What is environmental economics?

Definition of Environmental economics:

environmental economics

Environmental economics is that branch of economics which deals with the inter-linkage between the economy and the environment.

In other words, environmental economics is concerned with the impact of different economics activities on environment.

Objective of environmental economics: 

Environmental economics has emerged as a new branch of economics to prescribe appropriate regulations for the controlling economy activities so that a balance can be maintained between the economy and the environment.

The specific objective of environmental economics can be summarised under the following points:

(i) One of the important objective of environmental economics is understand the mechanism through which the economy and the environment intersect with one another.

(ii) Another objective of environmental economics is to promote harmony between human being and nature.

(iii) The fundamental objective of environmental economics is to maintain a balance between development and environmental quality.

(iv) Environmental economics seeks to promote sustainable resources use, so that the process of economic development continuous for generation to come.

(v) Environmental economics seeks to ensure social efficiency. In other words, environmental economics attempts to address the market failure issue in case of environmental goods.

(vi) Determined the value of different environment amenities and taking decision regarding their optimum level of use and preservation is yet another objective of environmental economics.

Nature of environmental economics: 

Environmental economics is that branch of economics which basically deals with the inter-linkage between the economy and the environment. It has emerged as a separate branch of economics with the realisation of fact that environmental resources are not abundantly free in nature.

 In fact they are scare. Thus environmental economics attempts to prescribe appropriate rules and regulations to militated the adverse effects of economics activities on environment. Accordingly environmental economics aims to determine social optimum level of production, consumption and other types of economics is basically on normative branch of economic analysis.

Scope or subject matter of environmental economics:

Though environmental economics has emerged as a new branch of economic analysis but it has wide applicability in modern times. Environmental economics is basically concern with the study of the inter-linkage between the economy and the environment, the dependence of the economy on the environment. 

The impact of economic activities on the environment and appropriate regulations to control economic development and environmental qualities can be harmonized. Thus the scope or subject matter of environmental economics can be summarised under the following points-

(i) Inter-linkage between economy and environment: 

Environmental economics begins with the inter-linkage between the economy and environment. Environmental economics highlights two way inter-linkage between the economy and environment. Firstly, environment provides all necessary resources for economic development and secondly, wastes and garbage generated out of economics activities are dumped into environment.

(ii) Balancing between economics development environmental quality: 

The fundamental objective of environmental economics is to maintain a proper balance between the economy and the environmental economics prescribe the regulations and policies to determine the socially optimum level of production and consumption etc, so that economic development and environmental quality can be harmonized.

(iii) Welfare approach: As a normative economics environmental economic is concerned about the consequences of economic activities on the environment. Therefore it prescribes the regulations, so that economic activities do not cross the critical limit.

(iv) Promoting sustainable development: Environmental economics has separable connection with the idea of sustainable development infect the idea of emerged with on the purview of environmental economics. Environmental economics calls to design resources use in such a manner. So, that the process of economic development can go on from generation to come.

(v) Controlling environmental degradation: Controlling environmental degradation is yet another subject matter of environmental economics. Environmental economics shows how taxes and penalties can be imposed or leaved to control the level of population.

Inter-linkage between economy and environment:

Energy crisis of 1970'S and some other environmental issues in the same period had attracted the attention of different environmental scientists and economists to seriously considered the impact of economic activities on environment.

Thus they have recognize the inter-linkage between the economy and environment.

In order to identify the inter-linkage between the economy and environment a three fold connection between them has to be established.

(a) First, the environment provides the various types of natural resources and then raw material s to perform different type of activities. Resources extracted from nature are be used to produce different types of goods and services.

(b) Secondly, environment provides the life support system for human civilization from environment, we get oxygen, water, etc. which are critical for human survival.

(c) Finally, the environment acts as the recycling machine for the wastes generated out of different things of economic activities like production and consumption.

However it is worth maintaining that environment has limited capacity to recycle the waste. All the environmental issues occur when the intensity of residuals exceeds the assimilative capacity of the environment. Thus the process of economic development should be planned in such a way so that a balance can be maintain between the economy and environment.

The material balance model also highlights the inter-linkage between the economy and environment. The material balance model provides the accounting identity between the economy and environment by showing that total amount of resources extracted were eventually return to nature in the form of residuals.

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