Environmental economics (EE) is the study of interactions between human economic activity and the natural environment. EE is the subset of economics that is concerned with the efficient allocation of environmental resources. The environment provides both a direct value as well as raw material intended for economic activity, thus making the environment and the economy interdependent. takes into consideration issues such as the conservation and valuation of natural resources, pollution control, waste management and recycling. Since resources – whether human, natural, or monetary –are finite, these public policies are most effective only when they achieve the maximum possible benefit in the most efficient way.
The key objective of EE is to identify those particular tools or policy alternatives that will move the market towards the most efficient allocation of natural resources.