Economists vs. Conservationalists

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Economists Vs Conservationists

Economists understanding and statement of the environmental problem are likely to contrast from those of economists not trained with economic reasoning. One difference is that a layperson is likely to favor a program of direct regulation, in which the scarce resource to be controlled is directly limited by the government. Economists are likely to oppose that solution because it does not achieve the desired objective at the lowest cost possible in total resources regardless as to who pays those costs. As an alternative to direct regulation, economists will probably favor some type of market incentive program.

A market incentive program is a program that stimulates people to reduce their consumption of the scarce resource to be controlled having the price reflecting the negative externality (the result of a decision that is not taken into account by the decision maker). The reason for this difference between the layperson's and economist's view of policy is that regulation does not leave it up to people to adapt their budget to the regulation, taking to account a marginal costs/ marginal benefits analysis.

Equating marginal costs with marginal benefits is fundamental to achieve the highest benefit and lowest cost from a resource, making the policy as fair as possible to each individual separately, adjusting people's needs to environmental needs. A conservationist would basically focus on the environment's need, not taking into account how much damage (cost) could it cause to the society.

A better way of contrasting the difference between economist's and environmentalist's view is through the following example. Say we have two cities in which we want to lower water consumption. Let's call them city A and city B. Assuming that city A consumes 100 gallons of water a day and city B 200 gallons, one way and probably the...