environmental economics assignment help

environmental economics assignment help

The Importance of Environmental Economics

1. Introduction to Environmental Economics

It is important that we recognize this. People both in the developing world and at home are encouraged to examine their actions in terms of short-term gains and to disregard long-term detrimental consequences. Policies nurtured by multinational companies and through propaganda can bring about, unwittingly, long-term damage. For example, think of the consequences of continued destruction of the rainforests. The study of environmental economics should lead to a broadening of our perception of the long-term consequences of harming the environment, a broadening of the way of thinking about environmental problems. The inability of figures to guess the future will be discussed. Picturing and approximations are inevitable and should be undertaken.

Economics is concerned with the allocation and distribution of scarce resources, particularly but not exclusively, money income. Environmental economics is an application of this concern to the economic effects of environmental issues. It is a matter of concern that environmental issues are often neglected by politicians and decision makers on the grounds that economic issues take precedence. It is wrong. Environmental issues have profound effects on the health and well-being of people everywhere. In Britain alone, about 10,000 people die early each year as a result of air pollution, and many others endure a miserable existence. These numbers relating to a single aspect can be multiplied when all the other environmental problems and all the countries in the world are considered. Environmental economics is an important subject which has implications for us all, and knowledge to be imported to us all. Waste disposal and the disposal of other pollutants reduce the attractiveness of places for human habitation. In a similar manner, the exploitation of resources can have an unforeseen effect on the quality of life of the people currently exploiting it.

2. Economic Analysis of Environmental Issues

To sum up the advantages of environmental economics, a person will be equipped to resolve or at least shed light and proper knowledge on various environmental issues such as global warming, pollution, and loss of habitat and scenic beauty, which other individuals would exploit or maximize due to their narrow mindset.

The competitive nature of using more and more of the environment’s “goods” and transforming it from a “bad” to a “better” environment is largely due to the causation of the environment’s own activity of production. The creation of goods from the environment’s raw resources is often scarce and limited; thus, economics is essential in resolving the environment’s negative outcomes or pricing scarce resources. The fundamental economic concept of trade-offs or opportunity costs denotes that, unlike accounting costs, indirect costs are just as significant and little bargained for, which sets economic forces and discussions.

As for the importance of environmental economics, the environment is a very broad and complicated issue that people and economists have been dealing with for a long time now with no clear resolution. Because of this, the environment consists of various complex issues, and without an economic mindset and philosophies, a solution would never be achieved. Just as history and many successful governments’ ideals impose, if a problem arises, it must be dealt with at its core, often for practicality or enduring resolution.

Briefly defined, environmental economics is a subfield of economics that deals with environmental issues. It has become a widely applied tool in environmental management and policy making. Some of the key concepts in environmental economics are the costs and benefits of environmental policy, discounting, uneven distribution of benefits and costs, and many others, which this book will further elaborate on.

3. Market-Based Environmental Policies

Economic incentives can motivate the maximum number of firms and individuals to find the control and abatement strategies that will minimize the social costs of pollution relative to the regulatory alternatives of “direct controls, standards, and technology requirements.” Market-based environmental policies, therefore, use economic incentives to promote private initiatives and innovation in the development and diffusion of a cleaner and more sustainable technology. A system of ecological taxation is a common policy instrument used in many varieties around the world as a part of an integrated policy framework to control numerous kinds of goods or activities that produce pollution or otherwise harm the natural environment. Other objectives include cost-effectiveness, administrative simplicity, and the potential to generalize whether the tax imposes most costs on those who use the environment and money to fund environmentally-friendly activities.

Several restrictions on the design of environmental policy hinder this policy from reaching the objectives intended or from doing so in the most efficient, or most cost-effective, way. The policy is often applied subjectively and frequently does not consider how to reach emission control goals at the lowest cost to consumers or regulated industries. There are limitations such as budget constraints, political pressures, and technological feasibility. As a result, there is a growing consensus among modern environmental economists that a substantial part of environmental policy should be directed at achieving specific environmental targets at the lowest cost. In other words, cost-effectiveness should be a prerequisite for the theory of environmental policy. Theoretical economics and empirical work should be used to design environmental controls that ensure that specific pollution threshold levels are reached and are reached at the minimum cost in terms of resources and administration.

4. Valuation of Environmental Goods and Services

Similarly, an increase in demand for rubber due to a rise in world demand for tires could lead to land clearing and so influence the volume of trade, especially in the short run, although officially trade won’t change (glue and extraterritorial glue trade balance will be affected, as well as wages and all domestic factors).

Many environmental goods have no market value, while others, such as air and water, are frequently charged less than the true cost of supply. There are, however, direct market values associated with other environmental goods that are traded, such as the resources that are extracted from forests, and also types of more recently developed environmental markets like wildlife stocks and air (pollution) emission permits. The existence of direct market values means that in some cases there may be a direct effect on trade in goods and services. For example, a sudden increase in demand for biofuel could, it is sometimes argued, significantly increase the volume of trade in raw materials, including some agricultural products. This is likely to happen if the increased demand is not met by sustainable resource use in general, but induced by distortionary policy (e.g. mandatory biofuel targets, high import tariffs) that favors production in countries with lower resource management standards.

There is a large and growing literature that explores the potential effect of environmental policy on patterns of trade. The literature is yet to come to a clear consensus. We can think that there are both consumption and production complementarities between pollution-intensive goods and dirty technologies, such as the emission of stock pollutants on the one hand, and between cleaner technologies and pollution abatement on the other. Equally, it is still possible that reducing pollution could make a country uncompetitive in the global market, especially in the short run.

In more recent years, a concern has also been expressed about the potential for pollution to be exported from developed to less developed countries. This includes not only the physical impact of production on levels of environmental quality, but also the consequences of large-scale resource extraction. In this regard, we can think about the environmental consequences of the extraction of raw materials (e.g. minerals, fish stocks) and the impact of land clearing. Once again, a concern is that these activities could have significant consequences for volumes of trade.

5. Sustainable Development and Environmental Economics

Around 1.2 billion people lived in extreme poverty in 1998, more than the combined population of the greater China and India. In 1990, 35 of 173 developing countries were afflicted by abject poverty. In 2000, this number increased from 35 to 78, that is, more than half of all developing countries. Highly indebted poor countries (HIPC) remain in the grip of socio-economic instability, with some of them graduating from being poor and becoming highly indebted. It is no underestimate to assert that social programs that target government spending to the poorest are crucial to human development in the twenty-first century.

Many opponents argue that, because sustainable development is concerned with the environment, it is not feasible under the existing prevailing economic conditions. But economic development is welfare development, in the sense that it makes life meaningful to humanity by abating extreme poverty, eradicating diseases, promoting education, reducing unemployment, and so on. So, without economic development, there is very little chance of significant welfare improvement on a global basis. For example, governmental expenditure indicates the importance attributed by state authorities to welfare development. The fact that many LDCs allocate around 0.1% of GDP to pre-primary education is indicative of the very little importance that is attributed to welfare, human development, and the implementation of the MDGs, in that children are the future of sustainable development.