what is environmental economics and its relationship with economic development?

Answer 1

Environmental Economics looks at the effects and costs of production and consumption on the environment.

Unfortunately (sometimes fortunately), most production and consumption have by-products that are not paid for. These are called externalities. There can be positive externalities or more likely, negative externalities. For example, pumping untreated emissions into the sky is more cost effective for a firm than putting expensive scrubbers into the plant. The costs it saves is at the externalized cost of lung disease (and increased health costs) of the people in the path of its plume. It is this transfer of costs that is the negative externality.
A positive (?) externality may be global warming (another negative externality) in a cold climate country like Canada which could ultimately benefit economically from the warming.

As far as environmental economics and economic development, since it takes into account the externalites, it causes society to demand that producers pay to reduce those externalities (abatement costs) or pay to alleviate the harm caused by externalites (taxes, carbon emission trading, etc.) This does make the producer internalize externalities, but by increasing costs of production, slows development.

In developing countries the costs of production are much more externalized than in developed countries, with poor working conditions/benefits and wages and much less stringent pollution control. These countries want/need development so badly they ignore these externalites, especially when it may take years/decades for the total cost of pollution to come to fruition.

Hope that helps

Peace

Answer 2

Environmental Economics studies the market and how we should internalize factors that are now considered free goods. Like if an industry uses clean water and clean air by polluting it, what should be done? In economic terms, what is the optimum amount of polluted air, and supply and demand equilibrium? A lot of people can get the gist of that, but that's why we study it. It is related to development, because if you are taking all things into consideration (the cost to us all for development verses the costs businesses have to pay for) then we would know what sort of economic growth models we really want.

Answer 3

Our legal system does little to make decision makers account for environmental externalities. As a consequence our accounting standards do not include environmental values in economic statistics. The result is an artificial (false) dichotomy between the environment and the economy. Environmental economics seeks to correct this false dichotomy and incorporate environmental values into our economic system. Changes to legal and accounting systems, which require the internalisation of environmental externalities, will provide much more effective and efficient solutions to environmental problems than current approaches. As a result we will begin to see environmental improvements as economic development.