Economics! What’s the first thing that comes to your mind? In the simplest sense, economics is about supply and demand. Before we dive into the details of environmental economics, let’s get an Eco101 recap. There’s the supply curve and the demand curve. The point where the supply meets the demand is the ideal situation, and the universal goal is to hit this equilibrium. They look like this.
Now in the second graph, do you notice the upward shift in the supply curve? This means that what was initially supplied at $5 is now supplied at $7. And because of this upward shift, there is an increase in the equilibrium price and a decrease in quantity.
Are you wondering what caused this upward shift? It is due to external factors, also known as extremities. These extremities could be anything from the cost of labour, to the cost of pollution. And this is where environmental economics comes in.
Environmental economists claim that while external factors like labour, raw material costs, technology costs and others make their way into the graph, the not-so-direct factors don’t. These include things like environmental pollution, environmental resources, global warming and especially waste. The pacific garbage patch is definitive proof that this is a real concern. We’ve all heard of the awful state our environment is in, and the many rants about global climate change. The environment is giving out resources, but we aren’t just using them; we are using them up. And in the process, we’re generating tons of waste that are compounding on our environmental loan.
Environmental economics considers abstract parameters like pollution, resource depletion, education or health of a country in more quantifiable terms. It aims to solve the mismatch between the shift in the supply curve with these factors and the original supply curve. This decade has a new buzzword making its way into the limelight – sustainability! And this is the core of environmental economics.
One of the most used results of environmental economics is the cap system. Have you heard of industry pollutions limits? Since pollution is an inevitable by-product of industries, the government and policymakers have introduced the cap system. Here industries are allowed to operate as long as their pollutant level is within the cap, and severe legal actions are taken when they exceed the cap. Another modification to this policy is the cap and trade system. Say two factories produce the same product, one of them has a top-class waste management system and its pollution contribution is within 10% of the cap. The other factory, however, is over exceeding its cap due to outdated equipment and cannot upgrade anytime soon. Factory 2 has an option to pay factory 1, to claim some of that cap space. Hence, the cap and trade system. Interesting, right?
Curious about what else environmental economists do? Lots of research! Say your project is the construction of a dam. You will need to study historical data and perform cost-benefit analyses. You will run environmental modelling programs and tests on the health effects of the project. You will also need to figure out technicalities like durability of the construction, duration, costs of limited resources and ways to reduce pollution. It also has a glamourous side to it, as environmental consultants, you will regularly engage with high profile policymakers, industrialists and professionals on your projects as key decision-makers. All these are just a handful of things an environmental economist does. Most environmental economist jobs are in Social impact consulting, Environmental consulting and federal industries. Did you know? The average environmental economist’s salary is $116,020 per year and can go up to $185,000/year.
So, how do you become an environmental economist? Although you can join laterally from a consulting career. The ideal way is through formal education. You will need to get a bachelors degree with a strong scientific or mathematical background, there are colleges that offer environmental economics degrees at the undergrad level too. Some industries recruit bachelor’s students. But it is advisable to apply for a specific environmental economics masters degree. Since this field focuses a lot on research, a PhD in environmental economics is a great option as well.
Now that we’ve covered the what, why and how of environmental economics. Let’s talk about the where! There are many reputed universities that offer environmental economics programs. We are limiting our scope to master’s degrees. Here are 5 of the top universities to pursue this specialization.
- MSc Environmental Economics and Climate Change at The London School of Economics and Political Science, UK
The program offers a deep understanding of the sciences, economics and policies that are associated with climate change. With world-class quantitative methods and highly experienced faculty, this program is one of a kind.
Duration: 1 year/FT and 2 years/PT
- MSc Economics and Policy of Energy and the Environment
University College London, UK
UCL is one of the top schools in the world and has gained international recognition for its curriculum. This MSc is a unique program that focuses on the present environmental problems, especially in the energy and climate fields.
Duration: 1 year/FT and 2-5 years/PT
- MSc Environmental Economics and Environmental Managements
University of York, UK
This program combines three different sciences – economical, ecological and social systems to develop the skills needed by today’s policymakers, environmental scientists and consultants to tackle global environmental issues.
Duration: 1 year/FT
- Environmental Economics & Policy
Duke University, USA
This program allows students to learn to make effective choices to address today’s national and global environmental problems. Students learn the relevant parts of economics, politics and law for an all-round environmental economics study.
Duration: 1 year/FT
- Environmental Economics and Management
Michigan State University, USA
This program offers integrated learning of natural resource management and economics with a focus on core business principles. Students also undergo an additional capstone course in the field of corporate environmental management.
Duration: 1 year/FT
If you are looking to build a career in Environmental Economics, connect with our counselors to get more information about profile pre-requisites, how to apply, scholarships, financial aid options and more.