Environmental economics will help you understand some important and controversial issues — such as climate change policy, nuclear power, recycling policy, and traffic congestion charging. This is an exciting field of economics to study, and very much at the heart of many public debates and controversies.
In very broad terms, environmental economics looks at how economic activity and policy affect the environment in which we live. Some production generates pollution — for example, power station emissions cause acid rain and also contribute to global warming. Household consumption decisions too affect the environment — for example, more consumption can mean more waste sent to polluting incinerators or garbage dumps.
Courses in environmental economics will vary in the emphasis they give to these issues — and some may also discuss issues of natural resource scarcity as well. Most will include some microeconomic theory, looking at how firms and individuals behave when production or consumption involves externalities. Some courses may also look at the methods used to measure environmental benefits. But analysis of policy issues will be an important part of nearly all courses in environmental economics.
Professor Stephen Smith, University College London