Questions and Answers of Environmental Economics

Referring to Figure 6.1, what is the approximate total cost of achieving 38-gigaton reductions in carbon dioxide equivalents, below the 2030 baseline? Hint: The answer has to do with the area of two
As an aide to Governor Blabla, you are given the task of recommending whether the state should locate a low-level nuclear waste facility in a rural county. The nuclear industry provides you with a
Economists view environmental resources or the natural environment, in general, as a scarce resource. In what specific way is the natural environment regarded as a scarce resource?
Economics is said to be the study of choices that implies trade-offs. Viewed broadly, what is the specific trade-off involved when the environment is the focus of an eco-nomic study?
Identify the three specific ways the human economy depends on the natural environment
What do economists mean by the following concepts?- Factors of production.- Factor substitution- Technological advances.
Are you convinced by the economists' arguments of the extent to which factor substitution and technological advances can be used to ameliorate the scarcity of environmental resources? Provide
Economists appear to envision the human economy as a system that is characterized by complex interactions of commodities, people, and social institutions (markets and non-markets) with a primary goal
It is said that neoclassical economists view the human economy as though it is an "open system." What does this mean and what implication(s) does it have for the relationship of the human economy and
Make a careful note of the following three closely related criticisms about the economic worldview on the relationship between the human economy and the environment:a) The natural environment is
As a concept, ecosystem is used to describe both a lake in a small isolated locality as well as the entire region of the Amazon rainforest in Brazil. What are the common traits (elements) that these
An ecosystem is often described as the "house of life." This is in large part because al "living" ecosystems have to contain the six elements essential for life in some naturally prescribed manner.
Ecological interdependencies may be manifested in ways that are either competitive or symbiotic. However, what matters is the fact that interdependencies are essential for material cycling within a
From a purely physical perspective the function of an ecosystem is recognized by "a continuous transformation of matter and energy." In other words, nature manifests its existence through this
Explain, using examples, the following, based on what you read in the textbook under the heading ecological succession:a) The pioneer and climax stages.b) Ecological stability.c) Biodiversity and
Compare and contrast the way the following items are treated or manifested in the human economy versus the natural ecosystems:a) energy,b) material cycling, andc) means (i.e., resources) and ends
The risk of approaching an environmental tipping point is unknown, but the stakes are high. Contemplate on what this statement may be saying on the risk of the extended use by humans of some
Dasgupta, Levin, and Lubchenco (2000: 343) argued that "the preservation of biodiversity is essential, both to provide unique services and to provide insurance against the loss of similarly
Please read the following quoted remark from Ausubel (1996) very carefully:Segments of the energy economy have advanced impressively toward local ceilings of 100 percent efficiency. However, modern
Read the following paragraph carefully and answer the question that follows:Clearly, a parallel exists between ecology where humans are viewed as an external factor (disturbance) to the natural
While the capacity of a given natural ecosystem (such as a big body of water) to assimilate waste is limited, the efficacy of any natural environment to withstand damage from pollution depends on the
Does the fact that the assimilative capacity of an environment to assimilate waste is limited necessarily imply that this service provided by nature is scarce? Explain.
Pollution reduced the capacity of the environment to withstand further pollution. Explain the rationale for this statement using a concrete example(s),
In this chapter, two specific ways of ameliorating (reducing) harmful side-effects (pollution damage) are discussed. The first approach relies on the improvement in waste process; for example, the
Environmentalists are generally skeptical of technological solutions to environmental damage (pollution). Are they justified to be so? Provide two examples that can be used to support the skepticism
Carefully delineate the differences between public goods and common property resources. Why would it matter to know the difference between these two property in management and allocation of
What is externality? How is externality associated with the fact that environmental resources lack clearly defined ownership rights? Try to be specific.
It is said that the consequence of externality is the divergence between private and social costs or private and social benefits. Carefully explain how this situation occurs when the externality
What is a transaction cost when it is used within the context of internalizing or correcting market failure? Provide example(s).
Followers of the New Institutional Economics insist that the choice of institutions to correct market failure should be primarily based on consideration of "transaction costs." These economists have
Questions for discussion: read the material in Exhibit 3. 3 and answer the two questions presented at the end of the exhibit.Data from Exhibit 3. 3 Exhibit 3.3 What is the most desirable level of
Provide in your own words a good description of the concepts of pollution-control (abatement) cost. Provide two examples.
Refer to Figure 4. 1 in the textbook. Based on this graph, it is argued that the marginal cost of controlling pollution increases with the successive increase in pollution clean-up. What could
How would an advance in the technology of pollution control affect the MCC? Explain this using a graph? Can you provide an example or two that would represent an advance in pollution-control
Explain in your own words what exactly the concept of pollution-damage cost represents. Provide two examples.
