A PROJECT REPORT

on

Environmental Economics

Prepared by:
B-26 AMRUTA KATKAR

B-27 PRASHANT KHOMANE

B-28 SAKSHI KHOPKAR

B-29 SIDDHESH KHOT

B-30 ARYA KULKARNI

 Environmental Economics
A PROJECT REPORT

Submitted by

B-26 AMRUTA KATKAR

B-27 PRASHANT KHOMANE

B-28 SAKSHI KHOPKAR

B-29 SIDDHESH KHOT

B-30 ARYA KULKARNI

In partial fulfillment of the syllabus

of

ENVIRONMENTAL STUDIES

Second Year B.Tech. (Sem-III)

Submitted to

THE FACULTY OF ENVIRONMENTAL STUDIES

DEPARTMENT OF ELECTRONIC & TELECOMMUNICATION
KIT’S COLLEGE OF ENGINEERING (AUTONOMOUS)
GOKUL SHIRGAON, KOLHAPUR

Faculty mentor
MRS. PALLAVI DHEKANE
 Kolhapur Institute of Technology’s
College of Engineering (Autonomous)
Gokul Shirgaon, Kolhapur
Department of Electronic & Telecommunication
Faculty of Environmental Studies

CERTIFICATE
This is to certify that,

B-26 AMRUTA KATKAR

B-27 PRASHANT KHOMANE

B-28 SAKSHI KHOPKAR

B-29 SIDDHESH KHOT

B-30 ARYA KULKARNI

have satisfactorily completed the project report entitled “ENVIRONMENTAL

ECONOMICS” as a part of Environmental Studies (Sem-III) during the

Academic Year 2020-2021.

Course Teacher HoD, E&TC

Acknowledgments
We would like to thank our supervisor, Mrs. PALLAVI DHEKANE,
for the valuable advice and support he has given us in the writing of
this report. We would also like to thank our teacher, for their
encouragement and guidance. We are also much thankful to the
librarian and staff of Central Library of KIT’sCoEK for their support
and help in providing us the essential references. Thanks also to our
friends, for his immaculate suggestions. Our deepest thanks go to our
parents, for their love, understanding and support.
Contents
1. INTRODUCTION
I) Importance of Environmental Economics
II) Aims and Objectives
III) Relation between Economics And Environment

2. ECONOMIC DEVELOPMENT
I) Relation between economic growth and the environment
II) Environmental Kuznets Curve

3. FREE TRADE
I) Free Trade Agreement
II) Advantages
III) Disadvantages
IV) Which countries have Free Trade

4. ELEMENTS OF ECONOMIC ENVIRONMENT

I) Economic Condition
II) Economic System
III) Economic Policy
IV) International Economic Environment
V) Economic Legislations

5. GLOBALIZATION
I) Economic Globalization
II) Cultural Globalization
III) Political Globalization

6. CONCLUSION

7.REFERENCES
ABSTRACT
The primary concern of Environmental & Resource
Economics is the application of economic theory and
methods to environmental issues and problems that require
detailed analysis in order to improve management strategies.
The contemporary environmental debate is in a constant state
of flux, with new or relatively unexplored topics continually
emerging. The Journal provides a forum for the further
exploration of causes, consequences and policy responses
linked to these topics, across a range of spatial and temporal
scales up to the global dimension. Areas of particular interest
include evaluation and development of instruments of
environmental policy; cost-benefit and cost effectiveness
analysis; sectoral environmental policy impact analysis;
modeling and simulation; institutional arrangements;
resource pricing and the valuation of environmental goods;
and indicators of environmental quality.
Introduction
The complex of physical, chemical, and biotic factors ; such
as climate, soil, and living things that act upon an organism
or an ecological community and ultimately determine its
form and survival is called environment.
• Herman Edward Daly: The father of environmental
economics.

Environmental economics :Environmental economics is a

sub-discipline of economics that aims to understand, and
influence, the. economic causes of human impacts on the
non-human world, such as atmospheric pollution.
• It seeks. to apply the main concepts and methods of
economic thought to environmental goods.
• Environmental economics is an area of economics that
studies the financial impact of environmental policies.
 • This field of economics helps users design
appropriate environmental policies and analyze the
effects and merits of existing or proposed policies.

Importance of Environmental economics

 Environmental economics will help you understand

some important and controversial issues – such as
climate change policy, nuclear power, recycling policy,
and traffic congestion charging.
 In very broad terms, environmental economics looks at
how economic activity and policy affect
the environment in which we live.

