Economics is about the study of choice. Because we can’t do everything and we can’t have it all, often we have to make a choice. But to do that, we have to know the value of things so that we can make a smart decision.
When it comes to the environment, it’s a tough question because clean air and clean water often don’t have an accurate price tag. We also don’t know or fully appreciate the value of a single tree. Aside from the material it provides, that tree also gives us oxygen and shade, helps in cooling, and adds beauty to the place. It can be hard or impossible to put a price on those things.
As a result, it’s hard to decide whether we should cut down that tree or just let it be. It gets even harder to choose between preserving a forest or clearing the land to give way to a new residential or commercial site (which can generate and sustain jobs). Here it seems growing the economy and protecting the environment will never get along.
To make them get along somehow, first we have to know or estimate the value of things and then point the choices toward more sustainable and environment-friendly practices. One way to accomplish that is through higher taxes, penalties, and prices for tree cutting and pollution-related practices (discouraging these practices). Another way is through subsidies and incentives for developing and adopting less-polluting technologies (encourage environment-friendly technologies and behaviors). It’s also good to adopt a circular economy approach so we can maximize the use of resources or keep them in use. For example, we might instead capture the carbon dioxide before it gets released from industrial facilities and use the carbon to build new materials. In other words, we can use the waste as a resource or a new input to something else.
Those are just a few approaches and examples about the role of economics in sustainability and environment. It’s about influencing our choices and directing the funds and other resources to achieve sustainability. But first, we have to know the value of what the environment provides and how the loss and damage can affect us (an example of benefit-cost analysis).