In the discussion of damage costs, why is it important to give attention to the type (nature) of the waste; that is, biodegradable versus persistent pollutants? Explain.
Explain why environmental damage costs are an externality. Use some concrete exam ple(s) to support your answer.
Refer to Figure 4. 2 in the textbook. This graph demonstrates that the marginal pollution-damage cost (MDC) of each successive unit of pollution is incrementally rising at an increasing rate. What
While this is not fully explained in the present chapter, can you speculate why people's preference for a higher environmental quality (i.e., less environmental damage) and income are two major
Fundamentally, the economics of pollution control attempts to balance the cost of pollution clean-up with the damage cost to the environment at the margin. With this in mind, explain what decision
At the beginning of Chapter 4 it is argued that "trade-off" exists between damage and control costs. Furthermore "from an economic viewpoint, a dollar's worth of investment (expenditure) on
Provide four good reasons why scholars who uphold an ecological perspective to pollution control may be skeptical (critical) of the economic notion of "optimal" pollution. Explain.
Answer the questions below using the information provided in the figure. Note: the MCC and MDC are drawn as a straight line to make the numerical computations simple. You should also be reminded that
Briefly identify the following concepts: the polluter-pays principle, regulatory capture, emission standards, effluent charge, and the double-dividend feature of the effluent charge (tax).
Why is a pollution regulation regime that is based on emission standards often labelled as a command-and-control approach to pollution control? Be specific.
Does it amount to guesswork, given that the EPA sets emission standards on the basis of the "best" available technology to control pollution? Explain.
Can you identify some of the major transaction costs associated in setting emission standards in general? Be specific.
Emission standards can be set in three different bases; namely, quantity (volume)-base, performance-base, and technology-base. Provide a real-world example(s) for each one of these three ways of
In the United States the EPA is responsible for implementing environmental laws enacted by Congress. It does this by setting the minimum allowable emission standards that all states have to follow.
With regard to setting emission standards, what does a "regulatory capture" mean? In your opinion is this a pervasive problem? Provide two real-world examples.
It is suggested that pollution-control policy based on emission standards is likely to provide incentives for firms (polluters) to hide technological advances on pollution control from regulatory
In general it appears that environmental groups favor standards over market-based solutions to pollution. Do you think this preference is based on pragmatic considerations or the belief that, in
As you read in the textbook, economists tend to be critical of using emission standards as a policy instrument to control pollution on the grounds that it is not cost-effective. This argument is
Can you provide three real-world examples where effluent charge (pollution tax) is used to control pollution? Can you find the history for cost-effectiveness?
Can you identify some of the major transaction costs that are typically associated with administering and policing effluent charge? Some economists argue that the transaction cost associated in
It is often argued that, to curtail pollutants that are highly toxic and persistent, a policy based on emission standards is far more effective than one based on an effluent charge. Explain this by
In the case of water pollution, do you think the choice of pollution emission policy instrument (such as emission standards versus effluent charge) depends on whether the source of pollution emission
Answer the following questions on the basis of the information given in Figure 5. 6.Data from Figure 5.6a) How many units of pollutant would this firm (source) have emitted if an effluent charge was
Refer back to Figure 5. 3. Let $\mathrm{t}_{\mathrm{k}}$ now represent not effluent tax but subsidies. In other words, the firm will be paid by the regulators $t_{k}$ (i.e., \$20) for each unit
It is often argued that effluent charge may have a regressive effect on income distribution (i.e., lower-income households may end up paying more tax relative to their income). However, some
It is often argued that effluent charges provide firms with an incentive to improve their waste-control technology. First, make sure that you have a good understanding of the theoretical
Briefly describe the following concepts: emission credits, the grandfathering principle the emissions bubble policy, the emissions offsets policy, the emissions banking pol hypothesis.
Emission credit works with the notion that we can treat the services of the environment to assimilate or store pollution as commodities that can be exchanged in the market. place. Would you consider
Under the TEC regime, what are the three important functions of a government as a regulator of pollution emissions? Be specific.
Are the following three statements reconcilable?a) Uncertainty arising from environmental regulation is crippling job creation.b) Environmental regulations enhance innovation and competitiveness.c)
What aspect(s) of the theoretical arguments for the existence of a negative trade-of between jobs and environmental protection expenditure (EPE) did you find to be most convincing? Explain.
