Environmental economics studies the economic impact of environmental policies and how climate changes can affect the economy. The field helps design appropriate policies and analyze their effects. For example, a policy to save the endangered bluefin tuna from overfishing would require investments in tuna population renewal, substitutes, and enforcement that could decrease revenues from tuna fishing but are necessary to prevent extinction and ensure future sustainability. Effective implementation is estimated to cost $5-7.5 billion over 5 years.
1. A New Sustainable Initiative
We are forced to live in quite difficult conditions. We face economic, social and
ecological problems. As a result our existence and existence of the future generations are
endangered. That is why we should tend to reach the so-called sustainable development. In
our opinion, one of the most appropriate definitions of this term is the following.
“Sustainable development is development that meets the needs of the present
without compromising the ability of future generations to meet their own needs. It
contains within it two key concepts: the concept of needs, in particular the
essential needs of the world's poor, to which overriding priority should be given;
and the idea of limitations imposed by the state of technology and social
organization on the environment's ability to meet present and future needs”
(Sustainable Development Definition).
We believe that one of the most important thing that should be included in the context
of sustainable development is consensus with natural environment. The reason for it is that
severe climate changes and natural disasters have become common nowadays. The term
environmental economics is very important in this case.
The main goal of this paper is to explain the role of environmental economics. The
objectives of the research are, first of all, to explain why this policy is needed and, second of
all, predict its possible economic consequences for society.
To begin with it is worth to say some general words about such item as environmental
economics. First of all, here is the definition of this term. The most appropriate one is the
following:
“Environmental economics is an area of economics that studies the economic
impact of environmental policies. Environment economists perform studies to
determine the theoretical or empirical effects of environmental policies on the
2. economy. This field of economics helps users design appropriate environmental
policies and analyze the effects and merits of existing or proposed policies”
(Investopedia).
Simply speaking, environmental economics is a science and the area of practical
knowledge that shows how environmental policies can affect economic well-being of the
society. Environmental economics also has some other purposes, which are going to be
discussed below.
First subject of focus are environmental policies and their consequences. These
policies have become very popular in the recent years. They are applied in order to improve
or at least maintain conditions of natural environment. They are part of so-called
environmental risk management.
Environmental risk management cannot be considered as a policy of society to
minimize negative impact of the natural environment resulting from its performance. On the
other hand, the second task of environmental risk management is to limit negative influence
of society on natural environment. In such context, environmental management involves
reducing pollution and the consumption of natural resources by the organizations and society,
in general.
The second approach considers the term of environmental management as a policy
and practice of predicting and preventing natural disasters and eliminating their negative
consequences. In such context this term is close to the term of natural disaster risk
management. Also, in this case, it is worth to mention not only the responsibility of the
particular organizations, but also the responsibility of the whole society to natural
environment.
Taking into account the climate changes in the recent years, the problem of the impact
of natural disasters on society has become really popular. It has grown, first of all, because of
3. the number and severity of such disasters and, second of all, because of human and financial
losses caused by them.
Everyone knows that number and severity of such cataclysms have increased
dramatically in the past years. There is a range of factors that have caused such growth.
Among them we may differentiate the following: more frequent extreme weather events
related to global warming and climate changes caused by it; high temps of technological
development of civilization and its negative impact on the natural environment; population
growth and factors caused by it (for example, urbanization and pressure on natural resources);
cyclical features of the development of our planet, which change the natural course of events
time from time, etc.
In such hostile circumstances the importance of environmental risk management has
increased significantly, because its main functions are to forecast, prevent and provide
effective recovery from natural disasters and severe climate changes.
Thus, the definition of the environmental risk management can be stated as the
following: the environmental risk management is a standardized system or policy, developed
by the society to forecast, prevent and recover from different types of disasters. It includes
two main sides – prevention and recovery. Taking into account unpredictable climate changes
of recent years it is almost impossible to predict and, as a result, prevent some disasters. That
is why the main goal of environmental risk management should me minimizing the possible
losses from them and providing effective recovery.
We can also define four main phases of the disaster risk management, which are
consecutive. These phases are the following: predicator (prevention); immediate relief period;
reconstruction and rehabilitation; recovery.
Thus, environmental policies as a part of environmental risk management are applied
to prevent and minimize negative influence of society on natural environment. The reason for
4. it is that this environment is able to pay back via severe climate changes and even natural
disasters. Environmental economics studies how these policies affect economic well-being of
society and how climate changes are able to affect it too. Additionally, environmental
economics studies the best economically-beneficial ways of the usage of natural resources
and losses from their misuse.
As an example of environmental economics and sustainable development initiative we
can propose policy of saving bluefin tuna. uation endangers the future existence of mankind
in general.
Blue-fin tuna is one of the most expensive fishes in the world. Its meat is very
valuable and useful. As a result, it is able to bring significant benefits for companies and
governments. That is why it is not surprising that this fish has become the subject of
overfishing. Respectively, the fish has found itself on the verge of extinction. It means that
special policy should be implemented on both national and international levels in order to
save the fish.
Among the instruments that may reach this goal the following ones have been pointed
out. Governments, companies, international organizations should be stimulated to renovate
population of tuna. Fishing must be only legal. Poaching is a great problem that should be
eliminated. Legal fishing is much easier to control and apply different policies, while
poaching is simply unregulated.
Development and production of the substitute goods may be also a way to save tuna.
Help of developed countries and international organizations is required for developing
countries in order to convince them to stop overfishing. Special financial funds should be
created to invest into mechanisms of solving the problem.
All these instruments are going to lead to economic consequences. The most severe
economic consequences are as follows. Development and production of sub-par fish also
5. requires some investments. The governments will be forced to look for additional money in
order to finance such projects. Yellow-fin tuna is cheaper than the blue-fin one. As a result,
revenues from this business are going to decline. This policy is going to require appropriate
mechanism of control and monitoring. Implementation of such mechanism will bear a lot of
costs.
It is important not to go far away in the realization of this policy. We mean that
yellow-fin tuna also may become the subject of extinction. We will be forced to protect this
fish in the future and, as a result, additional financial resources will be required. Generally,
existence of one fish should not be a price for existence of another one.
According to the estimation of experts, effective implementation of policy requires
from 5 to 7.5 billions of USD. It is a significant sum in the conditions of the global financial
crisis. Nowadays, this policy is financed only by about 25%. The rest 75% should by
financed in the following 5 years. It is the last deadline for the implementation of this policy.
To conclude it is worth to say that, simply speaking, environmental economics is a
science and the area of practical knowledge that shows how environmental policies can affect
economic well-being of the society. The main goals of environmental economics are to
calculate and justify influence of specific policies on economic well-being of society and also
to explore economic costs of society’s influence on natural environment. Necessity of such
discipline is determined by the severe climate changes that have happened in the recent years.
Such situation endangers the future existence of mankind in general.
6. References
Enock, N. (2013) Is that its net worth? Bluefin tuna sells for a record £1MILLION in Japan
(or a whopping £2,230 per pound). Retrieved January 27, 2013, from
http://www.dailymail.co.uk/news/article-2257604/Bluefin-tuna-sells-record-
1MILLION-Japan-whopping-2-235-pound.html
Investopedia. Environmental economics definition. Retrieved January 30, 2013, from
http://www.investopedia.com/terms/e/environmental-economics.asp#axzz2J5PIWu7K
Sustainable Development Definition. Retrieved January 30, 2013, from
http://www.iisd.org/sd/