Agricultural and Natural Resource Economics; Environmental and Ecological Economics
Agricultural, natural-resource, and environmental economics study the use and management of land, food systems, natural resources, and the environment, and the policies that govern them.
Scope
This field (JEL category Q) covers agricultural production and policy, natural-resource use, environmental externalities and their regulation, common-pool resources, and the economics of climate change and sustainability.
Sub-topics
Core questions
- How are agricultural and resource markets organized?
- How should environmental externalities be regulated?
- How can common-pool resources be managed sustainably?
- How should agriculture be modernized in developing countries?
- How should policy address climate change?
Key concepts
- Common-pool resources
- Externalities
- Tragedy of the commons
- Prices vs quantities (tax vs permits)
- Sustainability
- Resource depletion
- Agricultural productivity
- Climate policy
Key theories
- The tragedy of the commons
- Hardin dramatized how individually rational use of an unmanaged shared resource leads to its collective ruin.
- Governing common-pool resources
- Ostrom showed empirically that communities can devise institutions to manage commons sustainably without privatization or state control.
- Prices versus quantities
- Weitzman analysed when taxes (prices) outperform tradable permits (quantities) for pollution control under uncertainty.
- Transforming traditional agriculture
- Schultz argued traditional farmers are 'poor but efficient', and that growth requires investment in new inputs and human capital.
History
Agricultural economics matured mid-century (Schultz), while environmental and resource economics grew from welfare economics and the work of Pigou and Hotelling. Hardin's commons (1968), Weitzman's instrument-choice analysis (1974), and Ostrom's institutional analysis (1990) are foundational; climate change now dominates the environmental side of the field.
Debates
- Markets, states, or communities for the commons?
- Hardin's privatization/regulation framing is challenged by Ostrom's evidence for community self-governance.
- Taxes versus cap-and-trade
- The choice between price and quantity instruments for pollution control remains contested, especially for climate policy.
Key figures
- Garrett Hardin
- Theodore Schultz
- Martin Weitzman
- Elinor Ostrom
Related topics
Seminal works
- hardin-1968
- schultz-1964
- weitzman-1974
- ostrom-1990
Frequently asked questions
- What is the tragedy of the commons?
- The tendency for a shared, unmanaged resource to be overused and depleted because individual users bear only part of the cost of their use.
- Carbon tax or cap-and-trade?
- Both put a price on emissions; a tax fixes the price and lets quantity vary, while cap-and-trade fixes the quantity and lets the price vary — Weitzman's analysis shows which is better depends on uncertainty.