How The Environment and Economy Go Hand in Hand


Many people tend to overlook how much our global environment and economy correlate. However, it is very important to understand just how much our environment and economy go hand in hand. In today’s blog, we will be diving into how this correlation effects the United States, other countries, and the world as a whole.

Developing Countries

Environmental restrictions can have major negative impacts, especially on developing countries. Therefore, the best opportunity developing countries have to balance environmental impact and economic growth is capitalism. In a truly free market economy, the producers of anything recognize the scarcity of the resources, no matter what those resources are. Producers want to use a minimal number of resources in order to produce their products or services.  As a result, innovation thrives and investment in technologies that cause a minimal impact on the environment are possible. The more restrictive the economy due to governmental restrictions, the more waste, graft, and corruption occur in the economy which leads to wastes of resources and less investment in technologies that would limit environmental impact. 

Some may argue that environmentally related restrictions may help slow the warming of our planet’s temperature. Although many sources agree that our planet is in fact becoming warmer, it is heavily debated if or how much influence humans actually have over this. Historically, we have seen natural fluctuations in our planet’s temperature. As a result of this debate, it is very important to think of how much or little of a benefit any type of environmental related restriction would actually have on our global environment.

Things such as clean energy are currently extremely expensive to produce compared to energy created using fossil fuels. The more intervention of government into things such as energy production, the less efficient its production will be, the more costly it will be, and the less the citizens will be served. The producers are not able to respond to the market demands but must focus on the governmental demands which rarely align with the consumers’ true needs. So, if less fortunate countries were forced to produce clean energy it would be very directly expensive for them which would likely result in a lower standard of living and could even result in a lower average life span for the countries citizens.

Economic Recessions

Recessions tend to not only be bad for the economy, but also for the environment. Generally speaking, countries tend to focus on their economy before they focus on their environment which is understandable considering if a country’s economy faulters even for a couple of months it can have very fast negative effects on human life and in many cases and ways it can also lead to death. Therefore, economic issues can lead to the understandable temporary ignorance of the environment in order to do what is best for a specific country at a specific time. Where government is deeply involved in an economy, it reduces investment in capital investments and technology innovation resulting in slowdown of advancement of economical use of resources. This causes more waste and has a cascading effect on the environment. 

Good Environment = Good Economy

Arguments can be made for government staying out of its citizens lives or that it is positive for both the economy and the environment.  For example, if one looks at China, which is the most polluting country in the world, one can see they have advanced economically.  It is also one of the most repressive governments. Now consider the U.S., we have a large world economy, yet we rank much lower on the contribution of pollution. One could argue that it is because of government insistence of environmental compliance. It could also be argued that we would have a much larger economy, even less pollution, if there were more opportunities for companies to be free to be more economical with resources. They would have additional resources to invest in technologies and innovations that would further limit their environmental impact. 


From all of the topics we have covered, it is very clear just how much our economy and environment correlate in many different ways. It is very important to understand this correlation in order to empathize with developing countries and to understand the importance of a strong global economy and how it helps to better our environment.

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