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Posted on 2008-Sep-26 at 12:40
Economics is the study of the nature and rationale behind decision-making by humans (individuals and groups) in relation to the allocation, use and distribution of valuable resources (living or non-living). It provides a set of analytical tools that can be used in any given situation in which the scarcity of means requires the balancing of competing objectives. Therefore, an economic resource is a good or service for which there is sufficient demand (scarcity) that people are willing to pay for it (price) - in general, the scarcer the good, the higher the price.
A natural resource can be described as any naturally occurring environmental component which supports or supplies the basis for economic activity, in terms of goods, services or attributes. Natural resources can be regarded as physical or biological. Physical resources include soils, minerals and quarry materials, hydrocarbons, water and atmospheric conditions. Biological resources include forests, wetlands beaches, oceans, and their associated flora, fauna and other valuable components.
In general, the focus of "resource economics" is primarily on the optimal exploitation of natural resources (goods, services and attributes), whereas "environmental economics" is more concerned with the economics of environmental quality and pollution - it may be regarded as the application of the principles of economics to the study of how environmental resources are developed, managed and conserved.
The primary focus of environmental economics is on the nature and rationale of human decision-making processes that have consequences for the natural environment. However, it is also concerned with how economic institutions and policies can be modified to bring environmental impacts more into balance with human preferences as well as the needs of the ecosystem itself. The study of the behaviour of individuals and small groups of resource users is known as "micro-economics"; "macro-economics" is the study of the economic performances of economies as a whole. Environmental economics is therefore concerned with both of these considerations; however, there is a general tendency for there to be more focus on micro-economics than macro-economics.
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