WHAT IS ECONOMICS ?
Economics is a study of man in ordinary business of life.
It studies : –
- Human behaviour and
- Wealth of a man and
- The economy.
# NEW CONCEPT
Environmental economics is a new term introduced which is a sub-field of economics.
It is concerned with the environmental issues.
In environmental economics we deal economy with the environment .
It means what are the problems which environment face during the : –
- transportation of material or resource and
- how it impacts the environment
- For example : – use of fossil fuels while transportation cost of fossil fuel etc.
Market failure is the center of environment economics.
Scarcity is the core of economics.
WHAT IS SCARCITY ?
Scarcity means there is something not enough to satisfy all conceivable human wants.
In other words, when the resources are limited to satisfy each and every ones needs.
The condition of scarcity in the real world necessitates competition for scarce resources.
# ALLOCATE RESOURCES
- The price system
- Market prices, are one way to allocate scarce resources.
For example : –
- although air is more important to us than gold, it is less scarce simply.
- This is because it is available in abundance and the production cost of air is zero.
- Gold on the other hand has a high production cost.
Market failure means market fails to allocate resources efficiently.
It means market is unable to allocate resources in a equilibrium manner to everyone.
ENVIRONMENT – ECONOMY LINKAGES
All economic activities either affect or are affected by natural and environmental resources.
Activities such as : –
- Consumption affect the stock of natural resources
- Add stress to the environmental systems and
- Introduce wastes to environmental media.
# AFFECTED NATURAL RESOURCES
Economic activities affect the stock of natural resources available for the future and have inter-temporal welfare effects.
From this perspective, the productivity of an economic system depends on the : –
- Supply and
- Quality of natural and
- Environmental resources.
Environmental degradation imposes costs on the economy which results in : –
- Output and
- Human capital losses.