Aims and objectives

 The main objective of environmental economics is to

maintain a balance between economic development and
environmental quality.
 In order to achieve it, environmental economists have to
explore the various socio-economic possibilities to
reduce pollution and uplift the standard of living of the
people.
Relation between Economics and
Environment

 The links between the economy and the environment are

manifold.
 The environment provides resources to the economy, and
acts as a sink for emissions and waste.
 Poor environmental quality in turn
affects economic growth and wellbeing by lowering the
quantity and quality of resources or due to health
impacts, etc.
 Economic development

 Environmental impact of economic growth.

 Economic growth means an increase in real output i.e real
GDP therefore with increased output and consumption we
are likely to see cost imposed on environment
 The environmental impact of economic growth include the
increased consumption of non-renewable resources,higher
level of pollution,global warming and the potential loss of
environmental habitats etc.
 However,not all forms of economic growth cause damage
to the environment with rising real income to devote
resources to protecting the environment and mitigate the
harmful effect of pollution.Also,economic growth caused
 by improved technology can enable higher output with less
pollution.
 Economic growth and environmental performance must go
hand in hand
 i.e We have perfect balance in economic growth and
environmental performance.
 Natural environment is at central to economic activity and
economic growth.
 Providing the resources we need to produce goods and
cervices and absorbing and processing unwanted
byproducts in the form of pollution and waste.
 For less damage to environment the role of environmental
pollicy is to manage the provision and use of environmental
resources in a way that supports continued improvement in
prosperity and wellbeing for current and future generation
 sustainable development requires changes in accounting
information users in their specific environmental
decisions.

 The pace of global economic growth in the past century has

led to a decline in the availability of natural resources such
as forests (cut down for agriculture/demand for wood)

 A decline in sources of oil/coal/gas

 Loss of fishing stocks – due to overfishing
 Loss of species diversity – damage to natural resources has
led to species extinction.
 Pollution. Increased consumption of fossil fuels can lead to
immediate problems such as poor air quality and soot,
 (London smogs of the 1950s). Some of the worst problems
of burning fossil fuels have been mitigated by Clean Air
Acts – which limit the burning of coal in city centres.
Showing that economic growth can be consistent with
reducing a certain type of pollution.
 Less visible more diffuse pollution. While smogs were a
very clear and obvious danger, the effects of increased CO2
emissions are less immediately obvious and therefore there
is less incentive for policymakers to tackle. Scientists state
the accumulation of CO2 emissions have contributed to
global warming and more volatile weather. All this
suggests economic growth is increasing long-term
environmental costs – not just for the present moment, but
future generations.

 Damage to nature.

 Air/land/water pollution causes health problems and can

damage the productivity of land and seas.
 Global warming and volatile weather. Global warming
leads to rising sea levels, volatile weather patterns and
could cause significant economic costs
 Soil erosion. Deforestation resulting from economic
development damages soil and makes areas more prone to
drought.
 Loss of biodiversity. Economic growth leads to resource
depletion and loss of biodiversity. This could harm future
‘carrying capacity of ecological systems’ for the economy.
Though there is uncertainty about the extent of this cost as
the benefit of lost genetic maps may never be known.
 Long-term toxins. Economic growth creates long-term
waste and toxins, which may have unknown consequences.
For example, economic growth has led to increased use of
plastic, which when disposed of do not degrade. So there is
an ever-increasing stock of plastic in the seas and
environment – which is both unsightly but also damaging to
wildlife.

Relationship between economic growth

and the environment

While the previous section discussed the importance of

natural capital to economic growth, this section looks at the
relationship between economic growth and environmental
quality, and discusses its main drivers.

Environmental Kuznets Curve

The Environmental Kuznets Curve (EKC) is often used to
describe the relationship between economic
growth and environmental quality. It refers to the hypothesis
of an inverted U-shaped relationship between economic
output per capita and some measures of environmental
quality.

OTHER POINT WHICH DESCRIBE RELATIONSHIP

BETWEEN ECONOMIC DEVELOPMENT AND
ENVIRONMENTAL ECONOMICS
1.TECHNOLOGICAL PROGRESS
All company and industry concentrate on expanding
production as quickly as possible and don't think about
destroy and damage of environment.

2.BEHAVIOR CHANGE
Society is at first interested in higher level of
consumption,regardless of the means by which it is
achieved,but after a certain point greter consideration is given
to other factor affecting quality of environment as well as
quality of life.

