Economics, however, is simply not a good tool for valuating natural resources- natural resources' future values are incredibly ambiguous, even were we able to coherently separate out one natural resource from another.

This simply isn’t true. The most obvious natural resources (timber, coal, oil, natural gas, unpolluted land, etc.) - are easy to assign value to since markets for them already exist and measuring their volume (and thus aggregate value) is simple. For some other resources (clean air, fisheries, and land use change come to mind) there is some difficulty measuring total volume, but within-reason estimates are still not outside of the scope of reality.

The only resource that I can come up with off the top of my head that is really problematic to valuate is biodiversity, and since legislation like the Endangered Species Act effectively acknowledges biodiversity as a trump card, accurate valuation is thankfully not a necessity (I say “thankfully” because of the difficulty of conducting such a valuation, though I have no doubt that an accurate calculus would show biodiversity to be of greater value than almost any project which would endanger it).

Immediate consumption is necessary for sustaining the society that could in theory produce smarter consumption methods in the future, but also provides numerous infrastructural and market-based disincentives for that same research and development.

I made no argument against immediate consumption. In fact I encourage it for exactly the reason you cite in your initial clause. Immediate consumption is not at odds with conservation, and appropriate regulation (see below) allows us to determine with reasonable accuracy (depending on the resource in question) the proper balance between immediate consumption and resource conservation. The disincentives you speak of are subject to the same argument that I make about the following quote – you’re thinking about the point-of-view of firms when you should be thinking about the point-of-view of the regulator.

Long-term market disadvantages like, say, complete depletion of resources, will inevitably be outweighed in economic analysis by the profitgasm of dwindling supply and exploding demand. The profitgasm comes sooner and is therefore discounted to a lesser extent, and even after resource depletion those who have extracted maximum value during the post-peak era will be in a vastly superior economic position, meaning that tangible costs like dirty air and water will impact them the least as a percentage of their total economic surplusage.

Here you appear to be talking about individual firms within an economy, yet the perspectives of these firms isn’t of any particular interest since their externalities are, by definition, not internalized anyway. Economic analysis of environmental issues takes place primarily at the level of the regulator, who can use accurate analysis to determine appropriate places, times, and methods of environmental regulation. Example: fishing permits, which are issued by the regulator (usually federal or state government) in order to limit entrance into a particular fishery. Permits decrease present profit, but eliminate the externality of entry into an unrestricted resource. Market analysis is surprisingly successful at dictating the amount of fishing that will guarantee sustainability and maximize economic value.

And after all, dirty air and water aren't merely costs- they're new markets.

I absolutely agree, as long as you’re not trying to imply that this complicates matters. It’s perfectly reasonable to see environmental damage as a social cost with respect to the markets of its producers and as a potential input for a new market. Companies that produce new scrubbers, for example, profit off the existence of air pollution, while creating the positive externality of pollution remediation. While we might tax a polluter to make up for their negative externality, we ought to subsidize industries that create positive externalities. Our scrubber manufacturer would be a candidate for such subsidies, as would any firm related to cleaner energy production.

In order to effectively respond to any of your comment (since I’ve been busy and am, as such, tired), I’m going to have to reduce it to a few key points. In general, you have touched on two concerns that I have about the application of economic analysis to environmental issues: uncertainty and discounting. Uncertainty is obvious – if you don’t know whether or not something is going to happen, or to what degree, it’s near impossible to develop a convincing valuation. Such is the case with climate change. Ignoring the fact that the consequences are far off (since I haven’t gotten to discounting yet), the actual costs of climate change are basically impossible to accurately compute. To this end, environmentalists (with whom I agree completely) generally feel that even without analysis climate change is so obviously costly that it must be controlled. Many of those who would bear the immediate burden of reducing carbon emissions (and would see a very small amount of the payoff in the absence of external incentives) are not persuaded.

The discount rate is another contentious issue – environmentalists are generally of the sentiment that a lower discount rate ought to apply to relevant non-market goods. 5% is a pretty commonly used figure, but dropping it by less than a percent can have a big impact on cost-benefit calculus. Discounting also does a poor job of representing value to future generations (such as cases where some individuals alive today may live long enough to realize any of the benefits of a particular regulatory scheme).

As far as trans-national polluters, this is more or less of an issue on a case-by-case basis. When people talk about “air pollution,” they’re generally talking about nitrogen and sulfur oxides (NOx and SOx) and ground-level ozone. NOx and SOx simply don’t travel far enough in most cases to be a global issue. Ground-level ozone never does. Nation-level regulation (we use emissions trading in the U.S.) works pretty well for all three of these. Carbon is obviously a global pollutant, but I optimistically expect that we’re going to see global trading of carbon emissions (like the EU has already implemented) by the time Kyoto expires. There are obvious problems of encouraging participation in such a scheme, but as time progresses the costs of failing to abate are only going to become clearer, reducing the uncertainty that I spoke of above, and altering the cost-benefit calculus involved in each nation’s choice to participate. I could literally write several posts on participation in international agreements – and I probably will eventually – but not tonight.

The best example of a global pollutant that will probably require local regulation is mercury, of which I have already written extensively. This is a serious problem for reasons that you’ve already discussed, and I don’t have any brainy ideas offhand about how to begin to deal with it, but as you say, public policy is probably a better starting point here than economics.