1) Environmental economics studies the relationship between the environment and economic development to ensure the environment is not impaired by economic activity. 2) The environment provides material resources, waste treatment, life support services, and recreational benefits to humans. 3) The material balance model shows that in the economy, the total raw materials input from the environment equals the total waste output. 4) Sustainable development aims to meet current needs without compromising the environment for future generations. Tools like pollution taxes and industrial efficiency can promote sustainable development.

1. Environmental EconomicsAn IntroductionByDr. (Mrs.) VandanaDwivediSr. Lecturer, Dept. of EconomicsP.P.N. CollegeKanpur.

2. Definition of Environmental EconomicsAccording to T Eugine,“That part of economics which deals with inter-relationship between environment and economic development and studies the ways and means by which the former is not impaired nor is the latter impeded.”

3. Services of the Environment1.Material Resources, which provide the input for man’s productive activities. These resources can be classified into:Renewable( forest, water etc.)Non-renewable(minerals, fossil fuels, etc.)

4. Cont.2. Thewastes are cleaned up by the environment.3. The environment provideslife-support services such as maintenance of genetic diversity and stabilization of the ecosystem.4. The environment provides us with various environmental services like providing space for recreation & scenery & wildlife for aesthetic enjoyment.

5. Economy – Environment InterlinkagesMaterial Balance Model*The Environment R (Raw Material)Production Sector R=F+W1Household Sector F=W2R=W1+W2 (Input=Output)W1 & W2 = Waste from Prod. and Household Sector ,F=Final Product * by AlenKneese and R.V. Ayres.

6. Cont.In the production sector, R= F + W1R= units of raw material from the environmentF= units of the final productW1= amount of waste in the production processIn the household sector, F = W2W2=units of waste in the household sector by consuming all the F units of the final product like packaging, by-products etc.Hence , in the economy, R = W1 + W2The entire mass of inputs (raw materials) equals the entire mass of output (waste). This is the “Material Balance Model”.

7. Environmental SegmentsLITHOSPHERE

8. HYDROSPHERE

9. BIOSPHERE

10. ATMOSPHEREScope of environmental economicsEconomic Growth& Environmental BalancePollution Control & EnvironmentConservation of Resources

11. Atmospheric Pollution due to Industrial Development

12. Sustainable DevelopmentThe aim of environmental economics is to promote sustainable development. It is defined as, “Sustainable development is development that meets the needs of the present generation without compromising the ability of future generations to meet their own needs.” World Commission, 1983

13. The question is what we are going to leave for our future generations ? Vehicles but no petrolThe barren landsMountains of concrete and jungles of sky touching buildingFactories with no power to run themCan it be recognized as development? Is this development that can be sustained?

14. Tools for Promoting Sustainable DevelopmentAssign environmental costs to resources under use.Use price as a tool to avoid waste of resources.Allocation of environmental resources based on true costs and real benefits.Resource conservation through environmental management Material Substitution (ex. copper sheet can be substituted by aluminum etc.).Product Life Extension (ex. use & throw consumption pattern of many goods should be postponed).Recycling (industrial waste & by-products can be profitability recycled).Pollution TaxesWaste Reduction through technological efficiency.

15. Sustainable IndustrializationSustainable industrialization requires integrating environmental considerations at every stage of decision making in the supply chain of the product. The product goes through five stages in the following sequence before it is available for use:Material Extraction Primary Processing Design & Manufacture Distribution Use Disposal Every transformation generates environmental impacts which should be considered by the management/decision makers.

16. Guidelines for Sustainable Industrial ProcessesUse of low & non waste technologies.Transformation of as much material as possible into the marketable product.Increasing the life of the products, i.e., producing more durable products.Upgrade used products by making components available.Recovering components & recycling materials when products cease to be useful.Using toxic chemicals only as a last resorts.

17. Challenges to CompaniesTo make products that are eco-friendly with minimum impact on people & the earth.To introduce processes that minimize the use of raw materials & energy, reduce waste and prevent pollution.To adapt practices that build concern for the earth into the whole apparatus of business, industry and commerce, by consciously avoiding damage, monitoring impacts & having consultations with local communities and the public at large.

18. ConclusionI would like to conclude this lecture with the famous saying of Alfred Kahn,“ Environmental values are economic values; it is in principle just as important, in the interests of economic efficiency and therefore economic welfare, to conserve our limited natural resources, to make wise and sparing use of our limited clean air, water and living space, as it is to economize in the use of labour and capital.”

19. You have to decide whether development means affluence or whether development means peace, prosperity and happiness.SunderlalBahuguna