Questions and Answers of Environmental Economics

Describe a weakness of the CVM method. What makes this method attractive despite potential flaws?
Globalization may permit firms to shop across countries to find low environmental standards. Explain the remedy you favor for this practice.
List four influences that may prevent international environmental policy from achieving social efficiency and explain a specific solution for any two of them.
What incentives do policymakers in international organizations have to prioritize commercial interests? What incentives do they have to prioritize environmental interests? Are these incentives
In a symbolic gesture against poaching, Kenyan President Daniel arap Moi burned 2,500 elephant tusks. Does this make sense from an economic standpoint? Using a graph, illustrate the effect of this
Consider the scenario represented in Figure 11.2, with S1 representing the black-market supply of ivory (which well assume remains constant). Let the shift from S1 to S2 represent an influx of legal
Consider the ivory market once more. Starting from an equilibrium at point A in Figure 11.2, suppose that a partial lifting of the ivory ban lowers the marginal cost of selling on the black-market,
What do you see as the greatest specific cost and benefit of globalization?
As the director of the World Bank, what one question would you add to those listed in the section on the World Bank and the IMF as a consideration prior to the adoption of a policy?
Why is it unlikely that country-level policy would be socially efficient in regard to acid deposition?
Environmental policies have not been changed at the behest of ecoterrorists, nor are concessions typically made to other terrorists or kidnappers. What is the logic behind a policy of noncompliance
Consider an electric utility that in 2013 had enough SO2 allowances to cover its current emissions. If the utility could have reduced its emissions at a cost of $0.15 per ton, should it have done so?
Suppose that rather than regulating the amount of pollution, the government regulated the amount of pollution abatement. Draw a graph similar to Figure 12.1 except with units of pollution abatement
Draw two graphs with identical demand curves for pollution defined by the equation Q = 100-P, with Q being the quantity of pollution and P being the price per unit of pollution. Assuming that all
In what situations are command-and-control regulations most appropriate? Provide a specific example that is not from this book.
The Endangered Species Act stipulates that recovery plans be established for each listed species without regard to the cost of recovery. Using economic reasoning, explain what you perceive as the
Draw a graph as in Figure 12.2 and label the four cost curves W, X, Y, and Z, in that order, from left to right. Assume that firms are risk neutral unless told otherwise, there are no Pigou taxes in
The text explains how command-and-control policies, including the Endangered Species Act and the National Pollutant Discharge Elimination System, might be combined with market incentives to yield
Describe an environmental problem that might be solved with activism and the type of activism you would recommend. Discuss the combination of incentives the source of this problem will face and how
Suppose that ChemsAreUs Corporation is contemplating the production of Agent Yellow, an update of defoliant Agent Orange. Agent Yellow has a 10 percent chance of causing $1 billion worth of
Consider a fishery with annual growth as shown in Figure 13.9. Explain what would happen if there were a continued annual catch of CatchA with a beginning stock of each of the following:Figure 13.9
Draw a depensated growth function that is not critically depensated. Label any stable or unstable equilibria. Discuss whether this function might apply to the growth of some animal stocks.
Wild morel mushrooms are a delicacy in soups and salads. The following table shows the number of mushrooms that can be harvested per picker per hour in a fictional forest, depending on the number of
Considering the data provided in Problem 3, what is the economic rent with the socially optimal number of pickers? What economic rent results from entry based on private incentives? What entry fee
Consider once more the situation in Problem 3. Explain two policies that do not involve a fee that could result in the optimal level of effort. What complications might arise in the administration of
List three common-property resources not discussed in this chapter to which the models explained in the chapter could be applied.
Discuss the implications on fishery policy decisions of each of the following: a) An increase b) An increase c) An increase in monitoring technology in certainty about the catch per unit of effort in
Draw a graph with growth per year on the vertical axis and time on the horizontal axis that corresponds with the total growth function in Figure 13.7. Explain why the optimal harvest is unlikely to
Policymakers sometimes consider relaxing access to national forests for logging purposes. Relative to harvest decisions made for trees on private land as discussed in this chapter, how would you
How would each of the following affect the socially optimal rotation intervals for trees?a) An increase in the demand for real estateb) An increase in soil erosion on deforested land due to global
Given Hotelling's valuation principle and constant extraction costs, what is the total value of a stock of 1 million “dry long ton units” of extractable iron ore if the current price is 40 cents
Some investigators have concluded that Hotelling's rule does not apply.List two of Hotelling's assumptions that are inconsistent with the realworld oil situation.
