Environmental Economics Essay Example | Topics and Well Written Essays - 1000 words - 1

Environmental Economics - Essay Example To a great extent, this has impacted on the quality of life of the population. The market economy has various implications on the general wellbeing of the environment. Relative effects are both negative and positive. Although negative effects are apparent in the short run, positive effects are more pronounced. It is against this background that this paper reviews the impacts of the market economy on environmental protection. To enhance a harmonic view, it begins by reviewing the negative effects and then proceeds to evaluating the positive effects. The market decisions place emphasis on increased production. According to Morgen, Pizer and Shih (1998), increased economic production implies an increase in production of wastes. This contributes to environmental pollution and resource depletion. Although incomes are likely to rise, environmental protection remains at risk. Under-valuation of natural resources has made it difficult for the environmental damages to be addressed effectively . The profits that firms and producers enjoy are not reflective of the environmental damages that production processes impose on the environment. In this consideration, market decisions compromise the wellbeing of the environment. In his research, Kolstad (2010) indicates that the market economy has had significant negative effects on the holistic wellbeing of the environment. ... Ideally, the environmental and naturally resources are considered public property (Harrington, Morgenstern & Nelson, 1999). For this reason, nobody takes responsibility for the negative effects that they suffer. It is contented that waste of important natural resources and resultant environmental destruction dis-economises the society. From an economic point of view, this undesirable status has the ability to reduce the marginal cost of economic firms and instead increase the consumer’s marginal utility. Thus market economy does not have the ability to address the various concerns that are related to resource sustainability. While the environment places emphasis on the need for resources to benefit future generations, market economy considers the benefits of the environment to present populations only. In this respect, market decisions greatly harm environmental wellbeing and undermine its protection. Besides the preceding negative effects, market decisions also promote enviro nmental protection in different ways. Notably, the government has a stake in market decision making. Relative environmental departments push for formulation and implementation of environmental regulation. Its provisions require that individuals and firms who engage in environmental pollution and destruction be punished accordingly. Stringent laws can culminate in investment in environment protection by economic firms. In addition, respective firms assume environmentally sound practices in order to prevent the economic losses that are associated with violation of environmental protection laws (Lomborg, 2001). Seemingly, decision making under the market economy is done by the government in collaboration with