3.LEWIS GROWTH MODEL

The development pattern of any economy is characterised
by the changing patterns of economic activity.
Stage 1: society concentrates resources in the primary sector
(i.e. extraction, agriculture) to satisfy necessary consumption;
Stage 2: resources are switched to the secondary sector (i.e.
manufacturing) as basic needs are satisfied and further
consumption is concentrated on consumption goods; and
Stage 3: society moves from the secondary to the tertiary
sector (i.e. services) characterised by much lower levels of
pollution. However, this model is less applicable in an
increasingly globalised world where the move from stage 1 to
3 may happen as the result of a shift rather than a reduction in
the levels of pollution.

4.THE SCALE EFFECT

Economic growth has a negative effect on the
environment,where increased production and consumption
cause increased environmental damage.
5.THE COMPOSITION EFFECT
The composition of production changes along the growth
path
Initially economic growth leads to industrialization and as
the goods balance shift from agriculture to manufactured
products,environmental damage increase.

6THE TECHNICAL EFFECT

Technology development leads to a changes in
environmental impacts of production this often reduction in
environmental intensity.
 FREE TRADE
Free trade is a trade policy that does not restrict imports or
exports. It can also be understood as the free market idea
applied to international trade. In government, free trade is
predominantly advocated by political parties that hold liberal
economic positions while economically left-wing and nationalist
political parties generally support protectionism, the opposite of free
trade.

FREE TRADE AGREEMENT

A free trade agreement (FTA) or treaty is a multinational
agreement according to international law to form a free-trade
area between the cooperating states. FTAs, a form of trade
pacts, determine the tariffs and duties that countries impose on
imports and exports with the goal of reducing or eliminating
trade barriers, thus encouraging international trade. Such
agreements usually "center on a chapter providing for
preferential tariff treatment", but they also often "include
clauses on trade facilitation and rule-making in areas such as
investment, intellectual property, government procurement,
technical standards and sanitary and phytosanitary issues".

Advantages:
. Economic growth- because taxes are not applied on goods
the economy is boasts by free trade
. Highly employment rate-It require more people to transport
goods so that they require more employees and it increase
employment rarate
. Less child labor-Free trade require experienced and skilled
employees and children's are not that much skilled hence it
reduce child labor
. Access to new market- As there is no any taxes and also no
political interruption small countries are also try to access new
market
. Increase production-The productitis increase by free trade
because it is not required to give taxes for the production
. Benifit to consumer-Goods comes in country by free trade
passes less price.
Foreign exchange gain-Because of free trade it is easy to
connect with international market so it is good for small
countries because because of it foreign exchange gain occure
Disadvantage
Non cooperation of countries-Large countries not cooperat
with small countries. This happen when small countries are in
business
with large countries
. Economic dependency-Because of free trade we have to
depend on another countries for our economy with which we
are in business
. Political slavery-Some big countries like US can manipulate
other small countries because of strong political background
. Harmful products-Some harmful products can enter in
country without knowing government and it is very harmful to
our country
. International manipulation-It is same as political slavery. In
it big or stronger countries manipulate smaller or weaker
countries for economic dependency
. Environmental problems-Free trade can lead to pollution and
other economic problems. It requires much more use of
transport system to transport goods from one place to another
and it leads to increase carbon dioxide amount in air
. Harmful to less developed countries-Because of competition
in free trade it is unhealthy and unfair and less developed
countries find it difficult to compete with economically
advanced countries generally experience unfavorable balance
of payment. It is not solved by free trade policy
 Which countries have FREE TRADE
There are some countehich are successful after applying free
trade policy in their countries. That countries are
Africa
Europe
America

The world's largest free trade area took effect in afritin July
2020.It is projected to contribute to an increase in GDP and
industrial specialization.
Elements of Economic Environment
It has mainly 5 components:
1. Economic Condition
2. Economic System
3. Economic Policy
4. International Economic Environment
5. Economic Legislations
 1.Economic Conditions

Economic policies of a business unit are largely affected by

the economic conditions of an economy. Any improvement in
the economy conditions such as standard of living, purchasing
power of public, demand & supply, distribution of income etc.
largely affects the size of the market.
Business cycle is another economic condition that is very
important for a business unit.
Business cycle has 5 different stages viz.
1)Prosperity:
Prosperity is a condition in which a person or community is
doing well financially.
2)Boom:
A period of great prosperity or rapid economic growth.
3)Decline:
In the depression stage, the economy’s growth rate becomes
negative. There is further decline until the prices of factors, as
well as the demand & supply of goods and services, reach
their lowest point. The economy eventually reaches the
trough. It is the negative saturation point for an economy.
4)Depression:
There is a commensurate rise in unemployment The growth
in the economy continues to decline, and as this falls below
the steady growth line, the stage is called depression.
5)Recovery:
After this stage, the economy comes to the stages of
recovery. In this phase, there is a turnaround from the trough
and the economy starts recovering from the negative growth
rate. Demands starts to pick up due to the lowest price and
consequently supply starts reacting, too.
The economy develops a positive attitude towards
investment and employment and production starts increasing.
Recovery continues until the economy returns to steady
growth levels. It completes one full business cycle of boom
and contraction. The extreme points are the peak & the
trough.

