhile, the conservationist side could only recognize the value of material resources, not beauty or wilderness. The preservation side seemingly left out a place for humans. In the first half of the 20th century, American natural resource economics was firmly on the conservationists side of that schism. It developed an American theory of property rights and institutions distinct from other theories of externalities.

The history of environmental economics is interwined with other histories and movements. These include (1) humanitys thinking about its relationship to Nature; (2) a redefinition of economics from the study of material welfare to the study of tradeoffs, including tradeoffs between developing resources and preserving them; (3) rising consumer movements and a shift in economic focus from the producer to the consumer, which in turn facilitiated a shift from thinking about the exploitation of resources to the enjoyment of preserved landscapes; (4) developments in economic theories of externalities and public goods; and (5) the increasing involvement of economics in government policy, from agricultural and resource economics to planning government spending and regulation.