In the present time, Environmental concerns have become a major problem for all human beings. These problems are ascending from the activities of mankind only. The bond between man and the environment changed the whole phase of development progression in an economy. Moreover, various environmental economists rely on increasing demand and this creates a drastic impact on the environmental condition, resulting in limited growth.

Introduction to Environmental Economics

Before getting started with environmental economics, it is really necessary to grasp knowledge about economics first. Economics may be defined as the best utilization of available resources to make development in one’s well-being. Due to the strong relationship between economy and environment, humans are facing lots of environmental problems caused by the economic development.

Environmental economics is a branch of economics that deals with the various environmental issues. In other words, it is concerned with the relation between environment and economic growth.

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Topics Related to Environmental Economics

Understanding the nature and scope of environmental economics is always a studious task for students. Though, there are some important concepts and topics in environmental economics that makes it one of the most fascinating matters among all. So, now it’s time to throw some light on the topics of environmental economics mentioned below:

  • Market Failure: Market failure is the central issue in environmental economics, which needs to be comprehended above all of them. It usually refers to a situation where the allocations of resources are not sufficient enough. In simple terms, it occurs when the market fails to allocate scarce resources. There are two types of market failure in environmental economics listed below:
    • Complete Market Failure: This type of market failure occurs when the market simply fails to supply any product at all.
    • Partial Market Failure: This kind of market failure mainly happens when the market doesn’t function according to the needs. Like, sometimes they produce products at the wrong price or sometimes at a wrong quantity.
  • Externality: Another great concept comes into the context, i.e. Externality. It usually refers to a situation when an individual makes wrong choices that disturb the other people. An externality may be positive or negative. For example: water leakage in a residential house happens on upper floor affects the ground floor too.
  • Common Goods and Public Goods: In economics, common goods can be defined as the goods where even nonpaying customers can be able to access it. On the other hand, in the case of public goods, a service is provided to all the people without any profit.
  • Valuation: In this concept, contingent valuation method (CVM) is used to determine the economic values for all kinds of environmental services.

Nature of Environmental Economics

There are many aspects that clearly define the nature and scope of environmental economics. The nature of environmental economics is regarded as the both positive and normative science. Furthermore, the nature of environmental economics also covers both micro and macro phase of distinctive environment problems. So, without wasting time, let’s understand the nature of environmental economics.

  • Positive and Normative Aspect: Environmental economics is based on the scientific theories and application of welfare economics too. When it comes to the cause and effect relationship, it encompasses the positive aspect. But on the contrary, when it relates to policy measures, then it covers normative aspects. According to B.C field, humans are the main cause of environmental degradation as they lack moral strength.
  • Micro and Macro Aspect: To apprehend the concept of micro and macro aspect, let’s take an instance for a clear vision.

Generally, in metropolitan cities like Delhi, people do not get fresh air to breathe. Its solution comes under the micro level of planning. Besides it, when the problem of pollution affects the economy as a whole, like, increase in temperature, then it falls under the category of macro aspect.

Environmental Pollution as an Economic issue

Environmental pollution is a major economic problem because the methods by which it can be reduced are using the resources themselves only. It means that pollution in economics is an issue of insufficiency in terms of waste disposal capability. Under the nature and scope of environmental economics, the issue of externalities is the most crucial aspect of various environmental problems. To overcome this situation and to improve the environment quality, there must be objective to control those production actions that increase the social cost to society. However, the concepts under nature and scope of environmental economics also play a crucial role in controlling environmental problems. Due to this economic growth, our environmental quality can also be improved.

Scope of Environmental Economics

Earlier, we discussed the nature of environmental economics. But, now, here comes the most paramount section of environmental economics, i.e. Scope of this discipline. The nature and scope of Environmental economics have always been a great topic to understand, as students can get most of the knowledge from it only. Let’s talk about the scope of environmental economics in detail:

  • Eco-Development: It is one of the most chief scopes among all. The main purpose of environmental economics is to create stability between economic development and the quality of the environment. To, achieve this; various environmental economists must have to go through socioeconomic possibilities to decrease the pollution level.
  • Economic-Environment Analysis: This scope of environmental economics is mainly related to the economic activities and its impact on the quality of the environment. Many economic-environment models have been designed by environmental economists to explain the economic activities.
  • Welfare Approach: In this kind of scope, it is developed to combat various environmental problems. The welfare approach covers market failures and scarce resources that lead to numerous pollution problems.
  • Environmental Values: In simple terms, environmental values are related to economic values. It is necessary for the society to preserve the limited resources such as water, forests and fisheries in the interest of economic welfare.
  • Clean Technology: Nowadays, the main cause of environmental degradation is the misuse of present-day technology. A lot of environmental economists are engaged in developing new technologies that offer the most balanced use of natural resources to save the environment.

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