Environmental

economics
Proessor : Do Xuan Luan
Student : Ma Thi Sung
 OUTLINE
I : Introduction
1.1 : what is economics
1.2 : what is environmental economics

II : Why we should study environmental economics ?.

III : Reference
WHAT ?

 Study of how people use resources , respond to incentives

 how economics and individual allocate scarce resources
 Economics is decision making about use and distribution of resource
 Study of decision-making

Have affect on the natural environment.

 EXAMPLE
The dumping of waste products into the natural environment.

Creates pollution that harms humans and other living things, production,
and degrades ecosystems – the planet’s air, water.

It leads to wasteful use of resources and threatens the sustainability of

both our environment and economy
1.1 : What is economics

Is to understand how to produce goods for society in the most

efficient manner

 By having a better understanding of human

activities in a market system
 1.2 : What is environmental economics

Is branch of economics that acknowledges the value of both the environment and
WHAT economic activity and makes choices based on those values.

To balance the economic activity and the environmental impacts

WHY

By taking into account all the costs and benefits

HOW
 To take into account pollution and natural resource
depletion ( which of market systems fails to do )

This “failure” needs to be addressed by correcting prices by

take into account “external” costs. External costs are
uncompensated side effects of human actions

For example, if a stream is polluted by runoff from agricultural land, the

people downstream suffer a negative external cost or externality
Environmental economics focus on

How and why people make decision that have consequances for the
natural environmental .

How economics institution and policies can be changed to bring

these environmental impact back to balance
II : Why we should study environmental economics

it is a tools and policy to bring harmony to the economics

system and the environment

1.TOOLS 2. Policy
taxes and tax exemptions, Laws, regulations
tradable permit
fees
EXAMPLE 1

Power station emission can cause acid rain and

also contribute to global warming.

Governments can require firms to reduce their emissions and can

encourage people to change their behaviour by levying taxs
EXAMPLE 2
 when a factory produces waste pollution which may be dumped into a
river, and contaminating water

Consequence : all of people who use this river will pay cost when they
must clean the water before drinking it .( is external to the costs of the
factory.)
Or tragedies of the commons are overfishing and overgrazing
 so

 If leave economics growth to the free market, consumer and firms will
ignore the external cost = >get overconsumption

 Without government involvement, the commons is overused

III : Reference

https://en.wikipedia.org/wiki/Environmental_policy
http://www.sfu.ca/~wainwrig/Econ400/documents/Econ_460_Lecture-Notes-part_One-10-3.pdf
http://whystudyeconomics.ac.uk/during-your-study/module-choices/environmental-economics/
Edward R. Morey: whyacourse.pdf Sept 5, 2017 Why should there be a special course in environment
al economics
Jill Caviglia-Harris on 07 December 2012 Why Study Environmental Economics