Questions and Answers of Environmental Economics

It is possible to show that the marginal welfare loss from a labor $\operatorname{tax}$ is $V=t_{L} \in /\left[w-t_{L} \varepsilon\right]$ where $\varepsilon$ is the labor supply elasticity
For each partition, propose a division of the profits that makes each firm at least as well off relative to independent action. Then show how one or more firms can actually do better in a coalition
Consider a pollution problem involving a paper mill located on a river and a commercial salmon fishery operating on the same river. The fishery can operate at one of two locations: upstream (above
Discuss the following statement: Most pollution problems can be traced to disputes over property rights, imperfectly defined property rights, or ambiguously defined property rights. Give examples to
Consider a situation involving Finch's Footwear and Millie's Muffins. Finch's Footwear produces shoes $(S)$ at a cost $C_{s}(S)=S^{2}+8$ and the Millie's Muffins produces baked goods (B) at a
Brussels is currently considering two plans to control pollution caused by heavy trucks. Plan A calls for the institution and enforcement of tight emission standards on commercial trucks with fines
Foster and Hahn (1995) have examined trading of air pollutant emission rights within the Los Angeles air basin in 1985-1991. They hypothesized that two factors would lead to high transaction costs:
A beekeeper and a farmer with an apple orchard are neighbors. This is convenient for the orchard owner since the bees pollinate the apple trees: one beehive pollinates one acre of orchard.
In the 1970s in U.S. cities, air emissions were governed almost completely by prescriptive regulations. One of the problems faced by regulators in large urban areas with air quality well below
Assume the marginal savings from emissions for an industry are given by $M S(e)=$ $30-e$ and that the marginal damage from emissions is given by $M D(e)=e$. Suppose that the tax interaction
Write the analog for Eq. (14.16) for the case of multiple receptors. Interpret your result.Equation 14.16. MC, (e) MC, (e) a, MS, (e,) MS, (e) a = It (14.16)
An ambient differentiated emission permit gives the holder the right to emit anywhere provided emissions have no more impact on receptor $j$ than one unit of emissions at source $i$. Let
Acid rain is a problem in Scandinavia. Electricity-generating plants burn coal and emit sulfur dioxide. That sulfur dioxide is converted to sulfates, which travel long distances and are washed out of
Consider an abstraction of the Santiago, Chile air pollution problem. Assume all pollution damage is in downtown Santiago and is equal to p2/2p2/2 where pp is the pollution concentration in parts per
Write the continuous time version of Eq. 14.24 and, using derivatives, derive the continuous time equivalents of Eqs. 14.25-14.29. s(t) = ds(t1) + e(t) (14.24)
Two identical firms save money from polluting. A firm's marginal savings from emitting an amount $e$ are given by 10-2e. The two firms differ in their impact on ambient pollution concentrations.
Consider the case of carbon dioxide being emitted into the atmosphere. Assume that a ton of $\mathrm{CO}_{2}$ emitted decays at a very slow rate; assume only $1 \%$ of the stock in the atmosphere
Carbon dioxide is well known as the most significant greenhouse gas, leading to climate change and global warming. But other gases are also greenhouse gases contributing to global warming and thus
Briefly identify the following concepts or phrases based on how they are used in this chapter: the Malthusian trap, the law of diminishing marginal product, Ricardian rent, real per capita output,
Compare and contrast the following pairs of concepts:- preventive versus positive checks of population- geometric versus arithmetic growth- affluence versus overconsumption- cowboy versus the
What are the three fundamental postulates that all scholars with a Malthusian perspective on resource scarcity and economic growth share? Be specific.