Economic conditions of nation can be of any one of the

following type:
1. Capitalism:
The economic systems in which business units or factors of
production are privately owned and governed is called
Capitalism.
The profit earning is the sole aim of the business unit.
Government of that country does not interfere in the economic
activities of the country. It is also known as free market
economy. All decision relating to the economic activities are
privately taken.
Eg.
1) The united states of America
2) Canada
3) Japan
4) Germany
2. Socialism:
Under socialism economic system, all the economic activities
of the country are controlled and regulated by the Government
in the interest of public. The first country to adopt this concept
was soviet Russia.
3. Mixed Economy:
The economic system in which both public and private sector
co-exist is known as Mixed Economy. Both private and public
sectors play key role in the development of the country.
Eg.
1) India
2) China
3) France
4) Sweden
5) Iceland

2. Economic System
An Economic system of a nation or country may be defined as
a framework of rules, goals and incentives that controls
economic relations among people in a society.
It also helps in providing framework for answering the basic
economic questions. Different countries of a world have
different economic systems and the prevailing economic
systems in a country affects the business units to a large
extent.
 3. Economic Policies
Government frames economic policies. Economic policies
affect the different business unit in different ways. It may or
not be favorable effect on a business unit. The government
may grant subsidies to one business or decrease the rates of
excise or custom duty or the government may increase the
rates of excise or custom duty, tax rates for another business.
All the business enterprises frame their policies keeping in
view the prevailing economic policies.

Important Economic policies of a country are as follows:

A) Monetary Policy:
The policy formulated by the central bank of a country to
control the supply and the cost of money in order to attain
some specified objectives is known as Monetary Policy.
B) Fiscal Policy:
It may be termed as budgetary policy. It is related with the
income and expenditure of a country.
Fiscal policy works as an instrument in economic and
social growth of a country. It deals with taxation, government
expenditure, borrowings, deficit financing and management of
public debts in an economy.
c) Foreign Investment Policy:
The policy related to the investment by the foreigners in a
country is known as Foreign Investment Policy.
If the government has adopted liberal investment policy
then it will lead to more inflow of foreign capital in the
country which ultimately results in more industrialization and
growth in the country.
4.International Economic Environment
The role of international economic environment is increasing
day by day. If any business enterprise is involved in foreign
trade, then it is influenced by not only its own country
economic environment but also the economic environment of
the country from/to which it is importing or exporting goods.

There are various rules and guidelines for these trades which
are issued by many organizations like world bank, WTO, UN
etc.
 5. Economic Legislations
Besides the above policies, Government of different countries
frame various legislations which regulates and control the
business.

between the domestic and international levels of authority.

Some people are citizens of multiple nation-states. Multiple

citizenship, also called dual citizenship or multiple nationality
or dual nationality, is a person's citizenship status, in which a
person is concurrently regarded as a citizen of more than
one state under the laws of those states
 GLOBALIZATION

Globalization, is the process of interaction and integration

among people, companies, and governments worldwide.
Globalization has accelerated since the 18th century due to
advances in transportation and communication technology.
This increase in global interactions has caused a growth in
international trade and the exchange of ideas and culture.
Globalization is primarily an economic process of interaction
and integration that is associated with social and cultural
aspects. However, conflicts and diplomacy are also large parts
of the history of globalization, and of modern globalization.
Economically, globalization
involves goods, services, data, technology, and the economic
resources of capital.[1] The expansion of global markets
liberalizes the economic activities of the exchange of goods
and funds. Removal of cross-border trade barriers has made
the formation of global markets more feasible.[2] Advances
in transportation, like the steam locomotive, steamship, jet
engine, and container ships, and developments
in telecommunication infrastructure, like
the telegraph, Internet, and mobile phones, have been major
factors in globalization and have generated
further interdependence of economic and cultural activities
around the globe.
Globalization is the extension of social relations across world-
space, defining that world-space in terms of the historically
variable ways that it has been practiced and socially
understood through changing world-time.

