Questions and Answers of Environmental Economics

Explain the processes and results of two different voluntary restraint regulations.
Explain how to implement an optimal environmental tax.
What are the merits and drawbacks of environmental taxes and subsidies?
Consider to whom environmental tax burdens are shifted to, and explain how to reverse that shift.
Why are transaction costs important?
What are the limits of the Coase theorem?
Describe emissions trading systems.
How could emissions trading systems potentially lead to efficient resource distribution?
What are the problems with initial distributions in emissions trading systems?
In his book The Ultimate Resource, economist Julian Simon makes the point that calling the resource base “finite” is misleading. To illustrate this point, he uses a yardstick, with its one-inch
Does the normal reaction of the price system to a resource shortage provide an example of a positive or a negative feedback loop? Why?
Look up Japan’s domestic SO2 emissions and per capita GDP data and create a scatterplot graph. Then, explain the relationship between economic growth and SO2-induced environmental contamination.
Explain why CO2 is not applicable to an environmental Kuznets curve.
In a tropical region, rainforest destruction is taking a toll. Assuming the economic standards of local residents were to improve through this activity, would this lead to the tropical rainforest’s
The price of used paper was quite high during the oil shocks in the 1970s, but after that it sharply fell. In another scenario, recycling magazine paper could cost close to nil, while in other cases,
Consider the following argument and explain whether or not it is valid, and why:“Recycling promotes thorough collection and separation of garbage, so it should be implemented as a means of reducing
Consider the following argument and explain whether or not it is valid, and why:“In order to curb waste, there should be fees for garbage disposal.”
Summarize what could be done in order to prevent climate change.
Consider the following argument and explain whether or not it is valid, and why:“As economic development leads to increased oil use, oil prices will also rise, causing businesses and consumers to
The demand function for oil is x = 4 − p, and the supply function is x = p − 2.P is the price of oil, and x is the amount of oil. With this information, solve the following problems:a. Derive the
Assume x hectares (ha) of tropical rainforest is being converted into farmland.The conversion cost is represented by the function 2 × 2 + 2x. Also assume that the market price of farmland is ¥p/ha,
Explain how pollution issues inherently involve negative externalities.
Investigate what kind of policy would be needed to reduce damages inflicted on future generations based on the economic experiment with externalities shown in Figure 2.1.4 of the Learning
Research an example of the commons. Then, look up whether or not the tragedy of the commons has occurred for it, as well as why it occurred.
Though Japanese national parks are free to enter, do you think that they should have entrance fees? Why or why not?
The growth function for fish stocks is x = −S2 + 10S. S is the fish resource stock, while x is the resource growth amount in tons. Furthermore, the price for fish resources is ¥1/ton. The total
Think of an environmental problem that involves public goods, and investigate how the free-rider problem may arise.
About 30% of the forests in Japan are managed by the government as national forests. Do you think they should be privatized? Why or why not?
Consider the limitations of self-imposed climate change countermeasures among businesses.
Perform the public good supply experiment outlined in the Learning point.Then, consider what is necessary to avoid the free-rider problem in the experiment.
Accidents with trucks carrying hazardous wastes are fairly common. Suppose regulators enact a rule requiring that the perpetrators of such an accident be liable for a sum equal to the average damages
How many different formulas can you think of for allocating a reduction in global CO2 among the nations of the world? Compare and contrast these in terms of efficiency and equity. Consider the
Economies grow by investing in new sources of productivity, new plants and equipment, infrastructure such as roads, and so on. How does this type of investment affect the flows depicted in Figure
As depicted in Figure 2.3, most emissions from individual sources get mixed in with those of other sources, to produce the general level of ambient quality. What problems does this present in
What is the difference between a residual and a pollutant? Illustrate this in the context of a common airborne emission such as sulfur dioxide (SO2); with noise; with junked automobiles; with an
Consider the production and use of single-use, plastic shopping bags, and examine their flows along all parts of Figure 2.1. Do the same for paper shopping bags. / Raw Materials (M) I Natural
Why are long-lived, cumulative pollutants so much harder to manage than short-lived, noncumulative pollutants?
