Climate and Community: Understanding Environmental Change

To begin, it is essential to understand the economic principles that relate to the environment. One such principle is the concept of externalities, which are costs or benefits of economic activities that are not reflected in market prices. Pollution is a classic negative externality, where the environmental costs are not borne by the polluter but by society at large.

The ‘polluter pays’ principle is a policy approach that aims to address this issue by assigning the cost of pollution back to the source, incentivizing businesses and individuals to reduce their environmental impact. This can be achieved through taxes on carbon emissions or regulations that require polluters to pay for the costs of cleanup and damages.

Another economic concept is the valuation of ecosystem services. These are the benefits that humans derive from ecosystems, such as water purification, carbon sequestration, and pollination. Assigning a monetary value to these services can help incorporate them into economic decision-making and justify investment in conservation and sustainable land management.