"Thomas Malthus developed a formal model of a dynamic growth process in which each country converged toward a stationary per capita income. According to this model, death rates fall and fertility
In what specific way(s) do the following prominent classical economists support and/o reject Malthus' gloomy prophecy of the future condition of human material progress:- David Ricardo (1772-1823)-
Give an account on how the following four events that occurred in the 1960s and 1970s were responsible in shaping the evolution of the neo-Malthusian theories on resource scarcity and economic
Section 10.3 of the textbook presented what is considered to be the generalized theoretical model of the neo-Malthusian school on the causes for the continued deterioration of the environment. This
As discussed in Section 10.3, in terms of public policy neo-Malthusians would advocate for population control, adjustment of per capita consumption to a level considered to be environmentally
Provide a brief discussion on the validity of the following statements:- The fact Malthus' theory has not materialized yet does not mean it is proven wrong or discredited.- Technological fixes often
What are the major criticisms of the neo-Malthusian perspective to resource scarcity and economic growth in general? Be specific.
The presence of biophysical limits to economic growth from the perspective of ecological economics is understood through the following three salient features:- The scale effect (i.e., the sheer size
It is argued that all transformations require energy, that energy flow is unidirectional, and that there is no substitute for energy. It, therefore, makes sense to use energy as a numeraire-a
Neoclassical economists have remained skeptical toward Malthusians' doom-andgloom prophecies on the future economic condition of humanity. What are the three explanations given in the textbook to
In direct opposition to the traditional Malthusian view, Julian Simon made the following remark: "Incredible as it may seem at first, the term 'finite' is not only inappropriate but downright
Briefly identify the following concepts: intergenerational equity, intragenerational equity, intergenerational efficiency, the Hicksian concept of income, weak sustainability, strong sustainability,
State whether the following statements are true, false, or uncertain and explain why.a) The necessary condition for strong sustainability is a non-declining natural capital and nothing else.b) The
The safe minimum standard (SMS) is a special case of the mainstream economics conception of sustainability. Can you present an argument that attempts to validate this statement?
In a world so divided in so many ways, sustainable economic development on a global scale will amount to nothing but a figment of human imagination or, to put it mildly, just wishful thinking. If you
"Debates over what environmental sustainability means often focus on whether humanmade capital can substitute for natural resources-whether human ingenuity will relax natural resource constraints, as
Suppose the world government through a United Nations-sponsored summit reached a binding agreement to designate existing tropical forest areas as critical natural (ecological) capital. At the same
In what specific ways would trade among nations complicate the effort to construct an environmentally adjusted sustainable national income accounting? Explain.
For a hypothetical country, XYZ, what information does each one of the following sustainability indicators convey? Be specific.a) Net genuine savings per capita $(\mathrm{GS} / \mathrm{P})>0$.b)
Eco-efficiency should be intuitively appealing to private firms because it increases profitability by reducing the amount of resources used to produce goods and services-"produce more using less." At
In Section 14.2 three case studies are presented. These case studies clearly indicate that the gain from the adoption of "eco-efficiency" as a strategy for pollution control is most effective when it
Critics of eco-efficiency are quick to say that "being less bad is no good." Is this a fair criticism of eco-efficiency? Why, or why not?
