Economics of Environment and Natural Resources


Many individuals are concerned about their own welfare at the expense of the environment. In other words, people do not care about either the future generation, or other species that live on our planet. There is a deep perception that environmental protection measures depend on the level of economic welfare. In the current perspective, political authorities are neglecting environmental concerns because of the economic recession. However, studies have indicated that the public puts a high value on environmental protection. Nonetheless, political figures seem to be directing their energy on “economic matters”, disregarding the impact on the environment. Such moves have a disastrous effect on the ecosystems and once the natural resources are depleted, the economy may not fulfill their expectations, as the economy’s sustainability and growth depend on these resources .


The correlation between the environment and economic growth could be evaluated from two perspectives. The first one considers factors such as government policies, political climate and environmental culture influence economic development. The second perspective concernthe ways in which activities related to the economic development influence the environment. For instance, how the environmental factors that exist in a particular region affect its rate of economic development.

The fact that environmental concerns are neglected during hard economic times is a reflection of the beliefs held by some political leaders that measures of environmental protection are rather a waste of resources than an investment. Despite that, public policy should be mandated in finding a balance between economic development and environmental protection. During the recession, a tendency to promote economic development and ignoring the environment can be seen. However, the impact of environmental degradation on the economy is being gradually recognized. This paper is focused on evaluating specific environmental changes and their effect on the economy.

Air Pollution

Air pollution is one of the greatest problems our world is facing today. The industrial development in nowadays can be identified as a major contributor to this phenomenon. The problem of air pollution does not only affect human beings, but also causes damage to the entire ecological system. In essence, the impact of air pollution on the world has reached a critical level when the damage to the atmosphere appears to be extreme. Harmful substances and chemicals present in the Earth’s atmosphere also cause damage to the ozone layer, that protects the surface from the harmful sun radiation, as it absorbs ultraviolet rays and prevents them from reaching the Earth. Further, the naturally occurring ozone layer helps in removing pollutants from the Earth's surface. However, high concentrations of ozone can damage an individual’s respiratory system, leading to such health problems as throat irritation, coughing, chest and lung diseases.

There are many causes of air pollution ranging from natural to human-induced. However, human impact is the major one. The natural causes include wildfires, wind erosion, evaporation of organic compounds, volcanic eruptions, and pollen dispersal among others. The human causes include agricultural activities, industrial waste and combustion of fossil fuels.

The Impact of air pollution on the economy

The impact of air pollution on the environment is powerful, as it leads to changes in climate, which may disrupt transportation, trade, fisheries, agriculture and energy generation. Depletion of the ozone layer is the most serious environmental concern in my perspective, because it may result in the increased amount of radiation reaching the Earth, which subsequently leads to more devastating health issues such as cataracts, cancer, and impaired immune system. Excess exposure to ultraviolet rays also contributes to the increased rates of melanoma, which is a lethal kind of skin cancer. Consequently, health risks related to climate may lead to a decrease in working productivity that may have a direct negative impact on the country’s economy.

Furthermore, ultraviolet rays may damage sensitive crops, such as soya beans, and reduce the crop yields. It has been argued that many of the marine plants such as Phytoplankton, which are considered the base of the ocean food chain, have been adversely affected by the UV radiation. This has affected human food supplies from the ocean sources and damaged the fishing trade industry.


Deforestation is found to have a negative impact on the economy of a nation. Deforestation means that valuable resources in terms of wood, timber and wild animals are being destroyed. When the forests are destroyed, they are consequently replaced with scrubs and grassland, which are less important in regard to the economy. Some people may argue that logging supports the economy since it generates revenue from the sale of timber or wood and the resource base, particularly in secondary forest and plantations. However, it should be noted that logging in the rainforests is not practically sustainable, but it diminishes the long-term revenue of tropical countries. Extreme exploitation of forestry has reduced the income from wooding industry in many countries that were formerly exporting wood, including West Africa and Southeast Asia. According to the World Bank estimations, there are governments that lost up to $5 billion as an outcome of illegal logging. In recent perspective, timber-producing nations have incurred more than $10 billion losses in their national economies.

According to Nielsen any form of damage to the environment has an adverse impact on the life of the population. This is worse for the poor nations and it has been estimated that by 2050, the global GDP would be reduced by 7% because of deforestation. Historically, forests have been used as sources of timber and fuel, which is essential for human life, throughout the whole time of the existence of the human race. This role cannot even be compared with that played by water or cultivated land. In the current perspective, both developing and developed nations are using forest products such as timber in the construction of furniture, paper and as fuel. Specifically, wood fuel is essential to millions of people for heating their homes and cooking.

Forestry plays a significant role in a nation’s economy, both in the developed and developing nations. The conversion of forestland into agricultural lands has only short-term economic gains. In typical sense, overexploitation of forests and wood products leads not only to the income loss, but also to the loss of biological productivity of the territories. More importantly, forests are one of the conditions of the constant rainfall rate and when they are cleared, it means that agricultural activities cannot be sustained.


Considering the economic impact caused by environmental degradation, it is high time we had to grapple with these consequences and started acting to safeguard the environment. Doing nothing is the most expensive thing people can do. Although, we should look for ways of reducing and coping with the impact of climate changes, an account of such measures shows that managing endeavors will be more efficient when combined with prevention.

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