https://recyclefortamworth.co.uk/2023/06/16/environmental-economics/
Environmental economics studies the relation between economics and environmental issues. It focuses on how to balance economic growth and the sustainability of natural resources for the benefit of society in general.
The field of study originated from the first period of environmentalalism in 1950s and 1960s. This was inspired by Rachel Carson’s book Silent Spring. Her warnings against the use of agrochemicals sparked the growing concern about biodiversity and the impact of industrialization on the environment. It was only natural for economists to begin to look into the issue.
The main idea that was borrowed from other fields of economic thought is the concept of externalities, which refers to negative effects on third parties that aren’t included in the costs and benefits that a polluting company incurs. This problem is best illustrated by the environmental pollution that is caused by industrial production. Market-oriented economic systems may not be able to maximize the quality of life of humans since they do not take into account the harms caused to others in their cost structures.
The study of the environmental economy is concerned with identifying costs and incentives that businesses and individuals have to pay in order to comply with environmental regulations. It also focuses on the methods used to assess these policies. This includes assessing both the efficacy of prescriptive and based on market policies to achieve environmental objectives. 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.