16.12.2024
Environmental economics: Balancing growth and sustainability
Can nature’s value be measured in money? Is there a future in which both the economy and the environment are healthy? Environmental economics is an increasingly important branch of economics.
Environmental economics is a new course at the School of Business and Economics at Åbo Akademi University, within the Bachelor’s degree programmes in Economics and Social Sciences.
In short, environmental economics explores how we can achieve the environmental objectives we set with minimal cost to society.
“The environmental problems we face are widespread and acute. The market economy has so far not taken the limits of nature and the long-term consequences of resource consumption seriously enough. However, the subject of environmental economics offers tools to address these challenges, and it is crucial that future economists develop expertise in environmental economics,” explains Edvard Johansson, Professor of Economics at the School of Business and Economics at Åbo Akademi University.
Economists tell us that the costs of long-term environmental damage have not been sufficiently included in market prices. As a result, businesses and consumers do not pay for the negative external impacts, so-called externalities, that their activities and consumption have on the environment. This has led to major environmental problems. Examples of such externalities include air and water pollution and climate change.
To address this problem, economists propose various economic policy tools, such as environmental taxes, the emissions trading system and subsidies for sustainable alternatives. At the same time, innovations in renewable energy and energy-efficient technologies show that economic development and environmental considerations can go hand in hand.
“We have to tighten up certain rules, impose levies or taxes on specific areas and outright ban certain truly harmful activities. Besides, technological development is also crucial to promoting sustainability,” says Johansson.