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18 July 2016

Evaluation of the Environmental Impact on the Economy

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One of the most popular current topics is environmental impact, which has a close relationship with the macro and micro economy, although this is not a strictly proportional relationship. The lack of care toward the ecosystem in which an economy develops has serious consequences, from the disappearance of species to the indiscriminate consumption of natural resources.

Some definitions

It’s necessary to know the definitions of the commonly used terminology, such as environmental impact, which can be understood as the result of any activity that alters the environment in which it is contained and which can be caused by human beings. Therefore, all human activity has an environmental impact, however minimum it may be, and which can change the whole environmental system, putting the ecological balance and survival of the species that inhabit it at risk. When these conditions are met, there are significant impacts. But what exactly is an environmental system? It can be defined as a geographical area whose extension is delimited by natural borders (a river, contour lines, a mountain range, canyons, etc.) or artificial that have already caused a segmentation (a highway, a dam, a gap, etc.).

Taking the above concepts into account, the evaluation of environmental impact plays a hugely important role in the economy, as there must be harmony between the environment and the development of the economic activity (sustainability). If not, sooner or later the natural resources will run out, either due to industry consumption or due to contamination and/or the extermination of different species. For example, the impact generated by a chemical industry dumping its waste into a river has a significant implication, as it would be altering environmental factors that would have serious consequences for the environment.

According to impact identification technicians, the environmental factors affected in this case would firstly be water, flora and fauna (which would trigger a series of effects on the environment and would change its initial conditions). Although there has already been an impact from building the factory, there is also an imbalance which would once again be affected by the appearance of altered environmental factors.

The role of evaluating the environmental impact is precisely to prevent these types of impacts and to propose mitigation, prevention and/or offsetting measures for each of the impacts identified as significant. It is practically defined as follows:

  • Mitigation measures: these are applicable to impacts that can’t be avoided and their role is to reduce the damage to the affected environmental factor as much as possible.
  • Prevention measures: they prevent impacts that don’t necessarily have to happen (for example, a dam overflowing, a gas plant exploding, etc.).
  • Offsetting measures: every project has environmental impacts that can’t be avoided. That’s why the damage has to be offset in a certain area. The magnitude of these measures is often governed by laws.

Nevertheless, the application of any measure is subject to a technical-economic study which determines whether it is possible (within the scopes of the project) to finance the application of these measures, or whether there is sufficient technology. If not, a location would have to be found for the project that does imply causing significant impacts to the environmental system.


A suitable forecast of the environmental impacts makes it possible to minimize the damaging effects for the environment. However, the legal, technical and economic limitations need to be known when establishing a project to reduce the preliminary costs. These are costs that have to be amortized within the utilities generated during the project’s life, although one of the challenges is also to achieve an economic-technical-environmental balance which, in theory, is facilitated with technological innovations, although often this isn’t possible in the short-term. So the question would be: Do we have enough time to achieve this balance?

Nestor Javier Flores Ramírez

Independent Environmental Consultant



Domingo Gómez Orea. (2002). Evaluación de Impacto Ambiental [Environmental Impact Evaluation]. Spain: Mundi-prensa.

Ley General de Equilibrio Ecológico y la Protección al Ambiente [General Law of Ecological Balance and Environmental Protection] DOF 09-01-2015


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