What is Environmental Economics?

This section will consider a basic model for the 'price' of goods or services. It will then look at the effect of environmental consideration on the model.

To start with, imagine a 'good' or service that consumers would like to use. As demand increases, so does price, assuming that availability stays the same (see figure 1.1).

Figure 1.1: Rising demand of goods/services

Image source: University of Derby (2022)

Now assume that there are price decreases as availability of a 'good' or service increases in the marketplace (see figure 1.2).

Figure 1.2: Rising demand of goods/services

Image source: University of Derby (2022)

Now, assuming that demand stays the same: If the two price pressures are integrated, they will find an equilibrium point when the increased availability beyond demand reduces the cost below what is viable for production or competition (see figure 1.3).

Figure 1.3: Rising demand of goods/services

Image source: University of Derby (2022)