-
Environmental economics is concerned about the optimal use
of the scarce environmental goods and services.
-
Environmental economics is the study of the economic aspects
of the interactions between human society and its natural environment.
-
Externalities is the result of an activity that does not
limit itself to what is deliberately intended.
-
The environment is an asset that provides a broad set of
useful and unique services.
-
It is possible to, and should be, put a price on these
services.
-
Open, freely accessible resources abolishes the incentive to
save the resource, instead it promotes over exploitation. This is called the
tragedy of the commons.
-
Willingness to pay (WTP) is a concept that show how much an
individual is willing to pay to secure the increase of his/her welfare or to
prevent its loss.
-
Willingness to accept (WTA) on the other hand show how much
an individual is willing to accept to compensate the welfare loss or to
loose its increase.
-
The total economic value of the environmental good is the
sum of its use and non-use values.
-
Environmental values can be estimated by either direct or
indirect valuation.
-
Indirect valuation is a method with two stages: First the
physical, biological, medical or other effects of environmental quality
change are identified and quantified. Secondly these effects are converted
into money value.
-
The direct valuation methods relies in principle on prices
on existing markets and people's willingness to pay money or time to obtain
an increase of environmental quality.
-
The polluter pays principle (PPP) means that the one using
the environment should pay. However, due to difficulties in the application
of the principle several other similar principles have been put forward.
-
To achieve environmental goals governments may use
different kind of policy instruments: taxes, charges, trade, permits and
subsidies.
