lens 2 - environmental economics

environmental economics

studies the interactions between economic activity and the environment, focusing on how economic forces influence environmental policies and sustainability.

main areas of focus of environmental economics

• efficient allocation of natural resources

• environmental policies to address environmental damage

sustainable development

holistic approach to economic growth that aims to meet present needs without compromising the ability of future generations to meet their own needs

market failure

occurs when the allocation of goods and services is not efficient, often leading to negative environmental impacts and requiring intervention.

externalities

unintended side effects of an economic activity that affect third parties, which can be positive or negative.

valuation

the process of estimating the monetary value of non-market goods and services, often related to environmental assets or impacts.

cost-benefit analysis

a systematic approach to comparing the strengths and weaknesses of alternatives in order to determine the best option by weighing the total expected costs against the total expected benefits.

polluter pays principle

a principle stating that those who produce pollution should bear the costs of managing it to prevent damage to human health or the environment.

greenwashing

the practice of misleading consumers about the environmental benefits of a product or service to appear more environmentally friendly than it actually is.

environmental accounting

a methodology for incorporating environmental costs into financial accounting systems, helping businesses to evaluate their ecological impact and make informed decisions.

• problematic in achieving all stakeholders’ agreement

use value

people’s direct benefit from the use of good/service

• opportunity cost

• replacement cost

• pricing techniques

non use value

essential value of a species, the potential for future use or the value it may have for future generations

• surveys

cost - benefit analysis

a systematic approach for evaluating the economic pros and cons of different options

carbon offsetting

a reduction in emissions of carbon dioxide or other greenhouse gases made in order to compensate for emissions produced elsewhere.

• reforestation

• renewable energy

• energy efficiency

ecological economics

a subfield of economics that addresses the relationship between ecological and economic systems, focusing on sustainability and the valuation of natural resources.

economic growth

the increasing capacity of an economy to produce goods and services over time, typically measured by GDP.

genuine progress indicator GPI

is an alternative metric to GDP that considers environmental health, social well-being, and equity, providing a more comprehensive measure of economic progress.

eco-economic decoupling

achieving economic growth without harmin the environment

• impossible to be absolute

slow/no/zero or degrowth

a proposed economic model that advocates for reducing consumption and production to alleviate environmental pressures and promote sustainability.

ecological footprint = biocapacity → sustainability

degrowth advantages and disadvantages

+assumes a lead to sustainability

-for higher productivity, it can be achieved by higher efficiency

precautionary principle

the idea that preventive action should be taken in the face of uncertainty regarding environmental harm.

• helps avoid irreversible damage

• supports a sustainable future