RESOURCE ECONOMICS/ The basic argument underpinning

environmental economics is that there are

ENVIRONMENTAL environmental costs of economic growth
ECONOMICS/ COMPARATIVE that go unaccounted in the current market
ECONOMIC SYSTEM model. These negative externalities, like
pollution and other kinds of environmental
degradation, could then result in market
failure.
What is Environmental
Some of the environmental resources
Economics?
below that man derives benefit from and
Environmental Economics can be defined need to be managed:
as the study of how humans decide on
General: Air, Water, and Land, Specific:
how to dispose of environmental
resources. It is a domain of economics • trees or plants that supply the life-
that looks at problems of the environment giving oxygen humans need;
from an economical perspective.
• crops that provide food to humans;
Environmental economists perform
studies to determine the theoretical or • clean drinking water to keep
empirical effects of environmental policies human metabolism working and
on the economy. This field of economics flush out bodily wastes;
helps users design appropriate • metals that serve as raw materials
environmental policies and analyze the for human ingenuity such as
effects and merits of existing or proposed creation of tools, rigid structures
policies. for abode and cars for transport;
Environmental Economics is the study of and
interactions between human economic • oil to fuel industries that
activity and the natural environment. It is manufacture products that people
the subset of economics that is concerned need.
with the efficient allocation of
environmental resources. The
environment provides both a direct value Purpose of Environmental Economics
as well as raw material intended for
economic activity, thus making the • The main purpose of
environment and the economy environmental economics is to
interdependent, takes into consideration attain environmental resource
issues such as the conservation and sustainability. It is only an
valuation of natural resources, pollution instrument by which human needs
control waste management and recycling. and desires or wants may be
addressed, as much as possible,
Natural resources, such as clean water without depleting finite
are limited, because of pollution. They are environmental resources.
also seen as free public goods. This
means that if there are no rules on how to • Environmental economists are
use these goods, they will be used too concerned with identifying specific
much. There are externalities for using problems to be rectified, but there
these goods, and there is the problem of can be many approaches to
free riders. In this perspective, the solution solving the same environmental
is to convert these resources into problem. If a state is trying to
economic goods, which are integrated in impose a transition to clean
the market. energy, for example, they have
several options.
 • Environmental economics also make decisions that have
requires a transnational approach. consequences for the natural
An environmental economist could environment.
identify aquatic depopulation,
resulting from overfishing, as a
negative externality to be As a social Science
addressed. The global character of
such environmental issues has led • Environmental economics deals
to the rise of non-governmental with economic and managerial
organizations (NGO’s) like the aspects of pollution and natural
International Panel on Climate resources. It interacts between
Change (IPCC), which organizes human beings and their physical
annual forums for heads of state to surroundings. It studies the impact
negotiate international of pollution on human beings and
environmental policies. suggests national utilization of
resources in a proper way so that
• Environmental Economics is there may be an increase in social
considered both as positive and welfare or minimization of social
normative science. It also covers costs.
both micro and macro aspects of
different pollution problems.
Environmental Pollution as an
Economic Problem
Positive and Normative aspects:
• Environmental pollution is an
• Environmental Economics is an economic problem because it
application of scientific theories requires us to make choices and to
and general application of welfare resolve conflict of interest. It is an
economics. When we study the economic problem because the
cause and effect relationship, it means by which pollution can be
covers the positive aspect. For reduced are themselves resources
example, the laws of using. Further, it also reduces the
thermodynamics are equally value of some resources that
applicable to economic process. society has its disposal.
• If the problem is related to policy Environmental quality is largely influenced
measures, then it is considered as by human activities in terms of excess
normative aspect. Therefore, exploitation of resources and the
environmental economics is a production of waste.
normative science because it
prescribes the goals of Environmental pollution as an economic
environmental policy. problem is explained in terms of figure 1.

A study of Micro and Macro Aspects Scope of Environmental Economics

• There are many examples of micro • Economy-environment analysis

and macro aspects of • Eco-development
environmental problems in the
present times. • Welfare-approach

• Environmental economic draws • Dynamic and stock-flow analysis

more from microeconomics than • Environmental Values
from macroeconomics. It focuses
primarily on how and why people • Clean Technology
 • International Cooperation