What aspect(s) of the theoretical arguments for the existence of a positive trade-off between jobs and environmental protection between jobs and environmental protection expenditure did you find to
Were you surprised by the preponderance of the empirical evidence that, at the aggregate level, environmental regulations have, if any, negligible effect on job loss? Give this, how do you reconcile
It is said that when economists attempt to measure the benefits from improved environmental quality, they are measuring not the value of the environment but the preference of people for an
What are the three obvious limitations that are pointed out in the textbook when economists use "valuation" of environment on the basis of individuals' WTP? Make sure you have a good understanding of
It is said that to consider that WTP and WTA are equivalent would suggest that people value gains and losses similarly. Provide a careful assessment of the implication(s) of this to valuation of the
The various methods economists use to elicit WTP for environmental services (such as flood control, or a decrease in respiratory illness due to improved air quality, or biodiversity) are generally
In what way, if any, did you find helpful the distinctions economists are making between use- and non-use values of environmental resources? Be specific.
The contingent valuation method (CVM) works with the premise that it is possible to create an "artificial" market-like condition and elicit individuals" WTP through a well-designed survey questions.
Imagine that a study is being launched to estimate the money value on the Yosemite National Park (please use Google to learn more about this park). The gate (entrance fee) as of 2017 is $\$ 175$
In Table 7. 2 of the textbook, a grand summary of the economic methods for valuing ecosystem services discussed in Chapter 7 is provided. Based on what you see in this table, what can you say about
The textbook pointed out four major criticisms that have been raised against the economists' efforts to value the environment using a methodology that is based on individuals' willingness to pay. Do
What does the following say about economists' efforts to put value on nature? Discuss.Stewardship derives from value. The reason we have jewelry boxes is because diamonds are expensive. The value
"The price of anything is the amount of life you exchange for it." What does this quote from Henry David Thoreau say about valuing nature? Speculate.
It is said that cost-benefit analysis (CBA) is used to evaluate public "projects." How does the textbook conceptually define a project? Does it make sense to you? Explain. Provide three examples of
It is said that the fact CBA uses "potential Pareto improvement" as its theoretical foundation suggests it is impossible to evaluate a public project without making a "value judgment." What does this
The textbook discusses at some length the difference between private and public project appraisal methods; that is, capital budgeting and cost-benefit analysis, respectively, Both of these
A critic of CBA may say this: what is the point of entering into the philosophically loaded argument of intergenerational equity when we still have, as shown in Chapter 7 , a long way to go in
Caring for future generations should not come at the expense of the present poor. Would this be considered an argument made on account of environmental justice? Why, or why not? Answer this question
Export of hazardous electronic waste from the United States to a developing country such as Taiwan is reprehensible and immoral. Would this be considered an observation made on account of
What does consideration of environmental justice say about the use of cost-benefit analysis in the evaluation of environmental projects? Be specific.
Rawlsian justice is a philosophical argument in favor intergenerational fairness. What does intergenerational fairness mean in this context? How is this related to CBA? Explain.
Briefly identify the following concepts and phrases: troposphere, greenhouse gases (GHGs), anthropogenic climate change, the Keeling curve, the Intergovernmental Panel on Climate Change (IPCC),
Compare and contrast the following pairs of concepts:- weather and climate,- global warming and climate change.
The following two features set carbon dioxide CO2 apart from the other greenhouse gases: (1) it is by far the most abundant, and (2) it is very long-lived in the atmosphere, lasting as long as a
When it comes to global warming the best we can hope to do is to slow the future trend of warming. In other words, global warming has already become irreversible-we have reached a point that we can
As discussed in Section 9. 2, the scientific consensus on the causes for climate change appears to be associated with anthropogenic factors, most notably the increased use of fossil fuels since the
It is one thing to establish an association of increased concentrations of $\mathrm{CO}_{2}$ and other GHGs in the atmosphere and future global warming, but it is an entirely different matter to be
Global warming is not just about the increase in the average surface temperature of the earth. It also implies there will be variations of temperature and weather patterns on a regional basis. What
Exhibit 9. 1 in the textbook discusses the main sources for the scientific controversies of climate change. What do you make of those scientists who are highly skeptical about the consensus positions
A distinguished British economist, Sir Nicholas Stern (2007), proclaimed that climate change confronts economists with "the biggest case of market failure." What were his justifications for this
As discussed in Section 9. 3 of the textbook, economists make the general statement that any action taken to mitigate climate change involves trade-offs between two social costs; namely greenhouse
A distinguished Yale University economist who is known widely for his work on climate change, William Nordhaus (1990), considered the effort to quantify climate damage costs as "terra incognita of
In Section 9. 3, two economic approaches on what to do to slow global warming are presented. An advocate of one approach operates on the premise that, given our current understanding of the science
Compare and contrast the following pairs of concepts:- Climate mitigation and climate adaptation policies.- Climate debt and climate reparations.- The transfer of emissions reduction units (ERUs) and

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