Civil Engineering Reference
In-Depth Information
11
Environmental Economics
Economists like to proceed from a model framework to simplify reality and create a
reference point for their specific analysis. For many years, however, the models used
by mainstream economists tended to overlook the interactions between the economy
and the environment. The benefits of economic activity were exaggerated and
accounted for, while environmental costs were ignored. We introduced this major
distinction when we discussed a product's life cycle (from the 'cradle' to the 'grave')
in
Chapter 9
. However, we have suggested that the environment cannot be ignored
since it provides resources at the beginning of a product's life cycle, and absorbs
waste at the end of the cycle. This important strand of economic thinking began
to gain credence in the 1960s, drawing an important dividing line between
environmental and neoclassical economics (see
Key Points 9.3)
.
The significance of the environment for businesses of all types is succinctly
represented by the flow diagram in
Figure 11.1
. The environment is the resource
base that provides renewable and non-renewable resources that enable production
to begin. At the other end of a product's life, the environment is also expected to
provide a sink facility to assimilate the waste matter. (The environment can also
provide opportunities, as an amenity, for various leisure pursuits.) The process is
easy to exemplify within the construction sector, as the industry consumes resources
and generates waste on a scale that completely dwarfs other sectors of the economy.
Figure 11.1
The environment: beginning and end
Resources
Production
Consumption
Waste
