Environmental and natural resource economists study the tradeoffs associated with one of the most important scarce resources we have—nature. Economic activity generally affects the environment, usually negatively. Natural resources are used, and large amounts of waste are produced. These side effects can be seen as ways in which a producer’s actions impact a bystander’s well-being. The market fails to allocate adequate resources to address such external costs because it only concerns buyers and sellers, not the environment’s well-being. Only direct costs are considered relevant. External costs are harmful social or environmental effects caused by the production or consumption of economic goods. A cost-benefit analysis provides an estimate of the most economically efficient level of pollution reduction that is practical. Environmental laws today encompass various subjects, such as air and water quality, hazardous wastes, and biodiversity. These environmental laws aim to prevent, minimize, remedy, and punish actions that threaten or damage the environment and those that live in it. Conventions, or treaties, generally set forth international environmental regulations. These conventions and treaties often result from efforts by international organizations such as the United Nations (UN) or the World Bank. However, it is often difficult, if not impossible, to enforce these regulations because of the sovereign rights of countries. In addition, rules and regulations outlined in such agreements may be no more than non-binding recommendations, and often countries are exempted from regulations due to economic or cultural reasons. Despite these shortcomings, the international community has achieved some success via its environmental agreements. These include an international convention that placed a moratorium on whaling and a treaty that banned the ocean dumping of waste.
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University of California College Prep. (2012). AP environmental science. Available from http://cnx.org/content/col10548/1.2/. Available under Creative Commons Attribution 4.0 International License. (CC BY 4.0). Modified from original.