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April 21, 2010


Environment and economics is very closely related. When the environment is deteriorated, economics will also be effected. Dr. Michelle Villinski, Associate Professor in Economics and Management at DePauw University, Indiana-USA explained the relations between those two aspects during the Seminar on Environmental Economics: Tools and Applications, which was held on March 19th, 2009 in Library Building 5th floor University of Surabaya. In front of more than 200 attendants from industries, government and students, the Fullbright Senior Specialist for University of Surabaya stated many tiems that industrial activities have big impacts for environment existence. Ironically, to majority of business people, the environmental issues are still not a priority, even though sustainable supply of natural resources relate very closely to the environment’s quality. Moreover, industrial activities also contribute unwanted “side products” (waste) which in the end will be disposed of to the environment again.

Common assumption that environmental conservation is a useless effort and only result in higher burden/cost is wrong. Dr. Villinski shared some techniques that can be applied by business sector to harmonize environment and economics. These techniques area sustainability, production externalities, benefit cost analysis, future & present value. Taking some examples from companies that already have commitment toward the environment, responses from business sector can be expressed by implementing some programs such as: Corporate Social Responsibility (CSR) and Environmental Management Accounting (EMA).

CSR is a program commonly used by business sector to empower community surrounding their location. This program can be realized through activities aimed at conserving natural resources and/or safeguarding environmental quality. Industries should not only using existing natural resources but should also maintain the availability and quantity of the natural resources. EMA is a program which has a more internal characteristics. This program idetifies the hidden cost which might be present because of false production/management process, for example through raw material processing, inefficient energy consumption, unstandardized production process, etc. which will end up in Non Product Output (products that are unwanted or not supposed to exist). This Non Product Output is then quantified and defined as hidden cost which should be reduced. At the end of the seminar, Dr. Villinski shared some information regarding websites which could be visited for further inquiries about environment and economics.