What Is Environmental Economics?
Environmental economics is the study of the connection between economics and environmental issues. It focuses on how to balance economic development and sustainability of natural resources for the benefit https://recyclefortamworth.co.uk/2023/06/16/environmental-economics/ of the society in general.
This area of study was born from the initial wave of environmentalism in the 1950s and 1960s. This was initiated by Rachel Carson’s book Silent Spring. Her warnings against the use of agrochemicals caused an increasing concern over the diversity of life and industrialization’s effects on the environment. It was only natural that economists would start to study the issues.
The main idea that was borrowed from other fields of economics is the concept of externalities, that refers to negative consequences on third parties that aren’t included in the costs and benefits that a polluting company incurs. This issue is best illustrated by the pollution caused by industrial production. Market-oriented economic systems might not be able maximize human wellbeing because they don’t include the harms caused to others in their cost structures.
The study of economics of the environment is concerned with identifying the costs and benefits for businesses and individuals to adhere with various environmental regulations. It also focuses on the methods used to evaluate the effectiveness of these policies. This includes evaluating both the efficacy of prescriptive and market-based policies to meet environmental goals. Specifically, the degree to which a policy is prescriptive–that is, how tightly it outlines the specific measures that must be taken–and market-based–which allows for flexibility in how the goal is achieved, such as a cap-and-trade system for emissions reduction–influences its effectiveness.