Questions and Answers of Environmental Economics

Assume now that each firm has two abatement possibilities represented by the abatement vector lj=(lj1, lj2). The abatement cost function is additively separable and given by:and and emissions are
Show that a non-linear tax scheme which reflects total damage from ambient pollution also works to decentralize the first-best allocation if a firm has several choices.
Extend the model of this chapter by assuming that the firm’s cost function has the form C(X,E) satisfying assumption 5.1.(a) Derive the second-best optimal combination of an emission standard (no
In contrast to our analysis in Section 5.4.3, Carlton and Loury (1980) suggest that a Pigouvian tax alone will not lead to a long run social optimum for competitive polluting firms. Using their
Consider the model in section 5.3. (a) Derive the firm’s first-order conditions for profits maximization when they are subject to the relative standard given by Eq. (5.45).(b) Derive a rule for
Show that in the model with an exogenous number of firms, the second-order conditions for profit maximum are satisfied. Show that these cost functions satisfy assumptions 5.1 and 5.2.assumption
Show that proposition 5.1 holds for asymmetric firms.Proposition 5.1 Proposition 5.1 Under the assumptions of the model, the introduction (or increase) of an emissions tax leads to: (a) a decrease in
Consider the case when the cost function satisfies Cxe(•)=0.This can arise for different reasons. Consider the following two possibilities:(a) Suppose production and abatement costs (AC) are
To study the impact of market demand on the optimal emissions level, consider a parameterization of the inverse demand curve such that p=P(X,α), where α is a parameter such that Pα(•)>0 and as
Consider instances when a pollution tax is equivalent to an output tax by examining the following:(a) Suppose a firm’s cost function satisfies assumption 5.2. Show that in this case, an emissions
Consider a monopolist facing linear demand P(X)=1−X and constant marginal costs c>0 (and/or increasing marginal cost Cʹ(X) = cX). The social damage function is quadratic of the form D(E) = dE2/2.
Show that the monopoly output determined by Eq. (6.2) is a decreasing function of the tax rate.Equation 6.2 P'(X)X + P(X) = C'(X)+ T8. (6.2)
Show that the monopoly output and emissions determined by (6.12) are decreasing in the tax rate. That is, verify equations (6.17) and (6.18).Equation 6.12Equation 6.17Equation 6.18
Show that an emission tax and an absolute emission standard are equivalent instruments to regulate a polluting monopolist if and only if the standard is binding.
Derive a formula for the second-best relative standard to regulate a polluting monopolist.
Show that in a symmetric Cournot oligopoly under both assumptions 5.1 and 5.2 (see Chapter 5), profits decrease if the emission tax goes up.assumption 5.1assumption 5.2 Assumption 5.1 The cost
Show that in a symmetric oligopoly where the firms’ technologies satisfy assumption 5.1 , the first-best outcome can be achieved by a tax on emissions and a subsidy on output. Determine the optimal
Consider a symmetric oligopoly in which firms’ technologies satisfy assumption 5.1. Assume that firms get part of the tax revenues refunded, according to their market shares. The refund share is 0A
Carefully review the following economic concepts and make sure you have a clear understanding of them:Neoclassical economics, absolute scarcity, relative scarcity, natural capital, human-made
Identify the following:(a) The three distinctive contributions of the natural environment to the human economy.(b) The three roles of social institutions in a market economy.
Refer to Figure 1.4, where factor substitution possibility between human-made capital (M) and natural capital (N) was discussed using the New York water-filtration project as a case study. Try to
Read the following statements. In response, state ‘True’, ‘False’ or ‘Uncertain’ and explain why:(a) Environmental resources should be of economic concern only if they are scarce.(b)
To view the human economy in isolation from the natural environment is not only misguided but also dangerous.Comment.
Carefully review the following ecological concepts: ecosystem, primary producers, consumers, decomposers, photosynthesis, nitrogen fixation, ecological succession, biodiversity, ecological
Regarding the following, state ‘True’, ‘False’ or ‘Uncertain’ and explain why:(a) Energy is the ultimate resource.(b) In principle, an ecosystem can continue to function without the
Ecology and economics deal with the production and distribution of valuable resources among complex networks of producers and consumers. Energy and material transformations and the fundamental
What is ecological resilience? Provide three specific instances of human-induced loss of ecological resilience.
In his classic article ‘The Historical Roots of Our Ecological Crisis’ (1967), Lynn White, Jr., asserted that ‘we shall continue to have a worsening ecological crisis until we reject the
Dasgupta et al. (2000: 343) argued that ‘the preservation of biodiversity is essential, both to provide unique services and to provide insurance against the loss of similarly functioning
Using your understanding about the second law of thermodynamics, critically evaluate the evidence provided below by Ausubel (1996) to support the tremendous potential for energy saving that the US
The two paragraphs presented below capture the essence of the ideas that have been discussed in the last two chapters. Read these paragraphs very carefully and then write an essay that shows your
Select an agreement from Table 19.1 and investigate the details. For additional readings and websites pertaining to the material inthis chapter, see www.mhhe.com/field8e. Name of Agreement Marine
Consider food composting. In what ways is food composting sustainable? In what ways does food composting produce residual flows? In what ways does food composting produce pollution?
