- Environmental economics is a branch of economics that studies the economic impacts of environmental policies and behaviors. It recognizes that the economy and the environment are interconnected and that economic activities can have negative effects on the environment, leading to externalities or "spillover" costs. Environmental economists seek to understand how to internalize these costs and develop policies that address environmental concerns while also promoting economic growth. Some criticisms of environmental economics include the assumption of infinite wants and the belief that technical efficiency can overcome finite resources, leading to an emphasis on growth rather than sustainability. Additionally, environmental economics may prioritize market-based approaches, leading to a focus on efficiency rather than equity and distribution of costs and benefits.