What do economists have to say about the environment?

It’s really hard for economists to agree on how to deal with the environment because they’re undecided as to what our relationship to it actually is. Some say we can treat it like any other resource, by pricing it in the free market. Others say that the market isn’t great at recognizing long-term value, and we need better techniques. But some think putting a price on nature is impossible. They see the economy as a small part of the wider ecosystem, not the other way round.

Environmental economists use terms like ‘natural capital’, or the world’s stock of natural assets; externalities, or uncompensated effects of consumption and production that happen outside the market mechanism; and ‘ecological debts’, or ‘ecological services’ to describe what the relationship between the environment and the economy. Although they think using economics terms for the environment does make sense, they have trouble putting a price on resources, for several reasons. A resource like water may be cheap to us nowadays because it is abundant, but if we keep using large amounts of it, it will become expensive for future generations. Similarly, a forest may seem worthless in monetary terms now, while the land underneath could seem more valuable; but there’s no way to know whether if we kept it, we’d find incredibly useful medical substances within later down the line that we didn’t know about.

Ecological economists say that environmental economists aren’t going far enough. They say that the environment is much more than just a resource; human life and all other resources in the world depend on it. They see terms like natural capital as misleading because they suggest that ecology could be understand in economics terms, when really, it doesn’t make sense to value the environment using money. Money can only redistribute ownership and responsibility over the environment among people; it means nothing to the other species who rely on the environment as much as we do, let alone future generations who don’t have a say in how much money we would value the environment at today.