Hanley N, Shogren JF and White B (2013) Introduction to Environmental Economics, Oxford University Press
Chapter 1 provides a good introduction to the topic area and how the environment and the economy interact. There are also some more advanced topics covered that relate to how the economy and environment interact.
Introduction to Environmental Economics
Part I: Economic Tools for the Environment
1. Introduction: Economics for the Environment
Outline of this chapter:
- Discuss the connections between the economy and the environment.
- Review ten key insights from environmental and resource economics that environmental scientists, managers, and politicians ought to be aware of.
- Explain how this book is best used.
- Provide an overview of happens in the rest of the book.
1.1 The Economy and the Environment
The relationship between economics and environmental and natural resource policy is important due to the ‘unpriced’ or non-market services that the natural environment provides. The value of protecting wetlands for their biodiversity, flood defence, and pollution treatment functions is as economic of a value as the production of oil from an oilfield.
It might be beneficial to appreciate how the economy and the environment are interlinked through dynamic interactions.
First, the environment provides the economic system with inputs of raw materials and energy sources for production. Resources can either be non-renewable – coal or iron ore – renewable – such as fisheries or forests.
Second, the use of the environment as a waste sink. Waste may come from production or consumption. It comes in a number of basic types: solid, air- or waterborne. The environment has a limited assimilative capacity to absorb and transform waste into harmless substances. Pollution can be seen as when emission exceeds assimilative capacity and produce some undesirable impact.
Third, it provides households with amenity, from which they may derive utility (happiness, satisfaction).
Finally, it provides the economic system with basic life-support services.
Home 