Plain-language explanation.
Environmental economics applies economic tools to environmental problems — valuing ecosystems, designing carbon markets, and determining optimal pollution levels.
Core concepts and standard treatment.
Core environmental economics covers market failure and externalities (Pigou — corrective tax equal to marginal external cost — social cost of carbon — Stern Review 2006 — $85/tonne SCC; Coase theorem — private bargaining with well-defined property rights — limited by transaction costs and information asymmetry), environmental valuation (total economic value — use and non-use value — option value, existence value, bequest value; contingent valuation — WTP and WTA — hypothetical bias; hedonic pricing — house prices and environmental quality; travel cost method; benefits transfer), and pollution control instruments (command and control — technology vs performance standards; EU ETS — Phase 1-4 — carbon price — MSR market stability reserve; Weitzman prices vs quantities — cost uncertainty favours prices — benefit uncertainty favours quantities).
Deeper theory, debates and edge cases.
Advanced environmental economics covers climate economics (DICE model — Nordhaus Nobel 2018 — optimal carbon price path; Stern Review — very low discount rate — eta and pure rate of time preference; distributional effects of carbon policy — Canada carbon rebate — BC carbon tax; NGFS climate scenarios — physical vs transition risk — TCFD), biodiversity economics (Dasgupta Review 2021 — natural capital as asset; ecosystem services — TEEB — Economics of Ecosystems and Biodiversity; Natural Capital Accounting — ONS UKNEA; BNG — mandatory 10% biodiversity net gain UK 2024; 30x30 COP15 Kunming-Montreal), and circular economy (material flow analysis — Eurostat; EU circular economy package — right to repair; UK plastic packaging tax 2022; industrial symbiosis — Kalundborg; Ellen MacArthur Foundation Butterfly Diagram).
How it is applied in practice.
At the environmental economist and sustainability policy adviser level, practitioners contribute to Journal of Environmental Economics and Management; advise on climate policy (Climate Change Committee Sixth Carbon Budget; OBR fiscal risks and sustainability — climate scenarios; UK ETS Authority — auctioning — stabilisation mechanism); lead natural capital accounting (TNFD beta framework; ONS-DEFRA UKNEA update; voluntary biodiversity offset markets — Ecosystem Marketplace); contribute to international climate negotiations (COP NDCs — Global Stocktake — Article 6 carbon markets — ITMOs; GCF; Loss and Damage Fund COP28); and advise on ESG investment (SFDR Article 8/9; UK SDR; ISSB IFRS S1/S2; EU taxonomy — substantial contribution — DNSH).