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Environmental Economics! Meaning, Nature and Scope of Environmental Economics! +3 6th Sem - DSE-III!

Defining the Natural-Economic Interplay The environment is the summation of living organisms and nonliving elements that shape human existence. Economics revolves around the optimal allocation of scarce resources for maximum satisfaction. Environmental economics fuses these ideas by evaluating how production and consumption cause external effects like pollution while stressing efficient resource management.

Foundations and Theoretical Frameworks The discipline emerged from the industrial surge of the 1960s, when sustainable growth models and stable economies were first conceptualized. Early theories focused on inefficient natural resource allocation, market failures, and negative externalities affecting public welfare. It integrates both positive analysis and normative policy formation, combining static welfare concepts with dynamic resource optimization across micro and macro levels.

Assessing Environmental Damage and Guiding Policy The scope includes analyzing the economic causes behind environmental degradation such as air, water, and soil pollution as well as global warming. It quantifies the economic value of clean natural resources, highlighting how environmental harm translates into tangible costs. Insights from this analysis inform policy strategies to correct market and institutional failures while promoting sustainable resource management.