THERE ARE THREE TYPES :-

ECONOMIC GLOBALIZATION
CULTURAL GLOBALIZATION
POLITICAL GLOBALIZATION

ECONOMIC GLOBALIZATION

Economic globalization is the increasing economic

interdependence of national economies across the world
through a rapid increase in cross-border movement of goods,
services, technology, and capital. Whereas the globalization of
business is centered around the diminution of international
trade regulations as well as tariffs, taxes, and other
impediments that suppresses global trade, economic
globalization is the process of increasing economic
integration between countries, leading to the emergence of a
global marketplace or a single world market. Depending on
the paradigm, economic globalization can be viewed as either
a positive or a negative phenomenon. Economic globalization
comprises: globalization of production; which refers to the
obtainment of goods and services from a particular source
from locations around the globe to benefit from difference in
cost and quality. Likewise, it also comprises globalization of
markets; which is defined as the union of different and
separate markets into a massive global marketplace.
Economic globalization also includes competition,
technology, and corporations and industries.

Current globalization trends can be largely accounted for by

developed economies integrating with less developed
economies by means of foreign direct investment, the
reduction of trade barriers as well as other economic reforms,
and, in many cases, immigration.

A multinational corporation, or worldwide enterprise, is an

organization that owns or controls the production of goods or
services in one or more countries other than their home
country.[63] It can also be referred to as an international
corporation, a transnational corporation, or a stateless
corporation.
CULTURAL GLOBALIZATION

Cultural globalization refers to the transmission of ideas,

meanings, and values around the world in such a way as to
extend and intensify social relations. This process is marked
by the common consumption of cultures that have been
diffused by the Internet, popular culture media, and
international travel. This has added to processes of
commodity exchange and colonization which have a longer
history of carrying cultural meaning around the globe. The
circulation of cultures enables individuals to partake in
extended social relations that cross national and regional
borders. The creation and expansion of such social relations is
not merely observed on a material level. Cultural
globalization involves the formation of shared norms and
knowledge with which people associate their individual and
collective cultural identities. It brings increasing
interconnectedness among different populations and cultures.

Cross-cultural communication is a field of study that looks

at how people from differing cultural backgrounds
communicate, in similar and different ways among
themselves, and how they endeavour to communicate across
cultures. Intercultural communication is a related field of
study.

Cultural diffusion is the spread of cultural items—such

as ideas, styles, religions, technologies, languages etc.
Cultural globalization has increased cross-cultural contacts,
but may be accompanied by a decrease in the uniqueness of
once-isolated communities. For example, sushi is available in
Germany as well as Japan, but Euro-Disney outdraws the city
of Paris, potentially reducing demand for "authentic" French
pastry. Globalization's contribution to the alienation of
individuals from their traditions may be modest compared to
the impact of modernity itself, as alleged
by existentialists such as Jean-Paul Sartre and Albert Camus.
Globalization has expanded recreational opportunities by
spreading pop culture, particularly via the Internet and
satellite television.
POLITICAL GLOBALIZATION

Political globalization refers to the growth of the

worldwide political system, both in size and complexity. That
system includes national governments,
their governmental and intergovernmental organizations as
well as government-independent elements of global civil
society such as international non-governmental
organizations and social movement organizations. One of the
key aspects of the political globalization is the declining
importance of the nation-state and the rise of other actors on
the political scene. William R. Thompson has defined it as
"the expansion of a global political system, and its
institutions, in which inter-regional transactions (including,
but certainly not limited to trade) are managed".[95] Political
globalization is one of the three main dimensions of
globalization commonly found in academic literature, with the
two other being economic globalization and cultural
globalization.

Intergovernmentalism is a term in political science with two

meanings. The first refers to a theory of regional integration
originally proposed by Stanley Hoffmann; the second treats
states and the national government as the primary factors for
integration.[96] Multi-level governance is an approach
in political science and public administration theory that
originated from studies on European integration. Multi-level
governance gives expression to the idea that there are many
interacting authority structures at work in the emergent global
political economy. It illuminates the intimate entanglement
FOOD SECURITY

Globalization is associated with a more efficient system of food

production. This is because crops are grown in countries with
optimum growing conditions. This improvement causes an
increase in the world's food supply which encourages improved
food security.

Norway
Norway's limited crop range advocates globalization of food
production and availability. The northernmost country in
Europe requires trade with other countries to ensure
population food demands are met. The degree of self-
sufficiency in food production is around 50% in Norway.
 CONCLUSION
• Environmental values are economic values; it is in
principle just as important, in the interest of economic
efficiency and therefore economic welfare, to conserve
our limited natural resources, to make wise and sparing
use of our limited clean air, water and living space, as it
to economize in the use of labour and capital.
 REFERENCE
https://en.wikipedia.org/wiki/Environmental_economics
https://en.wikipedia.org/wiki/Free_trade
https://en.wikipedia.org/wiki/Globalization