Suppose there is a technological change that allows firms to produce goods and services with less pollution. How would this affect the production possibilities curves of Figure 2.2, and where might
What considerations come into play when considering whether a country or any other political entity is spending the right amount for environmental quality improvements?
Below is the marginal willingness to pay of a consumer for organic apples.a. What is this individual’s total willingness to pay at a consumption level of 4 apples?b. If the price of organic apples
Use the logic of willingness to pay to interpret the statement “I like clean air more than you do.”
Below are the marginal willingness-to-pay schedules for organic apples for two individuals.Construct the aggregate marginal willingness-to-pay (the demand) curve for this group of two people.
Figure 3.10 illustrates the derivation of an industry supply curve under competitive conditions where each firm receives the same price for its output. What is the relationship of this procedure to
What are the advantages and disadvantages of using willingness to pay as a measure of value? What are some alternatives?
Suppose that the following discrete numbers show the integer values of MWTP and MC as depicted in Figure 4.1. Determine the socially efficient rate of output. Show that at any other output level, the
Consider the marginal cost curve associated with cleaning your dorm room. Label the vertical axis “time” and the horizontal axis “percent clean.” What would this marginal cost curve look like?
Somebody invents a small machine that electrostatically is able to remove dust from rooms very quickly. What does this do to the marginal cost curve depicted in question 6?Question 6Consider the
Go back to question 2 in Chapter 3. Suppose the marginal cost of producing this item is constant at $5 per item. What is the socially efficient rate of output?Data From Question 2 in Chapter 3Below
Following are portions of the demand curves of three individuals for the water quality in a small pond. The water quality is expressed in terms of the parts per million (ppm) of dissolved oxygen
Prove (graphically) that the point labeled e* in Figure 5.6 is indeed the point that minimizes total social costs, the sum of abatement and damage costs. $ W D MAC DES a 1 e b Emissions
Considering the definition of public goods introduced in the chapter, is a bus a public good? Is an automatic teller machine (ATM)? Is a public park? Is a library?
Following are the marginal abatement costs of three firms, related to the quantity of emissions. Each firm is now emitting 10 tons/week, so total emissions are 30 tons/week. Suppose we wish to reduce
Suppose there is a suburban community where domestic septic tanks are responsible for contaminating a local lake. What is the effect on actual and efficient levels of water quality in the lake of an
Suppose a new law is put into effect requiring oil tankers to use certain types of navigation rules in coastal waters of the United States. Suppose that the very next year there is a large tanker
Air-pollution-control authorities in southern California propose to control mobile-source emissions by requiring that a certain percentage of all new cars sold in the region be electric. Contrast the
Suppose we are comparing two ways of protecting ourselves against mobile source air pollution: putting additional controls on the internal combustion engine or developing an entirely different type
Suppose the costs of an environmental pollution-control program are expected to be equal to $80 per year, and that benefits will be $50 per year for 50 years, then $150 per year thereafter. At a
When setting public policy on environmental risks, should we base it on the levels of risk to which people think they are exposed or on the risk levels as scientists have determined them to be in
Suppose you were hired by the homeowners located around a lake to determine the benefits of improving the water quality in the lake. How might you go about doing it?
The Chinese government has elected to close high polluting power plants and some factories. Compare and contrast how the Chinese government would evaluate the benefits versus how an individual
Suppose you want to determine the aggregate willingness to pay among students at your school for increasing recycling at the school. How might you do this?
What is the usual meaning that economists give to the expression “the value of a human life”? What are the different ways of estimating this value?
Design some contingent valuation-type questions for evaluating the value to people of improving the air quality in the Grand Canyon.
Survey 10 other students, asking them how much they would be willing to pay for one visit to their favorite beach. What qualifying questions did your respondents ask you before they could assign a
Over the last two years, emission abatement costs in industry X have been about $1 million per year. A new regulation will lead to abatement costs of $1.8 million per year. Does this mean that the
In order to protect the quality of its nearby water resources, a community places a restriction on any housing development closer than 100 feet to a wetland. How might you estimate the social costs
A tax on gasoline is proposed in order to raise money for the pollution-control activities of several public agencies. The tax will be 10¢ per gallon, and last year 10.3 million gallons of gasoline
Most industries are composed of firms that, though perhaps producing roughly the same thing, are very different; some are large and some small; some are profitable and others not; some are located in
“Efficiency implies cost-effectiveness, but cost-effectiveness does not imply efficiency.” Explain this statement.
