The missing link between Economic theory and environmental policy Environmental policy is a course of action taken to manage the adverse effects of human activities on the environment. Such actions may be designed to prevent, reduce or mitigate harmful effects on the human ecosystem. This is intended to promote sustainable practices on the environment which in turn promote economic development. Economic theory involves the production, distribution and consumption of goods and services produced in a country. With the increasing of global environmental problems, there is need for urgent correlation between the economic policies and the environment. This is because the environment controls the natural resources that are used in the manufacture of goods that are so crucial in the life of human beings. Poorly researched economic and environmental policies have resulted in changes in the environment that have led to human suffering and deaths. Traditional economic approaches fall short in the offering of complex perspectives in the relevant environmental issues, problem causes and solutions. Sustainable growth concept therefore emphasize on the fundamental role of the market at large in handling the environmental problems.
Smith (1997) states that many factors have necessitated governments to re-think critically on the issue of improvement of economic and environmental policies. Management of natural resources is one key area where environmental policy makers have to reckon with. The increase in human activity has had serous effects on the environment. For instance, mushrooming of industries in the major cities of the world has resulted in increased carbon dioxide concentration and other gases in the atmosphere. This has had a direct impact on the human health who is the major work force in driving the economy of countries involved. Likewise, there is increase of global warming hence resulting in flooding or increased desertification in the world today. Substandard environmental policies will result in over exploitation of natural resources in the environment There is need for sustainable management systems that could initiate positive changes in the environment which in turn will enhance sustainable use of the natural resources for the production of goods and services as well enabling human beings to live healthy and a happy life (Faure, 2005). Technological evolution is both advantageous and disadvantageous (Roberts, 2010). Human beings’ ability to utilize the resources available and the efforts to make life comfortable has resulted in man made disasters on the environment. Water and air pollution are most likely negative impacts of the technological advancement in the world today. Industries all over the world have been criticized for polluting the environment. For instance, the recent accidental spilling of oil into the sea along the Mexican border is one good example of the human technology and its impact on the ecosystem. Air pollution especially from industries in Beijing and other major cities of the world have sent clear signals that there is need for clear harmonization of policies to safeguard our environment. This means that there should be policies to focus on the problems arising from the human impact on the environment. Failure to take any action will result in negative impacts on the human values such as the good health or deprive human beings the right of having clean and green environment altogether (Baumol, 1988). Environmental policy instruments are classified into command and control, market based or economic incentives (Bailey, 2003). The emphasis is usually on the instruments that set given incentives to reduce the emission and pollution of the environment. These incentives include reduction in taxes, giving subsidies, tradable permit shemes and other liability rules. In some countries, companies dealing with environmental preservation are given tax relief on...