Origins and Scope of

Environmental Economics
Group1
Sai Oke Soe
Hsu Shwe Sin Tun
Thiri Su
Chaw Kay Zin
Swe Zin Oo
Nandar Khin
 Content

 What is Environmental Economics?

 Overview and Learning outcomes of Environmental
Economics
 Origins of Environmental Economics
 Scope of Environmental Economics
 Scope of the discipline
 Relationship between environment and economy
material balance
What is Environmental Economic?
Economic  The science of the
management of the material resources of
an individual , community , or country.
Environment A broad definition of the
environment might be the surroundings :
the conditions influencing development or
growth. Likewise, the environment can be
defined to include all flora and fauna ,
aquatic , ecosystems energy and material
resources , and the atmosphere.
Environmental Economic The branch of
economics that studies how
environmental and natural resources are
developed and managed.
Overview and Learning outcomes of Environmental Economics

Overview : Environmental economics is an area of economics that

studies the financial impact of environmental policies . Environmental
economists perform studies to determine the theoretical effects of
environmental policies on the economy.
Learning outcomes of environmental economic
 To understand the relationship of environmental economics to
economics in general
 To understand the economic impact of environment issues
 To appreciate the differing importance that environmental
economics attach to the physical constraints imposed by the
environment on economic activity.
 To show how the economy and the environment are related to each
other at the most basic level
Economic
Economic is a social science concerned with the production ,
distribution and consumption of goods and services. It studies
how individuals , businesses , governments and nations make
choices on resources to satisfy their wants and needs , and
tries to determine how these groups should organize and
coordinate efforts to achieve maximum output.
Types of Economics

There are two types of economics. They are

1.Neoclassical economic
Traditional view that the market and laws of supply
and demand can determine effective allocation of resources.
2.Ecological economics
Recognizes that certain resources are not adequately
addressed by current market forces. Ecological economics
views the relationships of the economy and environment as
central. It supports the nation of strong sustainability.
Origins of environmental economic
 Environmental economics developed in 1960s as a result of
the intensification of pollution and the heightened awareness
among the general public in western countries about the
environment and its importance to our existence.
 The growth of environmental economics in the 1970s was
initially with the neoclassical paradigm. This is concerned
with issues of market failure, inappropriate resource
allocation and how to manage public goods.
Why is environmental economic
important?
Economic is an important tool for making decisions about the
use, conservation and protection of natural resources because
it provides information about choices people make, the costs of
benefits of various proposed measures, and likely outcome of
environmental and other policies.
How does the environment affect the
economy?
Natural resources are essential inputs for production in many
sectors, while production and consumption also lead to pollution
and other pressure on the environment and also in the biosphere.
Poor environmental quality in turn affects economic growth and
wellbeing by lowering the quantity and quality of resources or due
to health impacts, etc.
What are the economic and institutional causes of
environmental? That is , how do the economic and social
systems shape incentives in ways that lead to environmental
degradation as well as to improvement?
But this leads to an analysis of market and failure and government failure.
For examples , one of the principal reasons for market failure is that there are
incomplete markets for environmental assets. By incomplete we mean there are many
cases where no market exists for the efficient allocation of an environmental
resource. There are plenty of examples of where markets are incomplete including:
 Clean air
 Beautiful views
 Unpolluted beaches
 Tropical rainforests, with their biodiversity and their carbon-fixing properties
 A quiet environment
 Tourism
To ensure that we employ scarce resources sufficiently the environment needs to be
included in economic calculations , and environmental economics aims to do this.
How can we assess the economic importance (i.e.
monetary value) of environmental
degradation/improvements?
 This question requires that we are able to place economic values
on environmental degradation or improvements. As we have
already noted , many environmental resources and goods are
priced in markets. Thus , to do this , environmental economics has
developed a set of methods to place values on these types of
goods.
How can we design economic incentives to slow or halt
environmental degradation and bring about
improvements in the quality of the natural environment?

To address the third question we will use economic tools to

critically evaluate environmental policies and whether they
are likely to achieve the aims of decreasing or halting
environmental degradation.
 The Circular flow of the environment and the economy
(Natural
Natural Environment Capital Stocks)

Waste
Treatment
Recycled

Residuals Discharges
Natural Capital
Producers Goods
Inputs

Residuals Discharges
Consumers

Waste
Recycled Treatment

Natural Environment
Relationship between Environment and Economy
Material Balance

THE ENVIRONMENT

Wast Product
e Q
ECONOMY
Productive Sector :P= Q + R
Household Sector :R= S
Final
HOUSEHOLD Economy :P= Q + S
Production R
Sector Sector
Product

Waste Product
S
Raw material
P
THE ENVIRONMENT
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