Since there is study of Environmental Economics which is an area of economics that studies the financial impact of environmental policies and this year World Environment Day theme is Biodiversity.
I thought of doing a blog on the relations between Finance and the Environment since I am currently studying them and have equal interest in them. And since Environmental Economists perform studies to determine the theoretical or empirical effects of environmental policies have on the economy. This blog will write bout the impact of environment with finance and its similarity terms used in Finance.
On the most obvious level on the relations of Environment and Finance is that Biodiversity helps the economies of many communities and countries worldwide through tourism. The beauty, array of fauna and flora and uniqueness all make some areas tourism hot spots example the Gardens By the Bay at Marina Bay and the Rain Vortex at Jewel Changi Airport.
In many ways, Environment is alike to Finance. Take for example the graph of showing a nature-cycle.
Vegatation is the source of food for small animals like Rabbit and Gazelle which in turns became food for Wild Cat and Jackal and in turns became food for the Lion. This illustrate a food chain cycle out in the wild.
And like in the wild, a similar structure exists in the economy. At the base of the cycle, we draw on ecological resources such as oil, timber, water and metal. There are then various stages of manufacturing which add value.
If you view it in a big picture the bottom of the cycle is closely in relation with those on the top of the cycle. For example, manufacturing produces jobs , jobs produces consumers, consumers produces demands and demands again require more manufacturing of goods and the cycle go on. Companies are enlist on the markets because the public have confidence on that particular company to have a growth in their future value.
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