Environmental economics studies the connection between economics and environmental issues. It focuses on https://recyclefortamworth.co.uk/2023/06/16/environmental-economics/ how to keep in balance the sustainability of natural resources as well as economic development for the benefit of society in general.
This area of study was born out of the first wave in environmentalism that occurred during the 1950s and 60s that was sparked by Rachel Carson’s book Silent Spring. Her warnings against the use of agrochemicals sparked an increase in concern over the biological diversity of our planet and the impact of industrialization on the environment. It was normal for economists to begin to look into the issue.
Externalities is a key idea that has been borrowed from other fields of thought. It is a term used to describe negative impacts on third parties, which are not accounted for in the costs and benefits for the polluting organization. The environmental pollution that results from industrial production is a classic example of this problem. Because market-oriented systems of economics don’t include the harm caused by other industries in their internal cost structures, they may not be able to optimize the human wellbeing.
The study of environmental economics is concerned with identifying costs and incentives that individuals and businesses must meet in order to be compliant with environmental regulations. It also focuses on the methods used to assess those policies. This includes assessing the effectiveness of prescriptive policies as well as market-based policies to achieve 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.