Do you agree with Klaus Toepfer that wars over water are inevitable?What do you see as the most realistic policy approach to minimizing future conflicts over water? Would you be in favor of water
The section on water allocation discusses the division of water between industry and agriculture in Taiwan. Using a graph similar to Figure 14.3, explain how this analysis would change in the
Draw a graph with the price per unit on the vertical axis and the number of units purchased on the horizontal axis. Draw the relationship between per-unit price and quantity for each of the following
Draw another graph with the price per unit on the vertical axis and the number of units purchased on the horizontal axis. Draw the relationship between price and quantity for each of the following
Of the plans you graphed in Problems 6 and 7, rank them in order from best to worst in their ability to promote efficient resource use. Which of these plans most closely resembles the pricing plan
Indicate whether the following statement is true, false, or uncertain, and explain your answer: If every type of water use were 100 percent nonconsumptive, the only major problems regarding the world
Suppose that in the punitive damages phase of the Deepwoter Horizon case, both sides expect a jury award of $2 billion on appeal, and that if they proceed with the case without settling, the
Answer the following questions in the context of the Deep woter Horizon case explained in Problem 1.a) What is the bargaining rent?b) What is the most either side should pay for the right to make a
Name the four conditions for settlement explained in this chapter. For one of them, explain a deterrent to reaching that condition and a remedy for that deterrent.
What do you think is the strongest deterrent to settlement in the dispute over the Rock of Gibralter?
What dispute resolution technique would you advise for Spain and Britain in their dispute over the Rock of Gibraltar?
Which dispute resolution technique would you advise for the residents and developers in the dispute over new hotels planned for natural areas in Hawaii?
Which dispute resolution technique would you advise for neighbors who disagree over homeowners' rights to replace lawns with un-mown native grasses.
What concerns might prevent Super-fund litigants from pressing on to trial in the face of a seemingly unfair demand from the EPA?
Do you feel that lawyers can bring justice to those who need it while stopping short of encouraging unnecessary litigation? Explain your answer.
Those who bargain ruthlessly and are intent on maximizing their personal gain are sometimes called "hawks." "Doves" give in easily, favoring peaceful accord over the potential gains from conflict The
What potential problem with conventional arbitration is resolved by final offer arbitration?
Imagine a world in which individuals cared only about themselves. Choose two of the following types of people and describe, in one paragraph each, how you think their behavior would differ in this
What criteria do you most often use when faced with an ethical dilemma? Which of the theories described in this chapter is the closest to your personal theory? Do you think any of the new ideas you
The giant Asian pond turtle is endangered. It is also highly sought after for medicinal and food purposes. Would you hunt and kill one of these turtles for $20? For $10,000? At what price would you
Do you believe that many Swiss dairy farmers really care about their animals as suggested in the text? Do you believe that many McDonald's executives really want to provide for an environmentally
Rawls (1999, 205) writes that if government is assumed to aim for the common good, and if "some men can be identified as having superior wisdom and judgment, others are willing to trust them and to
Consider one of the many dilemmas faced by the U.S. Food and Drug Administration. A National Academy of Sciences report estimated that 60,000 women in the United States put their fetuses at risk" of
Draw a utility distribution curve on which the Rawlsian and the egalitarian allocations are identical, but the utilitarian allocation is different. Label the points representing each solution with
Utilitarian Jeremy Bentham argued that if utility is good, then it is good irrespective of whose utility it is, and thus the sum of societal utility should be maximized. In what ways do you feel this
The tenets of ecofeminism suggest that those who seek to dominate or exploit women and those who seek to dominate or exploit the wilderness have a similar mindset. Do you agree? Are the people you
Which ethical theory do you feel has the strongest influence on policymakers in your family, local area, and nation? For which of these sets of policymakers would you most like to see a change in
Briefly identify the following concepts: absolute scarcity, relative scarcity, material balance approach to pollution, extractive resources, real cost, the strong hypotheses of increasing natural
Provide a list of what you consider to be the three most important features of the neoclassical perspective of biophysical limits. Why are they important?
Read the following statements. In response, state ‘True’, ‘False’ or ‘Uncertain’ and explain why:(a) Since resources have substitutes, ‘nature imposes particular scarcities, not an
Provide three factors that contribute to each of the following situations:(a) The declining portion of the EKC.(b) The rising portion of the EKC.(c) The high rate of population growth at the
‘The major constraint upon the human capacity to enjoy unlimited minerals, energy, and other raw materials at acceptable price is knowledge. And the source of knowledge is the human mind.
Studies of long-running natural resource scarcity trends of the B&M variety are primarily criticized for the following reasons: (a) they fail to explicitly consider environmental quality concerns;
The conventional wisdom in economics holds that limits to growth are more likely to arise due to social and technological failures than environmental or biophysical limits. Comment.
What possible implication(s) can you draw from the following empirical findings:(a) An N-shaped EKC for energy consumption in high income countries.(b) A monotonically increasing EKC for CO2,
Laissez-faire policies in reproduction would surely confront society with a ruinous problem of overpopulation. Evaluate.