Consider the example of the three homeowners around the lake (the ones depicted in Table 4.2). Suppose the lake was cleaned up to the efficient level of 2 ppm and that the total costs of the cleanup
Suppose there is a river on which are located several micro breweries, each of which discharges pollutants into the water.Suppose somebody invents a new technology for treating this waste stream
Suppose we are comparing two ways of increasing nonfossil fuel energy production: expanding solar arrays (short run) or developing new nuclear power technology (much longer run).How would changes in
Following are some illustrative numbers for benefits and costs arising from a program to restrict emissions of a pollutant.Current emissions are 10 tons per month. Identify the emission level at
A region is proposing an expansive project to install adaptation technology to control anticipated future sea water rise to protect an urban area along the seacoast. Compare and contrast how
Consider a small home project or a simple activity to help the climate that you, and maybe some friends, could do. Itemize and estimate the costs, including opportunity costs, of the project or
Investigate the recycling policy in the city where you live. How might you interpret the policy using the concepts or policy criteria presented in this chapter?
“The costs of achieving emission reductions in the future will depend greatly on the types of policies used to reduce emissions today.” Explain.
Suppose you want to reduce the level of trash disposed by your household. Develop an emission standard, a technology standard, and an ambient standard that would accomplish the reduction.
Explain how the same dollar emission charge satisfies the equimarginal principle while the same percent emissions reduction (equiproportional) results in higher societal costs.
Refer to Figure 14.3. Select a year when the gallons of oil spilled were over 15 million. Research the spill(s) for that year. Was the amount due to one oil spill or multiple oil spills?Investigate
Suppose a CAP policy was adopted that set allowances for a fixed number of miles driven by each car owner per year. Describe a plan for implementation and trading options.
Select a 48-hour period and drive at or below the speed limit whenever you drive during that time. Keep a journal about your behavior, experience, and feelings. How did this affect your time
When considering banning a toxic chemical, why should replacement substances or processes be part of the decision?
Refer to Figure 17.2. Assume the price of virgin materials is p2. Identify the level of total materials on the graph, the level of recyclable materials and virgin materials used via curve S1. Repeat
Select one industry in one country and investigate the GHG emissions for that industry. Discuss policies related to incentives in that industry as they affect GHG emissions, and trade-offs the
What are the benefits and drawbacks of direct regulations?
Explain whether environmental taxes or emissions trading systems are ideal.
Why are policy mixes needed?
Explain the benefits of the measured rate system vs. the fixed rate system for garbage fees.
What penal regulations serve to check unlawful littering?
Within which conditions are deposit systems ideal?
Summarize the Kyoto Protocol and its contents.
What are Kyoto mechanisms?
Describe the problems with clean development mechanisms.
Describe why international agreements are difficult.
Explain both the contributions and limitations of the Kyoto Protocol.
Outline the post-Kyoto Protocol options.
Assume the following utility function U = (q × M)/100. Importantly, q represents the fish population (numbers), and M represents income (tens of thousands of yen, M = 100).a. State the WTP amount
Indicate an evaluation target when the WTP and WTA are comparatively close, as well an evaluation target when there is thought to be a large gap in the WTP and WTA.
The following recreation demand function is for a beach: x = 4 − (p/500) + q. The visitation amount is represented by x (times), the travel cost is represented by p(yen), and the water quality is
The utility function of residents exists when the relationship between air quality(q points) and land prices (p yen) is represented by p = 5q. Assume it is u = q(20 − p).a. Express the extent to
Discuss problems with a CVM survey that uses the following to inquire about WTP:“A forest is to be preserved. How much do you mind paying in order to preserve this forest?”
Using the previously mentioned survey and the binary choice selection method, collect the following data:a. Create a scatter plot graph on a grid with the yes response rate on the vertical axis and
Explain the benefits that ought to be yielded when public investments are used for road construction.
Explain why efficiency guidelines for cost-benefit analyses applied to public investments must necessarily differ from Pareto optimality.
Compare the two projects in the Learning point. Calculate the two scenarios in which the discount rates are 4% and 10%. 140 120 100 80 60 40 60 40 20 20 0 This Year After 1 Year After 2 Years Net
What are the merits and drawbacks of adopting ISO 14001?
Non-physical, monetary units are used to depict environmental burdens in LCA. Explain the drawbacks as well as the importance of using monetary unit assessments.
Examine the environmental accounting published in the environmental report of a company that you know. Then, explain the special features and problematic aspects of the company’s environmental
Define CSR.
Explain the kind of conditions in which it is practical for businesses to engage in CSR activities.
State the CSR activity conditions that are linked to increases in social welfare.
Look up the environmental risks that a given business faces. Then, look up what types of risk countermeasures the firm has in place to cope with said risks.
Find an example in which risk perceptions vary between ordinary people and experts. Then, think about what the origins of such discrepancies are.
Assume that when the scope of risk reduction is 6/10,000, the value of statistical life is 200,000,000 yen, but when the scope of risk reduction is 2/10,000, the value of statistical life is
Look up the forest taxes implemented across the country, and consider the advantages and problematic points of each.
Investigate issues with implementing domestic biodiversity offsetting.
Explain the impact that international trade yields on the environment.
Describe the impact that one country’s environmental policies could have on another country’s trade.
Summarize the trade restrictions that are pertinent to environmental protection.
Explain why automobile pollution regulations spurred on technological improvements.
Describe factors that obstruct technological proliferation.
Describe factors that promote technological proliferation.
Market failures that arise from environmental and resource pricing must be corrected.
Renewable resources must be preserved such that they can continually replenish themselves.
Technological progress must be promoted through a system which encourages a transition from using non-renewable to using renewable resources.
Renewable resources ought to be used.
Economic activity must be restricted to a scope that does not transcend the natural resource limitations.
Define sustainable development.
Explain what comprises the environmental Kuznets curve.
Explain what kind of discount rate should be used in the presence of discount rate uncertainty.
Describe future global energy resources.
Explain how Japan has successfully promoted renewable energy proliferation.
Describe energy source options and their various benefits and drawbacks.
Explain how to determine optimal pollution levels.
Describe why direct regulations make it difficult to achieve optimal emission levels.

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