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Link Between the Economy and the Environment of a Country

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Environment and economy are like two wheels of a bike that need to be driven together for the growth of a nation. Many renowned economists believe that a better environment helps a lot in strengthening the economy of the country. However both Environment and economy are equally important for a nation and also they are interdependent. As the environment is the primary source of major resources needed by industries that contribute to a nation’s economy. While on the other hand, a country with a better climatic region and less environmental pollution is more likely to attract foreign direct investment that can easily boost the economy of a nation.

Many industrialists claim that it is difficult to preserve the environment while developing nations and thus many nations are now moving towards sustainable development. So that a nation keeps on developing without harming the environment. The first and foremost steps that can be taken by a nation to shift towards a green economy is to reduce the usage of fossil fuels and shift towards green fuels thus reducing the emission of harmful gases in the atmosphere. So, taking a step further many nations have started promoting E-vehicles so that it doesn’t affect the economy and also helps in bringing down the pollution level of a nation.

The environment provides lots of free natural resources to the economy like fossil fuels, ores, minerals, light, air, water, etc. While in return the economy of a country invests a lot in conserving the environment by finding substitutes for natural resources. 

Denmark shifted to greener fuels for producing energy and running vehicles and is the greenest economy in the world, becoming one of the favorite countries for foreign investors.

Need of Environment

Need of Economy

The environment fulfills the basic necessity to stay alive i.e. Food, air, and water. The economy of a nation empowers its citizen to learn and grow.      
The environment absorbs all the pollutants released by Industries and vehicles.  The strong economy of a nation leads to infrastructural development.
The environment provides major raw materials for industries.  Economy processes raw material to make finished goods. 
The environment provides industries with all the natural resources. The economy invests in developing technology to optimize the use of natural resources.

Interdependence of Environment and Ecology:

It’s a fact that environment and economy are interdependent, as the economy receives all its inputs from Environment and after processing it dumps it back into the Environment. This whole cycle results in destroying the ability of the environment to generate that input again and provide it to the economy in the future. Not only the economy and environment get affected each other but the humans and animals also get affected as the economy releases harmful gases in the environment affecting human health. While on the other hand, the pollutants dumped in rivers and lakes badly affect marine creatures.

However, this cycle can be broken if the waste from industries is being recycled before dumping it into the environment. Once this cycle gets broken the environment will be ready again to rejuvenate and will provide inputs to the economy with the same efficiency. 

Need for Economic Reforms:

There is a subtle need for economic reforms that should limit the use of natural resources so that they can be saved from getting exploited. If the environment and economy of a nation want to grow hand-in-hand the economic policies of the nation must assure that environment shouldn’t get polluted under the guise of development. 

Almost all the developing nations are making reforms in their economic policies to protect the environment from industrial pollution. The first and foremost step that can be taken in this policy is to shift towards green fuels and make use of renewable sources of energy like solar energy, wind energy, etc. as much as possible. 

Adverse Effects of the Polluted Environment on the Economy:

There are many adverse effects of the polluted environment on the economy and some of them are listed below.

  1. It has been observed that foreign investors always choose a nation with a green and clean environment for investment, thus due to a polluted environment a nation may need to bear heavy losses.
  2. Many medical research reports show that pollution is the primary cause of many diseases and thus forces the economy of the nation to spend a huge sum of money on fighting diseases.
  3. Gradual increase in pollution in the environment depletes the ozone layers and is the major cause of global warming.
  4. Over mining of natural resources like fossil fuels and minerals has brought natural resources to the brink of extinction. Thus creating big trouble for many nations as there will be no fossil fuels remain available for the upcoming generations.
  5. The polluted environment forces an economy of a nation to invest more and more in developing technologies to control pollution.

In the greed of a better economy, many countries have almost ended their natural resources. Instead of it, the country should rather switch to sustainable development so that these resources are saved for the future generation. Without a clean environment, a good economy will have no meaning as there will be no foreign investment in that country and more on the local citizens of that nation will have to face serious health-related problems. Any economy requires a huge sum of money to control pollution but the reason for this pollution is the same economy that didn’t possed strict restrictions on dumping of industrial waste.


Last Updated : 28 Mar, 2022
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