Greg Dale/NG Image Collection4
Environmental Economics 62- Economics is the study of how people use their limited
resources to try to satisfy their unlimited wants. Economies
depend on the natural environment as sources for raw
materials and sinks for waste products. Both sources and
sinks contribute to natural capital, which is Earth’s resources
and processes that sustain living organisms, including
humans. Natural capital includes minerals, forests, soils,
water, clean air, wildlife, and fisheries.- National income accounts are measures of the total income
of a nation’s goods and services for a given year. An external
cost is a harmful environmental or social cost that is borne
by people not directly involved in buying or selling a product.
National income accounts are incomplete estimates of
national economic performance because they do not include
both natural resource depletion and the environmental
costs of economic activities. Many economists, government
planners, and scientists support more comprehensive
income accounting that includes these estimates. - From an economic point of view, the appropriate amount of
pollution is a trade-off between harm to the environment and
inhibition of development. The marginal cost of pollution is
the added cost of an additional unit of pollution. The marginal
cost of pollution abatement is the added cost of reducing
one unit of a given type of pollution. Economists think the use
of resources for pollution abatement should increase only
until the cost of abatement equals the cost of the pollution
damage. This results in the optimum amount of pollution—
the amount of pollution that is economically most desirable. - Incentive-based regulations take advantage of economic
markets to reduce environmental damage. Environmental taxes
require polluters to pay an amount equal to the harm they cause.
Tradable permit systems limit the total amount of a pollutant
that can be released, allowing people to buy and sell rights to
emit and reduce emissions as inexpensively as possible. - The United States Congress passes environmental legislation
such as the Clean Air Act. The EPA is tasked with turning these
laws into environmental regulation. The EPA either directly
enforces the law or transfers authority to individual states.
Key Terms
biocentric preservationist 53
command and control regulation 67
cost–benefit diagram 66
external cost 65
incentive-based regulation 67marginal cost of pollution 66
marginal cost of pollution
abatement 66
national income accounts 63
natural capital 62optimum amount of pollution 67
systems perspective 55
utilitarian conservationist 52MANAN VATSYAYANA/Stringer/AFP/Getty ImagesResearch how Earth Day
was celebrated last year.
What issues did people
focus on?GLOBALLOCALWhat is happening in this
picture?
This photo was taken in 2010. What event
is taking place?
Note the ages of the individuals in this photo. Do people’s
attitudes toward the environment change as they grow
older? How and why?70 Environmental History, Politics, and Economics