Environmental Economics:Visions of The Future
Environmental Economics:Visions of The Future
Environmental Economics:Visions of The Future
Economics:Visions of
the Future
Lecture 1
Learning objectives
The focus of environmental economics.
Understanding the economic approach to the
analysis of environmental problems.
Example and the role of incentives
Major environmental challenges
Meeting the challenges
Ecological economics vs. Environmental Economics
Environmental economics
Is the study of environmental problems with the
perspective and analytical tools of economics.
Econ studies how and why people make
decisions about the use of scarce resources.
There are 2 branches of economics:
Macroeconomics;
Microeconomics.
Environmental economics draws mainly from
microeconomics.
The focus of environmental
economics
Environmental economics focuses on how
economic activities affect our natural
environment – the atmosphere, water, land,
living species, etc.
The focus of environmental
economics
Economic decisions made by firms, people,
and governments can have negative effects
on the natural environment.
Why do people behave in ways that cause
environmental destruction?
Why don’t people take into account the effects of
their economic activities on the environment?
Why do we cause environmental
destruction?
Why do people behave in ways that cause
environmental destruction?
Unethical or immoral human behavior?
Absence of an economic (and social) incentive
structure to efficiently dispose waste which
arises from our production and consumption
decisions?
Other answers?
Why does this occur in economic
systems?
Economists’ view:
People pollute because it is the cheapest