In Section 14.3 there is a list of six specific ways that the industrial system should attempt to imitate nature If this is what it would take to learn from nature do you think it will be rather too
Biomimicry is a failed science from the outset because there is nothing to learn from nature since all of the elements in natural ecosystems are products of evolution, which are impossible to
As discussed in Section 14.3, eco-effectiveness is a pollution control (management) philosophy that is based on the principle of a "cradle-to-cradle" design strategy. What does this mean? Does
At the core of the eco-effectiveness as pollution control strategy is the elimination of toxic waste from the industrial process. What would you make of Dr Karl-Henrik Robert's criteria for
Exhibit 14.1 presents a summary of the Kalundborg Industrial Park-an industrial symbiosis network located in Kalundborg, Denmark. Answer the following questions based on what you have learned from
In Section 14.4 two case studies (i.e., Polyface Farm and Interface, Inc.) are used to illustrate the rewards and challenges facing companies that attempt to implement the basic principles associated
Eco-effectiveness operates with the seemingly uncompromised principle of achieving "zero waste." Critics (mostly economists) argue that this principle (i.e., zero waste) is made without formal
In what two specific ways can market prices be used as a measure of resource scarcity? From your reading of Chapter 1, are you able to sense why market prices may "fail" to measure the scarcity of
As noted in this chapter, one of the Clean Air Act Amendments passed by the U.S.government in 1990 was designed to control the emission of hazardous air pollutants.The EPA released a publication that
Consider the following statement published on the website of the AEI-Brookings Joint Center for Regulatory Studies:EPA’s analysis of its new arsenic rule estimates annual costs of $210 million and
From an economic point of view, sustainability is about maintaining a high quality of life for future generations. To see how difficult this problem is to address, try to answer the following
Suppose Pandora is deciding how to dispose of some hazardous waste. She can contain it safely at a cost of $175 or bury it in the local landfill. If she chooses the second option, in ten years’
The Onceler has clear-cut a forest of Truffula trees and is considering replanting. If he replants, in 40 years he will have another stand of trees to harvest, and he will earn an (inflation
Suppose that a bacterium lives in a test tube and the bacterial population doubles every minute, so that at the end of one minute there are two, at the end of two minutes there are four, and so on.
At the same time that wild salmon are threatened with extinction across the planet, salmon is now widely available and relatively cheap in U.S. supermarkets. The reason?The explosive growth of salmon
One economic development paradox receiving recent research attention has been the “dismal” economic performance of many mineral-dependent countries in the Third World. On average, they have fared
The mineral unobtainium is a valuable nonrenewable resource with a total estimated supply of 74 million tons. Suppose that the inverse demand curve for the unobtainium in each of the two periods is
The county of Greenlandia has four regions. Information for the four regions is shown in Table 10.1. Suppose there are three types of land use: (1) agriculture, (2) managed forestry and (3)
There is a fish species that grows according to logistic growth:where St is the number of fish in period t, St+1 is the number of fish in the next period (t + 1), K is natural carrying capacity
In the United States, the flip side of increasing consumption over the last 30 years has been increasing hours of work. The increase in hours of work is surprising first because it goes against
Consider the following social welfare function:1. Place positive and negative signs above all the terms in the function, illustrating whether they increase or decrease each person’s utility.2. Will
To implement portions of the 1990 Clean Air Act, the EPA adopted a distinctly corporatist approach—negotiating the regulatory details with representatives from industry, the states, and big
Head to www.epa.gov/tri, read the TRI Overview, and then find out about the toxic releases for several plants in your zip code, or one nearby. Do you find that the information is reported in an
1. Give some examples of technology-based regulation.2. Give some examples to show how safety-based legislation can be inefficient.3. Give some examples to show how efficiency-based legislation can
What are the two features of command-and-control regulation? Go back and reread Section 13.1, 13.2, or 13.3 and explain to what degree the national legislation covering air, water, and land has these
The first civilian nuclear reactor began operation in 1957. Yet the agency in charge of overseeing the nuclear industry “had fewer than a dozen active regulations in 1970.”14 One explanation for
Economists tend to view the decision by an individual to comply with an environmental law in terms of economic motivations. While good citizenship—obeying the law simply because it is the
Before passing regulations on Coke ovens in the steel industry, the EPA estimated that the costs of controlling hazardous air pollutant emissions would be about $4 billion;four years later, that
Suppose that gunk has marginal benefits of reduction equal to 20 − 2x, and marginal costs of reduction equal to 5 + x/2, where x is the tons of gunk reduced.1. Graph the MB and MC curves to find
Consider these cap-and-trade programs discussed in the chapter:a. RECLAIMb. Bush cap-and-trade proposalc. Regional Greenhouse Gas Initiative (RGGI)d. Clunker Programe. National SO2 Tradingf. European
One of the main sources of water pollution is agricultural runoff. Consider three options to control this problem: (1) a CAC requirement prohibiting irrigation ditches from draining directly into
Biological pest control has high fixed costs associated with machinery and predator rearing; farmers experience substantial “learning by doing”; and farmers also depend on “network
Some critics have argued that recycling of old newspapers yields few environmental benefits. First, much pulpwood used in the United States is grown on tree plantations, not in old-growth forests.
