They are non-excludable actions as they will have global consequences from which no one can be excluded. A country's incentive to invest in carbon abatement is reduced because it can " free ride " off the efforts of other countries. Over a century ago, Swedish economist Knut Wicksell first discussed how public goods can be under-provided by the market because people might conceal their preferences for the good, but still enjoy the benefits without paying for them. Assessing the economic value of the environment is a major topic within the field.
Use and indirect use are tangible benefits accruing from natural resources or ecosystem services see the nature section of ecological economics. Non-use values include existence, option, and bequest values. For example, some people may value the existence of a diverse set of species, regardless of the effect of the loss of a species on ecosystem services. The existence of these species may have an option value, as there may be the possibility of using it for some human purpose.
For example, certain plants may be researched for drugs. Individuals may value the ability to leave a pristine environment to their children. Use and indirect use values can often be inferred from revealed behavior, such as the cost of taking recreational trips or using hedonic methods in which values are estimated based on observed prices. Non-use values are usually estimated using stated preference methods such as contingent valuation or choice modelling. Contingent valuation typically takes the form of surveys in which people are asked how much they would pay to observe and recreate in the environment willingness to pay or their willingness to accept WTA compensation for the destruction of the environmental good.
Hedonic pricing examines the effect the environment has on economic decisions through housing prices, traveling expenses, and payments to visit parks. Environmental economics is related to ecological economics but there are differences. Most environmental economists have been trained as economists.
They apply the tools of economics to address environmental problems, many of which are related to so-called market failures—circumstances wherein the " invisible hand " of economics is unreliable.
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Most ecological economists have been trained as ecologists, but have expanded the scope of their work to consider the impacts of humans and their economic activity on ecological systems and services, and vice versa. This field takes as its premise that economics is a strict subfield of ecology.
Ecological economics is sometimes described as taking a more pluralistic approach to environmental problems and focuses more explicitly on long-term environmental sustainability and issues of scale. Environmental economics is viewed as more pragmatic in a price system ; ecological economics as more idealistic in its attempts not to use money as a primary arbiter of decisions.
These two groups of specialists sometimes have conflicting views which may be traced to the different philosophical underpinnings. Another context in which externalities apply is when globalization permits one player in a market who is unconcerned with biodiversity to undercut prices of another who is - creating a race to the bottom in regulations and conservation.
This, in turn, may cause loss of natural capital with consequent erosion, water purity problems, diseases, desertification, and other outcomes which are not efficient in an economic sense. This concern is related to the subfield of sustainable development and its political relation, the anti-globalization movement.
Environmental economics was once distinct from resource economics. Natural resource economics as a subfield began when the main concern of researchers was the optimal commercial exploitation of natural resource stocks. But resource managers and policy-makers eventually began to pay attention to the broader importance of natural resources e. It is now difficult to distinguish "environmental" and "natural resource" economics as separate fields as the two became associated with sustainability. Many of the more radical green economists split off to work on an alternate political economy.
Environmental economics was a major influence on the theories of natural capitalism and environmental finance , which could be said to be two sub-branches of environmental economics concerned with resource conservation in production, and the value of biodiversity to humans, respectively. The theory of natural capitalism Hawken, Lovins, Lovins goes further than traditional environmental economics by envisioning a world where natural services are considered on par with physical capital.
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The more radical Green economists reject neoclassical economics in favour of a new political economy beyond capitalism or communism that gives a greater emphasis to the interaction of the human economy and the natural environment, acknowledging that "economy is three-fifths of ecology" - Mike Nickerson. These more radical approaches would imply changes to money supply and likely also a bioregional democracy so that political, economic, and ecological "environmental limits" were all aligned, and not subject to the arbitrage normally possible under capitalism.
An emerging sub-field of environmental economics studies its intersection with development economics.
Dubbed "envirodevonomics" by Michael Greenstone and B. Kelsey Jack in their paper "Envirodevonomics: A Research Agenda for a Young Field," the sub-field is primarily interested in studying "why environmental quality [is] so poor in developing countries. In the field of law and economics , environmental law is studied from an economic perspective.
The economic analysis of environmental law studies instruments such as zoning, expropriation, licensing, third party liability, safety regulation, mandatory insurance, and criminal sanctions. A book by Michael Faure surveys this literature. From Wikipedia, the free encyclopedia. Not to be confused with Ecological economics. Index Outline Category. History Branches Classification.
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