Topic 1 - What is Environmental Economics

ECON 377: Economics and the Environment

Topic 1: What is Environmental Economics?

  • Instructor: Muna Esheba

Learning Objectives

  • By the end of this topic, you will be able to:

    • Define environmental economics.

    • Explain the linkages between the economy and the environment.

    • Examine some of the environmental issues and problems.

Outline

  • What is Environmental Economics?

  • Circular Flow and Materials Balance Models

  • Major Issues and Problems

  • Reading Assignment and Next Topic

Definition of Environmental Economics

  • Economics: Study of how consumers, producers, and governments make decisions about the use and distribution of scarce resources.

  • Environmental Economics:

    • Application of economic principles to manage the environment and economy more effectively.

    • Examines how economic activities affect the environment and vice versa.

    • Focuses on regulating economic activities to achieve a balance between environmental and economic goals.

Importance of Environmental Economics

  • Recognized globally as a critical public policy issue affecting quality of life.

  • Governments acknowledge environmental protection as vital for societal well-being.

Environmental Kuznets Curve (EKC)

  • Developed countries often show lower pollution emissions despite higher GDP due to their access to pollution control technologies.

  • The Inverted U-shaped relationship:

    • As per capita real income increases, environmental degradation initially rises and then starts falling.

Circular Flow and Materials Balance Models

  • Introduction to concepts linking economy with natural resource use and environmental impacts.

Major Issues and Problems

Air Pollution

  • Typical by-products of consumption or production processes:

    • Common Pollutants:

      • Sulphur dioxide,

      • Carbon dioxide (major greenhouse gas),

      • Nitrogen oxides.

    • Damages:

      • Affects human health and plant life,

      • Contributes to climate modification.

  • Urban areas experience the worst levels of air pollution.

  • Some pollutants (e.g., sulphur dioxide) have been successfully controlled.

Prevalence of Air Pollution in Canada

  • 86% of Canadians live in regions with air pollution exceeding WHO guidelines, which poses health risks.

Water Pollution

  • Types of Water Pollutants:

    • Organic: Deposited into lakes/rivers.

    • Inorganic: Toxic metals, acids.

    • Infectious Agents: Bacteria, viruses.

  • Groundwater pollution is a significant concern.

  • Access to safe drinking water and sanitation is linked to child mortality rates.

Climate Change

  • Consumer and producer behaviors lead to greenhouse gas (GHG) emissions:

    • Key GHGs:

      • Carbon dioxide (CO2),

      • Methane (CH4),

      • Nitrous Oxide (N2O).

  • GHG emissions accumulate in the atmosphere, affecting the carbon cycle and leading to global warming:

    • ↑ GHG emissions =⇒ ↑ global average temperatures.

Other Environmental Problems

  • Include:

    • Toxic and hazardous substances,

    • Deforestation,

    • Water scarcity,

    • Overfishing,

    • Wildfires.

Next Steps

Reading Assignment

  • Textbook Reading: Chapter 1.

Upcoming Topic

  • Topic 2: The Economy and the Environment.