By Invitation

What does economics have to do with the environment?

Weighing up decisions such as cutting a forest for the MRT versus the effect on society, using monetary values, does add up

ST ILLUSTRATION: MANNY FRANCISCO

To what extent are environmental problems economic problems? And if so, how can economic instruments be used to tackle these problems? To answer this, one must understand the nature of an economic problem.

An economic problem is one that has the characteristic of scarcity, and because of it, one has to make choices. Such choices involve trade-offs. These, in turn, depend on what the opportunity costs or, conversely, the foregone gains in making, or not making, a choice are.

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A version of this article appeared in the print edition of The Straits Times on March 13, 2018, with the headline 'What does economics have to do with the environment?'. Subscribe