Describe the relevance of normative economic approaches in analyzing contemporary issues in environmental economics.
Normative Approach
A normative approach to economics looks at “what ought to be done” during decision-making relating to economics. Rather than just objectively studying an economic situation and coming up with solutions, normative economics comes up with a solution that caters to a certain perspective. It has a moral or ethical component to it, rather than merely a factual orientation, which introduces a subjective orientation to a study.
When analyzing contemporary issues in environmental economics Normative economic approach is applied.
Serious complexities must be taken into consideration when determining the most suitable alternatives to waste management. It is not the case that recycling is always the better option. It is necessary to combine Cost Benefit Analysis and Risk Assessment to determine whether disposing of garbage through landfills is a more viable option than recycling or burning. Market considerations, for example, make recycling aluminum cans highly profitable, whereas, the same market considerations make both paper and glass recycling unprofitable and very expensive. When it comes to the recycling of paper, consideration has to be made of the economic and environmental costs of recycling. Since it takes 5,000 more gallons of water to produce a ton of new paper from recycled paper than directly from wood pulp, issues concerning the depletion of water resources become paramount. Also, since manufacturing new paper from recycled paper produces a toxic sludge containing (among other things) the inks that are removed from the paper in the processing, recycling creates its own form of environmental pollution