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This chapter gives an overview of a few of the key ideas and economic theories that help us understand where environmental problems come from and what makes something a problem that actually needs to be fixed.
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Source: The NEED Project


The field of environmental and natural resource economics sounds to many like an oxymoron. Most people think economists study money, finance, and business—so what does that have to do with the environment? Economics is really broadly defined as the study of the allocation of scarce resources. In other words, economics is a social science that helps people understand how to make hard choices when there are unavoidable tradeoffs. For example, a company can make and sell more cars, which brings in revenue, but doing so also increases production costs. Or a student can choose to have a part-time job to reduce the size of the loan she needs to pay for college, but that reduces the time she has for studying and makes it harder for her to get good grades. Some economists do study business, helping companies and industries design production, marketing, and investment strategies that maximize their profits. Other economists work to understand and inform the choices individuals make about their investments in education and how to divide their time between work, leisure, and family in order to make themselves and their families better off. Environmental and natural resource economists study the tradeoffs associated with one of the most important scarce resources we have—nature.

Economists contribute to the study of environmental problems with two kinds of work. First, they do normative studies of how people should manage resources and invest in environmental quality to make themselves and/or society as well off as possible. Second, they do positive analyses of how human agents—individuals, firms, and so forth—actually do behave. Normative studies give recommendations and guidance for people and policy makers to follow. Positive studies of human behavior help us to understand what causes environmental problems and which policies are most likely to work well to alleviate them.

This chapter gives an overview of a few of the key ideas that have been developed in this field. First, we will learn the economic theories that help us understand where environmental problems come from and what makes something a problem that actually needs to be fixed. This section of the chapter will introduce the concepts of externalities, public goods, and open access resources, and explain how in situations with those features we often end up with too much pollution and excessive rates of natural resource exploitation. Second, we will learn the tools economists have developed to quantify the value of environmental amenities. It is very difficult to identify a monetary value for things like clean air and wildlife, which are not traded in a marketplace, but such value estimates are often helpful inputs for public discussions about environmental policies and investments. Third, we will discuss a set of approaches economists use to evaluate environmental policies and projects. We want to design policies that are “good,” but what exactly does that mean? Finally, we will learn about the different policy tools that can be used to solve problems of excess environmental degradation and resource exploitation, including a set of incentive policies that were designed by economists to work with rather than against the way that people really behave, and we will discuss the strengths and weaknesses of those different tools.

Questions & Answers

I only see partial conversation and what's the question here!
Crow Reply
what about nanotechnology for water purification
RAW Reply
please someone correct me if I'm wrong but I think one can use nanoparticles, specially silver nanoparticles for water treatment.
what is the stm
Brian Reply
is there industrial application of fullrenes. What is the method to prepare fullrene on large scale.?
industrial application...? mmm I think on the medical side as drug carrier, but you should go deeper on your research, I may be wrong
How we are making nano material?
what is a peer
What is meant by 'nano scale'?
What is STMs full form?
scanning tunneling microscope
how nano science is used for hydrophobicity
Do u think that Graphene and Fullrene fiber can be used to make Air Plane body structure the lightest and strongest. Rafiq
what is differents between GO and RGO?
what is simplest way to understand the applications of nano robots used to detect the cancer affected cell of human body.? How this robot is carried to required site of body cell.? what will be the carrier material and how can be detected that correct delivery of drug is done Rafiq
what is Nano technology ?
Bob Reply
write examples of Nano molecule?
The nanotechnology is as new science, to scale nanometric
nanotechnology is the study, desing, synthesis, manipulation and application of materials and functional systems through control of matter at nanoscale
Is there any normative that regulates the use of silver nanoparticles?
Damian Reply
what king of growth are you checking .?
What fields keep nano created devices from performing or assimulating ? Magnetic fields ? Are do they assimilate ?
Stoney Reply
why we need to study biomolecules, molecular biology in nanotechnology?
Adin Reply
yes I'm doing my masters in nanotechnology, we are being studying all these domains as well..
what school?
biomolecules are e building blocks of every organics and inorganic materials.
anyone know any internet site where one can find nanotechnology papers?
Damian Reply
sciencedirect big data base
Introduction about quantum dots in nanotechnology
Praveena Reply
what does nano mean?
Anassong Reply
nano basically means 10^(-9). nanometer is a unit to measure length.
do you think it's worthwhile in the long term to study the effects and possibilities of nanotechnology on viral treatment?
Damian Reply
absolutely yes
how to know photocatalytic properties of tio2 nanoparticles...what to do now
Akash Reply
it is a goid question and i want to know the answer as well
characteristics of micro business
for teaching engĺish at school how nano technology help us
How can I make nanorobot?
how did you get the value of 2000N.What calculations are needed to arrive at it
Smarajit Reply
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Source:  OpenStax, Sustainability: a comprehensive foundation. OpenStax CNX. Nov 11, 2013 Download for free at http://legacy.cnx.org/content/col11325/1.43
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