ABSTRACT
When the average person is asked to define economics, he or she might reply that it has something to do with money and profits. Well, not exactly. Economics applies anywhere constraints are faced such that choices must be made. Economists study how incentives affect people’s behavior. Economics is also the study of the allocation of scarce resources. Economic theories can be applied to any scarce resource, not just traditional commodities. Economics is an important tool for making decisions about the use, conservation, and protection of natural resources. Environmental economics should not be confused with resource economics. The combination of environmental and natural resource economics is the application of the principles of economics to the study of how environmental and natural resources are developed and managed. The distinction between the two is that natural resource economics (where natural resources serve as inputs to the economics system) deals with resources provided by nature that can be divided into increasingly smaller units and allocated at the margin. Environmental economics, a subset of economics, deals with the efficient allocation of environmental resources (affected by the system, such as by pollution) that are provided by nature and are indivisible. Environmental economics takes into consideration such issues as the conservation and valuation of natural resources, population control, waste management and recycling, and the efficient creation of emissions standards.
