In this article, I will explain to you the relationship between economy and environment, which is a concept that needs to be emphasized . Growth impact on the environment , the right-pollutingconcepts such as will be explained in detail. In order to get more efficiency from this article, we   recommend you to read our article about Production Factors .


Let us assume that an economy can grow continuously. This growth will have some costs to the environment. As the population increases, the pressure on own resources will increase and it will be requested that these resources be sufficient for the economy. It would not be right to think that economic growth will directly destroy the environment and consume resources. The necessity of having sufficient resources for the economy causes changes in the perception of people and will create different orientations in the impulses of markets and individuals.What are the different orientations we have mentioned? As we know from the supply and demand law, the increase in demand increases prices. Likewise, increasing the demand for own funds will increase the costs incurred in using the own funds. Therefore, if this equity is renewable, entrepreneurs get the urge to increase the production of this resource, but if this resource is a non-renewable resource, the desire to use the resource decreases with increasing prices.


Let’s consider timber to understand renewable resources. If the demand for timber increases throughout the country, as mentioned before, there will be an increase in timber prices. To meet this demand, timber producers are forced to increase the production of wood. As a result, the demand for forests and the amount of land allocated for forests increases. In other words, it would be wrong to think that the demand for timber will destroy the environment and end the forests. Supply is increased to meet increasing demand. In order to increase the supply, the amount of forest is increased.   


Let us consider coal to understand the non-renewable resources. Coal demand increases with increasing demand for coal. The enterprises that use coal in production save money in the use of coal in order to reduce the increasing production costs and try to use the coal in the most efficient way. The enterprises that cannot use coal efficiently are in a difficult situation due to their production costs and eventually have to stop production. Economically, efficiency is achieved by wasteful use of own resources. This also benefits the environment.


Environmental pollution is one of the undesirable consequences of the economy. It is not aimed to reduce the pollution in production to zero and it is not seen in the possibility. The ideal amount of contamination is achieved when production reaches to equal social marginal benefit and social marginal cost.In order to maintain the optimum level of pollution, the state has serious duties. Contaminants may be subject to extra taxes or sell pollution permits in proportion to pollution. Thus, the cost of pollution is imposed on the producers. Another method is to make compensation payments between those who are exposed to pollution and those pollutants. With these measures, pollution can be kept at the desired levels.


Extra taxes on pollution imposed on producers increase production costs. With this increase, the demand for production decreases and market prices increase. This reduces production and pollution. However, as these companies will not distinguish these taxes, producers that create much less pollution are also adversely affected by these taxes. Taxation imposes on the manufacturer the cost of contamination, but it cannot have the effect that each producer reduces the pollution that it creates. If demand increases despite the increasing prices, production will increase and pollution problem will occur again.


Pollution permits cause producers to produce at certain quotas. In order to reduce pollution, the government can increase or decrease the number of pollution permits issued. Thus, production limits and pollution can be kept at desired levels. Let us explain this situation with a simple example. The government, which wants to reduce the formation of a gas that is damaging to nature, issues pollution permits. Each permit allows the formation of a certain amount of gas. The number of contamination permits is determined according to the optimum pollution formation determined by the state. Since the number of pollutant permits is low, each pollutant permit permits the production of a certain amount of gas, thus reducing the amount of pollutant.


According to this theorem, the amount of compensation paid jointly between those exposed to pollution and the pollutants is paid. Thus, those who are exposed to the undesirable costs of production have to pay direct compensation. This is a theory that is effectively used by many countries and by many institutions and enables those who are exposed to pollution to claim their rights and receive compensation.

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