Environmental economics
Environmental economics, a sub-discipline of applied economics, is concerned with the interactions between the environment and the economy, and with the ecological consequences resulting from them. These are attributable to the fact that many natural resources (still) have the status of free public goods, i.e. that they are available to everyone because they are not excludable and their use is non-rivalrous – i.e. their use by one economic agent does not reduce their availability to others (e.g. air and water). However, the excessive use or overexploitation of our natural resources may lead to environmental damage.
Environmental economics provides a way of internalising the costs arising from environmental pressures or from the consumption of natural resources, i.e. evaluating them and allocating them to the polluter. Examples of environmental-economic measures include emissions trading, energy taxes, waste and wastewater collection charges etc.
Environmental economics can be divided into two branches: national economics and business economics. While the latter focuses on aspects of environment-oriented management (environmental management, environmental protection in the enterprise, ...), national environmental economics is primarily concerned with the following questions: What are the costs of environmental protection and what are the benefits for the national economy? Central tools in such an analysis are an extended cost-benefit analysis which deals with the aspects of environmental economics and integrated environmental and economic accounting.
In principle, one distinguishes in environmental economics between two methodical approaches:
- Management of renewable and non-renewable natural resources (e.g.: crude oil, coal, sun and water) which serve as input factors for economic activities
- Management of natural resources (in terms of the absorptive capacity of resources - for example: air, water, soil) which serve as absorptive media for outputs of economic activities.
Environmental accounts offer an opportunity to track the interactions between the environment and the economy, with which environmental economics is concerned, on the basis of specific data. They thus provide an excellent system which can be used to support environmental policy decision-making with comprehensible and extensive data.