Continued economic growth is the panacea for both the population and the environmental problems. Provide a critical evaluation of this assertion.
Briefly identify the following concepts: intergenerational equity, intragenerational equity, intergenerational efficiency, weak sustainability, strong sustainability, critical natural capital, the
Read the following statements. In response, state ‘True’, ‘False’ or ‘Uncertain’ and explain why:(a) The necessary condition for strong sustainability is non-declining natural capital and
Are the statements in (a) and (b) below saying the same thing? (Hint: think about the tradeoffs between concerns of intra- and intergenerational equity.)(a) Sustainability is principally about
The safe minimum standard (SMS) is just a minor variation of the strong sustainability rule. Is this true?Explain.
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. Do you
Beckerman (1994: 191) in his article entitled ‘Sustainable Development: Is it a Useful Concept?’ wrote the following: ‘It is argued that ‘sustainable development” has been defined in such a
‘Debates over what environmental sustainability means often focus on whether human-made capital can substitute for natural resources— whether human ingenuity will relax natural resource
Briefly describe the following concepts: the system of national income accounts (SNA), depreciation of humanmade capital, allowance for resource depletion, socially defensive expenditures,
Clearly explain the differences among the following alternative national accounting identities: (a) gross domestic product (GDP); (b) net national product (NNP); and (c) environmentally-adjusted net
National income accounts of the type discussed in question 2 above are said to measure the ‘flow’ of income or expenditures of a nation in given year. Why is the term ‘flow’ significant?
National income estimates derived from the use of accounting methods based on the SNA (such as GDP, NNP and NNP.) are said to be static. That is, they measure the flow of aggregate income or
Read the following statements. In response, state ‘True’, ‘False’ or ‘Uncertain and explain why:(a) In the presence of external trade, sustainability indicators at the national level may be
Why do some critics suggest that the so-called sustainability indicators, such as the GS and the ISEW, are better utilized as indicators of non-sustainability than sustainability? Explain.
A distinguishing feature of environmentally adjusted domestic product (EDP) as an indicator of sustainability is that it treats human capital as an investment, as measured by the total expenditures
Empirical studies over the past two decades have shown a widening gap between trend lines for the index of GDP per capita and the ISEW for many advanced countries. This seems to validate the claim
Beckerman (1994) argued that ‘Apart from a few small developing countries heavily dependent on minerals or other finite primary products, the measurement of some wider concept of ‘sustainable’
In Chapter 2, the concept of carrying capacity (CC) was introduced. It was defined as the population of a given species that can be supported indefinitely in a given well demarcated habitat (land)
For a hypothetical country, XYZ, what information does each of the following sustainability indicators convey(be specific):(a) Net genuine savings per capita (GS/P) > 0.(b) Ecological footprint per
Can you provide a real-world situation (i.e., a specific country in the world) that could possibly satisfy the above three sustainability indexes at the same time? Explain.
Briefly identify the following concepts: eco-efficiency, the 4Ps, the triple-bottom-line, corporate social responsibility (CSR), the sustainability sweet spot, corporate sustainability report,
Compare and contrast the following pairs of concepts:(a) Cradle-to-cradle versus cradle-to-grave; as competing waste-treatment philosophies.(b) Life cycle assessment versus design for the
Read the following statements. In response, state ‘True’, ‘False’ or ‘Uncertain’ and explain why:(a) The difference between recycling and up-cycling is purely semantic.(b) Biomimicry is a
Why do some critics argue that, while the eco-industrial park is a good concept, it remains inapplicable to practice in the real world? Are you convinced with this view point? Why or why not?
Eco-efficiency is just a piece-meal approach to eco-effectiveness. Thus, pursuing eco-efficiency as business strategy is not only good in itself, but it also allows companies to see the advantages of
Given the myopic nature of industry leaders and industrial society as a whole, do you think that the premise of‘the triple-bottom-line’ is viable? In other words, can private firms operate in
Dillon (1994: 203) suggested the following to be the most important implications of industrial ecology to the functioning, organization and management of a firm that is guided by a vision of
‘Commerce can be one of the most creative endeavors available to us, but it is not worthy of business to be the convenient and complicit bedfellow to a culture divorced from nature. While commerce
Briefly identify the following concepts: relative versus absolute poverty, urbanization, capital formation, vicious cycle of poverty, gender equity, governance, institutional failure, endogenous
Read the following statements. In response, state ‘True’, ‘False’ or ‘Uncertain’ and explain why:(a) It is not only the number of people, but also their lifestyles, political systems, and
Poor people degrade the environment more than the non-poor because the poor implicitly use a high discount rate in valuing current over future production. Do you agree or disagree with this logic?
At the United Nations Conference on the Human Environment in 1972 (also known as the Stockholm Conference), the then Indian Prime Minister Ms. Indira Gandhi proclaimed that ‘poverty is the greatest

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