Environmental Economics Easy Guide

Environmental economics is a growing demanding topic, and it relates to how we are addressing economy with growing environmental challenges.

It’s very interesting and tricky at the same time, because this challenges how we used to perceive things till now.

What Is Economics?

Economics is the study of man in the ordinary business of life. It’s about how people make choices and manage resources in their daily lives.

It studies: –

• Human behaviour
• The wealth of a man and
• The economy

What Is Environmental Economics?

Environmental economics is a new term introduced, which is a subfield of economics.

It is concerned with environmental issues. In environmental economics, we deal economy with the environment.

It means what are the problems that the environment faces during the: –

• production
• consumption 
• transportation of material or resource, and
• how it impacts the environment
• For example: – use of fossil fuels while transportation cost of fossil fuel, etc.

Market failure is the centre of environmental economics.

Scarcity is the core of economics.

What Is Scarcity? 

Scarcity means there is not enough to satisfy all conceivable human wants.

In other words, when the resources are limited to satisfy each and every one’s needs.

The condition of scarcity in the real world necessitates competition for scarce resources.

The goal is to allocate resources efficiently.

• The price system
• Market prices are one way to allocate scarce resources.

For example: –

• Although air is more important to us than gold, it is less scarce. This is because it is available in abundance, and the production cost of air is zero.
• Gold, on the other hand, has a high production cost.

Market-Failure

Market failure means the market fails to allocate resources efficiently.

It means the market is unable to allocate resources in an equilibrium manner to everyone.

The Environment-Economy Linkages

All economic activities either affect or are affected by natural and environmental resources.

Activities such as: –

• Extraction
• Processing
• Manufacture
• Transport
• Consumption affects the stock of natural resources
• Add stress to the environmental systems and
• Introduce wastes to environmental media

These activities are crucial for our survival, and it is our duty to practice them again and again so that we can live happily and peacefully.

Our government also plays a crucial role here in distributing the resources efficiently, but it is also the duty of the common man not to spoil the resources for the sun and use them as per their needs.

Affected Natural Resources

Economic activities affect the stock of natural resources available for the future and have intertemporal welfare effects.

From this perspective, the productivity of an economic system depends on the: –

• Supply and
• Quality of natural and
• Environmental resources

Environmental degradation imposes costs on the economy, which results in: –

• Output and
• Human capital losses

Climate change also plays a crucial role in triggering global economic and environmental factors.

To understand how we are utilizing the resources, it is important for us to realize we are exploiting them faster than ever before, and all due to triggering climate change by our activities, which is why we all must know how climate change is transforming the beautiful planet.

Conclusion On Environmental Economics

Environmental economics is a growing field and still evolving, and will continue to evolve till the Earth is breathing.

If we are breathing, then it is our duty to realize how much we need, how much we are getting, and how much we should get. The resources are not only for humans but its for everyone who exists on the planet today and will exist tomorrow.