An essential query in the study of
economics is; to what measure is considered when putting an economic value on
the environment. One conventional
scholarly interpretation of the ethics of placing a price tag on the
environment would be that the human species should only be allowed to take from
the environment for absolute necessity and survival (Tietenberg, 2009, pg.
19, para. 5). Moreover, it is imperative the United State continues it’s
efforts in sustainable energy technology and acknowledge the need to compete
with foreign countries such as China. Despite the U.S continued investments in
clean and renewable energy starting in 2004, for five consecutative years has
shown a rapid decline in efforts to compete with for countries (Ogden, Hernandez & Bovarnick, 2014). This
paper proposes the use of economics as a method of preserving the environment
to influence corporations to seek alternatives in emission consumption and
waste output. First, I describe the
human depth of how the environment is valued. The analysis then proceeds to how
opportunity costs affect the economics of the environment. The study then moves to examination of the demand curve and how analysis of data of
total benefits and opportunity cost can be useful mechanism
within demand curve to identify willingness to pay. The last elements
that support this insight are the timing of costs and benefits; including the
present value and discounted rate.
The environment and economics have an essential role to play when it comes to sustaining the value of raw material is at an adequate price, in order to ensure assets won’t be depleted. Likewise,
To elaborate, disputes within positive economics are usually fixed
with an appeal to the facts and are a
primary resource when making market comparisons between trade relations &
environmental assets. Whereas, normative economics remains a fundamental tool
for resolving whether a specific action would be ‘desirable to the general
public and corporations; often being a tool to make judgment calls on
“open-ended” dilemmas that challenge ethical and morality (Tietenberg, 2009, pg.
18, para. 1-3). A plausible
interpretation of the above is that two methods for making economic
interpretations of the environment involve positive and normative economics,
each serving two different purposes to resolve financial questions in
determinations of value. With the use of
positive economics to create a solid basis of evidence to support normative
economics will provide a reasonable basis for market prediction and a more
defined economic analysis.
Within the normative
economics decision making cost-benefit analysis gives one the tools to
frame the overall concept of what the main desirability
level would be determined by the evaluation of the net gains and losses (Tietenberg, 2009, pg.
18, para. 5). Likewise, desirability
can be determined when the benefits gained are more than the costs, and
consequently, if the prices were more than the benefits that this would be
undesirable (Tietenberg, 2009,
pg.
18, para. 5). Also, the mechanism used to measure economics is called anthropocentric, which centers around
humans (Tietenberg, 2009, pg.
18, para. 8).
Equally important, a demand curve is the calculation of the quantity concerning
commodities and the exact price the general public is inclined to purchase the products,
or often referred to as desirability.
In the same way, each purchased commodities is a reflection of an individuals
willingness to pay. For instance, one can find the demand curve by determining
the locus of points plotted on a graph from plotting points for prices of
product expenditures and estimates that the individual would be willing to pay
(Tietenberg, 2009, pg.
20, para. 1). Subsequently, The prior evidence suggests the willingness to pay
reflects the desirability of prime market value. When trying to define the desirable market
value for a commodity, the use of evaluating the demand curve will assist in
determining what consumers are willing to pay per unit for an object or
service. The same concept of assessing a demand curve can be applied to
environmental economics to asses the total benefits .
Comparitivley when developing a demand
curve the accumulative net costs for must be taken into account by tracking and
measuring costs, these costs to maintain production are labeled as opportunity costs. Just as net benefits must
be tracked to determine demand curve, keeping record of all financial losses
are equally important in defining willingness
to pay (Tietenberg,
2009, pg.
21, para. 2). In certain circumstances the present
value is needed to understand the value
of time in connection with monetary gain (Tietenberg, 2009, pg.
24, para. 2). Usually when an immediate need of resolutions. To accomplish factoring
the individual will need to obtain data that can be used for comparison of net benefits that have occurred at two
different periods of time.
In sum the systems of positive and
normative analysis serve two distict purposes yet can be used with one another
to provide a dynamic economic basis. Furthermore demand curves in normative
economics can provide a deeper understanding to opportunity costs, and present value. Economics must be analyzed
in every type of market, and this doesn’t
exclude the evironments raw assets and with out placing a monetary value
on an entity you have to ability to devalue the object or service in question.
References
Tietenberg, T. H. (2009).Environmental economics and policy (6th ed.). New York, NY: Prentice Hall.Retrieved from https://www.vitalsource.com/
Ogden, Hernandez & Bovarnick (2014). Galvanizingclean energy investment in the United States (Links to an external site.). Center for American Progress. Retrieved from http://americanprogress.org/issues/green/report/2014/04/03/87092/galvanizing-clean-energy-investment-in-the-united-states/
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