scope of Environmental Economics
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Answer:
Nature of Environmental Economics:
Environmental economics is considered both as positive and normative science. It also covers both micro and macro aspects of different pollution problems.
Positive and Normative aspects:
Environmental economics is an application of scientific theories and general application of welfare economics. When we study the cause and effect relationship, it covers the positive aspect. For example, the laws of thermodynamics are equally applicable to economic process.
If the problem is related to policy measures, then it is considered as normative aspect. Therefore, environmental economics is a normative science because it prescribes the goals of environmental policy. As pointed out by B. C. Field, “Environmental degradation is the result of human behaviour that is unethical or immoral. Thus, for example, the reason people pollute is because they lack the moral and ethical strength to refrain from the type of behaviour that cause environmental degradation. If this is true, then the way to get people to stop polluting is somehow to increase the general level of environmental morality in the society.” Field calls it as moral approach to environmental issues.
A Study of Micro and Macro Aspects:
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Economists such as Pigou, Hoteling and Nordhaus have formulated their models in relation to individual firms and natural resources. Therefore, it covers the micro and macro aspects of the pollution problem. There are many examples of micro and macro aspects of environmental problems in the present times.
We generally observe crowded market places, industrial units, and even residential areas in a city like, Delhi. We do not get enough fresh air at these places. Its solution lies in micro level planning. On the other-hand, when the pollution problem is related to the economy as a whole such as rise in temperature, then it is related to macro aspect of environmental planning.
Environmental economics draws more from microeconomics than from macroeconomics. It focuses primarily on how and why people make decisions that have consequences for the natural environment. It is concerned also with how economic institutions and policies can be changed to bring these environmental impacts more into balance with human desires and the needs of the ecosystem.