Environmental economists analyze economic decisions and their impact on the environment, using cost-benefit models to advise governments and businesses. They assign economic value to land and resources, and work with other professionals to develop new models and theories to accurately measure environmental costs.
An environmental economist studies the environmental importance of economic decisions using theories of economic analysis. From design to policy, these economists will analyze current or potential use of resources and advise the public, governments and business leaders on the resulting environmental effects. Environmental economists are also involved in reformulating analytical economic models, as well as developing new ones to deal with complex issues related to environmental economics. This process also includes discovering ways to assign economic value to the environment and discerning how that value correlates to the larger economy.
Working for the government or a commercial organization, environmental economists can work to assign economic value to land so that leaders can evaluate a commercial proposal. Part of this assessment will include determining the environmental impact of the development in economic terms. An environmental economist may also work directly with government leaders in designing or evaluating public policies where trade and the environment intersect during economic decision-making.
Regardless of the specific job, an environmental economist generally accomplishes these tasks using traditional cost-benefit analytical models. These economists employ these models to determine policy and design decisions. These models involve weighing all the potential benefits and associated costs. With traditional economics, it’s fairly straightforward to assess difficult costs, such as the potential effect on tax revenues or the profitability of a proposed project. Environmental impact assessment, however, involves many other complex nuances.
Often, environmental economists can find themselves entering uncharted territory. An environmental economist may need to assign value in new ways not yet effectively modeled in the economic theory of the day. At that point, the economist will have to develop new theory and new models to effectively assess the situation and assign value. The situation may also call for a reassessment of current theory and adjustments to the tools of economic evaluation.
Assigning value to the environment presents many challenges. The main challenge is that assigning monetary value to the environment is an illusory process. To illustrate, an economist concerned about the associated environmental costs might need to figure out the cost of clearing land for a development project. Among those dilemmas is assigning costs to things like the impact of soil erosion, habitat destruction, potential pollution, quality of life for nearby residents, and perhaps even contributions to climate change. Above all, an environmental economist must accurately measure these costs to properly convey the benefits and obstacles of this development.
So these economists are multifaceted. They consult with many other professionals, such as environmental scientists, to accurately identify and quantify the economic impact. The job doesn’t end with data collection and analysis; the required data may not even exist. Instead, environmental economists must develop new models and theories in conjunction with other professionals. Thereafter, they must disseminate this information to a wide range of people – sometimes even the public, when the environmental effects of a proposed economic situation are dire – regardless of the profit potential for invested parties.
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