Environmental policy is sometimes criticized for being a white, middle-class preoccupation. How might you interpret this position, using the concepts presented in this chapter?
Do you think that the impacts of the program to control automobile pollution are progressively or regressively distributed? How about the program to ensure the quality of public water supply systems?
Is there ever a justification for adopting an environmental regulation that cannot be, or will not be, enforced?
Catalytic converters are required on all new cars to reduce tailpipe emissions. Explain how this technology could have a beneficial impact in the short run but a less beneficial impact in the long
It would seem that neighbors could easily negotiate among themselves to settle problems of local externalities such as noise and unsightly land uses. Yet most communities control these problems with
Suppose courts changed rules regarding burden of proof, requiring polluters to show that their emissions are harmless, rather than pollutees to show that they have been harmed. What impact might this
Suppose a community weighed each resident’s solid-waste disposal when it was picked up and published the individual totals each year in the local newspaper. Do you think this would lead to a
For what types of pollution problems is voluntary action likely to be the most effective policy approach?
Consider the example of Figure 11.3. Suppose we define as fair a cutback in which the two sources have the same total costs. Would an equiproportionate reduction be fair in this sense? A reduction
Environmental protection programs are frequently designed to require all polluters to cut back emissions by a certain percentage. What are the perverse incentives built into this type of program?
If emission standards are ruled out because of, for example, the impossibility of measuring emissions (as in nonpoint-source emissions), what alternative types of standards might be used instead?
It is sometimes suggested that the most equitable way to resolve issues in international trade agreements would be for all countries to adopt the same emission standards. What are the pros and cons
How might an emission charge program be designed to reduce automobile emissions?
Explain how emission charges solve the equimarginal problem.
Opponents of emission tax policies sometimes assert that they are simply a way of letting firms buy the right to pollute. Is this a reasonable criticism?
When emission charges are put into effect, who ultimately ends up paying for them? Is this fair?
Refer to Figure 12.1. Suppose the emissions tax is $95/ton/month. Find the efficient level of emissions for the firm. Explain why the firm would not reduce its emissions to 1 ton/month.
Emission charges are sometimes seen as creating a “double burden”: Firms must pay the costs of reducing emissions and also pay the government for polluting discharges. How might a charge system
Following are the marginal abatement costs of two sources. They currently emit 10 tons each.a. What would the total abatement costs be for an equiproportional cutback to a total of 10 tons?b. Suppose
How might you design a transferable discharge permit system for solid waste? For phasing out of use a certain type of plastic? For phasing in a program for using recycled newsprint in newspapers?
Explain how a program of transferable discharge permits works to satisfy the equimarginal principle.
What are the pros and cons of letting anybody (banks, private citizens, environmental groups, government agencies, etc.) buy and sell transferable discharge permits, in addition to emission sources
Most of the carbon offsets traded globally are being bought by corporations, many of which are not currently subject to emission restrictions. Why do you think this is the case?
Distinguish between a “technology-based” water pollution–control program and an “ambient-based” program.
In order to meet TMDL limits in a cost-effective manner, what is the appropriate role of the equimarginal principle? What about the economic efficiency principle?
Controlling the residuals from the production of bleached paper towels is about five times costlier than controlling the residuals from unbleached paper towels. Analyze this difference with our
What are likely to be the main problems in establishing cap-and-trade programs for water pollution control?
Discuss the importance of the question of whether air-pollution damage functions have thresholds for establishing ambient air quality standards.
Suppose that engineers invented an accurate and reliable means of monitoring and measuring the emissions from individual automobiles throughout the year. What possibilities would this open up for new
The federal mobile-source air-pollution program means that new cars sold in rural regions meet the same emissions standards as cars sold in urban areas. Because there are fewer cars in rural areas,
What are the advantages and disadvantages of a “new-source” bias in stationary-source air-pollution control? Consider especially its impacts on the incentives of the operators of existing sources.

Showing 1000 - 1100 of 1133