Economics is the study of the allocation of scarce resources, including how markets function and how incentives affect people’s, businesses’ and institutions’ behavior. Within this discipline, environmental and natural resource economics is the application of the principles of economics to the study of how environmental and natural resources are developed and managed.
EPA uses economic analyses to improve the effectiveness of its environmental policies. A variety of economic tools allow the costs and benefits of different policy options to be compared. EPA also pursues new research to develop improved methods for measuring the economic consequences of environmental outcomes.