In an EPA-funded project, teams conducted waste minimization assessments of several medium-sized manufacturing plants. Table 17.5 provides a breakdown of the measures for two plants, the first a
Governor Blabla has decided that, rather than build a new nuclear power plant to service power needs, the state should save an equivalent amount of energy. As one component of an efficiency plan, he
Suppose that you are in charge of the demand-side management program at Megabucks Power, and your state public utility commission has just decided that you can now count energy-efficiency measures as
Some recent evidence shows that hazardous waste sites in the United States display an inverted U-shaped relationship with county income.26 That is, as income in a county rises, the number of
Reducing the rate of infant and childhood mortality in poor countries clearly leads to a short-run increase in population growth. Use the economic model of family size developed in this chapter to
Some have argued that removing government controls that keep food prices down is a necessary step to ensure food security.28 In addition, some maintain, the subsequent increase in price will reduce
In the past, the United States has imposed a ban on the export of unprocessed logs from public lands in the Pacific Northwest, with the purported intent of slowing down deforestation of the spotted
Yale economist William Nordhaus has done a lot of work on benefit-cost analysis of the Kyoto treaty. Bearing in mind the vast uncertainties associated with estimating both the costs and the benefits
The Kyoto Protocol requires that greenhouse gases be stabilized at a level that prevents “dangerous anthropogenic interference” with the climate system. In an effort to help define what this
Estimating the economic costs of global warming is quite a difficult process. In a book examining the issue, Nordhaus and Boyer (2000) provided this disclaimer on page 98:“Attempts to estimate the
The U.S. Environmental Protection Agency (EPA) issues regulations covering the design and construction of landfills for municipal solid waste. Landfills can represent a threat to environmental health
Suppose that 100 people live around a hazardous waste dump. If the people continue to live there for 20 years, one of them will likely contract a painful, nonfatal cancer that will lead to $1 million
The following data refer to the number of logging operations working in a stretch of tropical rain forest. Excluding externalities, the private cost of a logging operation is $25,000 per week. Logs
Surrounding the Great Lake are four paper mills, each producing 100 tons of paper per year. The paper is sold on the national market for $2 per ton, and including all the costs of production, costs
Adam and Eve live on two sides of the Garden of Eden, a small suburban development.After they move in, an old PCB dump is discovered between their houses. If X total tons of PCBs are removed from
The following graph illustrates the marginal costs and benefits of reducing emissions of benzene from year 2005 levels in a chemical factory. Currently, the firm is not reducing any emissions at
These smoking problems are a little silly but are good at illustrating some basic lessons about efficiency. So, this time, Groucho and Harpo work together in the same office.Groucho smokes; Harpo
Rancher Roy has his ranch next to the farm of farmer Fern. Cattle tend to roam and sometimes stray onto Fern’s land and damage her crops. Roy can choose the size of his herd. His revenues are $6
When setting standards for lead in drinking water, the EPA considered three options illustrated in Table 4.3. The symbol μg/l stands for micrograms (millionths of a gram)per liter. Standard A, the
In your second consulting job, you have been trying to estimate the WTA risk on the part of workers. You have gathered data on a variety of blue-collar occupations ranging from clerical work to
For consulting job 3, suppose you are analyzing the use value of a public beach.Controlling for income, age, preferences, and everything else that might affect beach visits, you have gathered the
When taken to its extreme, the logic of benefit-cost analysis can generate some strange conclusions. In one case, researchers wanted to determine the value that mothers placed on their children’s
In the political tug-of-war over benefit-cost analysis, some economists have argued that rather than value human lives saved as a result of regulation, we should instead value “life years.” The
In 2009, the conservative Heritage Foundation called the global-warming cap-andtrade bill being debated in the U.S. House a “jobs destroyer” and published an analysis claiming that the law, if

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