• Conservation Policy

• Multi-Disciplinary base

Linkage between economy and

Environment

Man’s life is interconnected with various

other living and non-living things. The life
also depends on social, political, ethical,
philosophical and other aspects of
economic system. In fact, the life of
human beings is shaped by his living The first law of thermodynamics, i.e. the
environment. The relationship between law of conservation of matter and energy,
the economy and the environment is emphasizes that in any production system
generally explained in the form of a “what goes in must come out”. This is
“Material Balance Model’’ developed by known as the Material Balance Approach
AlenKneese and R.V. Ayres. The model or Material Balance Principle. The material
considers the total economic process as a flow diagram implies that mass inputs
physically balanced flow between inputs must equal mass outputs for every
and outputs. Inputs are bestowed with process. Moreover, all resources
physical property of energy which is extracted from the environment eventually
received from the environment. become unwanted wastes and pollutants.
Production of output by firms from inputs
The interdependence of economics and
resulting in discharge of solid, liquid and
environment is given in the figure10.1 and
gaseous wastes. Similarly, waste results
flow diagram:
from consumption activities by
households. In short, material and energy
are drawn from environment, used for
production and consumption activities and
returned back to the environment as
wastes. In its simple form the Material
Balance Approach can be put in form
equation.
Is it alright? Environment is the supplier of environment. These are the lithosphere,
all forms of resources like renewable and hydrosphere, atmosphere and biosphere.
non-renewable, and it is also acting as a
 The lithosphere is the solid crust
sink for cleaning up of wastes.
or the hard-top layer of the earth. It
Households and firms are connected to
is made up of rocks and minerals
environment, and they are interconnected
and covered with a thin layer of
too. Households and firms depend on
soil. The lithosphere is an irregular
nature for resources. Both households
surface with mountains, plateaus,
and firms send out residuals of
plains, valleys, landforms, etc. It is
consumption and production respectively
the domain that provides us with
to nature. Nature has the power to
forests, grasslands for grazing,
assimilate all forms of waste. But this
land for agriculture and housing. It
power is conditional. There is a limit for
is also a source of minerals.
everything. The earth has reached the
saturation point and it is unable to cleanup  Hydrosphere is the domain of
several forms of wastes. Remember, the water. It comprises of the various
earth can also non-cooperate! sources of water and different
types of water bodies like rivers,
lakes, seas, oceans, estuaries, etc.
Our Environment It is essential for all living
organisms.
Our environment is everything that
surrounds us- from the trees, mountains,  The atmosphere is the thin layer
roads, buildings, things and even of air that surrounds the earth. It is
people. It is a combination of both natural held by the gravitational force of
and human-made elements. These the earth. The Atmosphere
elements are divided into two protects us from the harmful UV
types: Biotic and Abiotic. Biotic elements rays from the sun by blocking them
are all the living organisms. Abiotic out. It contains a number of gases
elements include all the non-living things. like oxygen, which is essential for
life, dust and water vapor.
Changes in atmosphere bring
changes in weather and climate.

 All life makes up the biosphere. It

is the zone of the earth where
land, water and air interact with
each other to support life.

Ecosystem

What is an ecosystem? All plants, animals

and human beings depend on each other.
The relation between living organisms, as
well as the relation between living
organisms and their environment, form an
ecosystem. An ocean is an example of an
Natural Environment ecosystem because it comprises of living
Everything that is not human-made comes organisms, land, air (in dissolved form)
under natural environment. Land, air, and water of course.
water, plants and animals all comprise the
natural environment. Let us learn about
the different domains of the natural Human Environment
Human environment is the man-made 6. Be considerate of other people.
environment. It has been modified by
7. Respect Wildlife
humans according to their needs. Before
technology evolved, human beings would
adapt themselves to the natural
environment. They led a simple life and
fulfilled their requirements from the nature
around them. With time, their needs grew
and became more varied. Human learnt
new ways to change their environment
according to their needs.

• They learnt to grow crops,

domesticate animals and build
houses. They invented the wheel,
barter system, trade and
commerce. Transportation became 8 Simple Ways to Help the Environment
faster. Large-scale production was
• Use reusable bags. Plastic
possible through Industrial
grocery-type bags that get thrown
revolution. Communication
out end up in landfills or in other
became easier and speedy across
parts of the environment.
the world. They have formed an
artificial ecosystem. • Print as little as necessary
• A perfect balance is necessary • Recycle
between the natural and man-
• Use a reusable beverage container
made environment. If we use the
sources provided by environment • Don’t throw your notes away
wisely, we can establish a healthy
balance. We should use our • Save electricity!
resources wisely and learn to • Save water
conserve them. natural resources
like wood, minerals, water, air are • Avoid taking cars or carpool when
precious and essential for survival. possible.
If we do not use them wisely, we
may run out of them one day. We
should think about our future
generations.

Best Environmental Practices

1. Plan ahead and prepare. Leave as

much garbage and food packaging
as possible at home.

2. Dispose of waste properly. It is

illegal to leave garbage in the
wilderness.

3. Minimize the impact of campfires.

4. Camp and walk on durable

surfaces

5. Leave what you find