What is Environmental Economics?
I have often given introductory lectures to non-specialized audiences on environmental economics. So, I thought I would share on this page how I explain what is environmental economics.
The textbook definition of Economics is “the study of the allocation of scarce resources for external purposes”. I find it useful to break them down when I am talking about environmental economics to non-economists:
Allocation is basically the decisions on production, distribution, and consumption (or when we try to answer WHAT are going to produce and how much, HOW to produce and WHO to produce it for).
Resources are the goods and services necessary for survival and quality of life (for example, clean air, or technology, or transportation). When economists say “scarce resources” we just mean that those resources are not unlimited.
External purposes means we are considering and comparing different alternatives of allocation.
So, a lot of different questions are of interest to economists. Like…
“Given that the government budget is limited, where should we invest?”
“Why do we have inflation? How does the supply and demand of goods work?”
“Why are some countries traditionally exporters of high-technology goods and services and others export more basic commodities? Is it necessary or desirable to avoid that?”.
When we talk about environmental economics, we mean exactly the study of the allocation of scarce resources for external purposes, but specifically, the NATURAL resources, that is, those concerning the environment.
The models, tools and results from economics are therefore useful for environmental economists, as what we do is to apply the economic knowledge and methods to the study of environmental issues.
Environmental economics thus is the field that investigates the connections between production and consumption decisions, the environment, and society's welfare. It explores how our production and consumption behaviors lead to pollution, affecting both ourselves and others. It aims to comprehend the motivations behind these choices, their environmental consequences, and their influence on our well-being, as well as how we can address the environmental issues we cause.
Some of the questions environmental economists tackle are:
“What is the value of the amazon rainforest?”
“What was the impact of a particular policy in the environment?”
“How can we effectivelly create incentives to decrease deforestation?”, and so on.
At the heart of environmental economics is multidisciplinary, as it often involves combining knowledge from different fields like ecology, biology, health and many others with economics.
My specific research within environmental economics centers on public policy analysis and design. In general terms, I analyse externalities and market failures in policymaking through the lens of microeconomics, with emphasis and applications to the natural environments (from the brazilian rainforest to the danish agricultural fields).