Environmental Economics

Final study set

perfectly mixed pollutants

GHGs such as CO2, Methane, and NO.

-Transboundary problem because of its non-point source.

-non-point source pollution implies that pollutin is the result of emissions from various sources that mix perfectly together.

Rivalry

One persons consumption diminishes the amount available for others

Excludability

infeasibility of selectively allowing consumers to consume the good

public good

non-rival and non-excludable

private good

rival and excludable

congestible

non-rival and excludable

open access

rival and non-excludable

Global public goods

because we cannot exclude people from partaking in climate, pricing its quality or consumption is challenging.

-because climate is non-rival, its hard to generate agreement or cooperation.

optimal level of pollution

when marginal abatement cost (MAC) = Marginal damage cost (MD)

economics of climate change

-the impacts of climate change are not marginal

-damages depend on concentrations of GHGs rather than the flow

-impacts are highly non linear and occur over very line time horizons

Global public goods problem

effects vary geographically by country but the damages are a function of the stock of GHG

agricultural productivity

emergence of new technologies are likely to play a major role in maintaining productivity and intensification trends. (climate change impact)

sea level rise

loss of coastal lands (climate change impact)

climate change impact on human health

as temperatures increase, the spread of disease carrying mosquitos will increase.

urban heat island

an effect where cities are warmer then surrounding areas as a result of human activities

-main cause is the absorption of heat by concrete and asphalts which raise nighttime temperatures.

mitigation

any attempt to prevent, slow, or alter the impacts of climate change

adaptation

the process of adapting behavior and decisions to prepare for or respond to climate change

-allows us to take advantage of existing opportunities

adaptation opportunities

-modifying zoning and location of new development

-change infrastructure standards

-develop riparian buffers along streams

-improve existing water/soil quality in preparation for future changes

mitigation opportunities

-smart growth policies ti reduce transportation emissions

-cap and trade systems for pollution

-specialization of land use

income and the environment

as income rises, people demand more environmental protection.

-changes in GDP per capita reflect growth and changes in the composition of industry

environmental kuznets curve

relationship between per capita GDP environmental degredation

-pollution increases in the early stages of development and then starts to decline for developed countries

monotonically decreasing EKZ

pollution continuously decreases with economic growth

monotonically increasing EKZ

pollution continuously increases with economic growth

trade theory

countries will hae a comparative advantage in goods produced with factors that are in relative abundance

jevons paradox

when we get more efficient we use more of a resource

natural monopolies

occurs when a good has high fixed costs, and low marginal costs meaning the company sells their goods and services at a lower price.

sustainable development

development that meets the needs of the present without compromising the ability of future generations to meet their own needs.

discounted utilitarianism

maximize PV utility over time subject to a resource constraints

Solow’s idea of sustainability

apply maximim across generations

maximum sustainable utility

maximize indefinitely maintainable level of instantaneous utility

strong sustainability

maintain (or increase) natural capital stocks across generations

problems:

• earth is not a closed system

• utility not constrained to be finite even in closed system

• other tradeoffs matter, not just embodied energy

weak sustainability

maintain total capital stocks across generations.

hartwicks rule

aim to achieve constant consumption

• every unit of natural resource extracted should be replaced by a unit of manufactured or human capital.

limits to sustainability

• “New” resource scarcity

• nonlinearity can lead to thresholds or tipping points

paradoxes of zero discount rate

• any environmental damage that permanently affects all future generations will lead to aggregate costs that are infinite

• an incentive to defer any expenditure/investment to allow the fund to grow so that future stream of benefits will be higher

• unfair towards discounted utilitarianism because of the presence of technological change

depleatable resource

not naturally replenished or is replenished at a low rate so it can be exhausted

recyclable resource

has some mass that can be recovered after use

tragedy of the commons

under open access, every individual has an incentive to consumer up to a point where average revenue = average costs

the schaefer model

develops a relationship between average growth of fish population and the size of the fish population

critical depensation

there is a critical minimum population that needs to be maintained for the fish stock to survive

steady state

a point of rest in the dynamic system when variables no longer change from one period to the next. state of no change

sustainable yield

catch level = growth rate

maximum sustainable yield

maximum catch that can be harvested every period in perpetuity maintaining a given stock level

fishing effort

measure of harvest intensity

total benefits

price x catch

stock effects

effect that harvesting decisions in the current period has on net revenue in all subsequent time effort periods through the future available stock to fish.

biological inefficiency

fish stock less than population at msy—> PVNB not maximized

aquaculture

the controlled raising and harvesting of fish

biological management

maximize average annual growth

mean annual increment

volume of trees at age T divided by the number of years(T)

optimal time to harvest

the age that maimizes the PVNB from wood

net benefits

value of the timber at harves age - PV of costs

concession agreements

define the terms under which public forests can be harvested

royalty payments

grant payments to biologicallt rich countries for all products developed from species in those countries

carbon sequestration credits

attempts to internalize the carbon absorption benefit externality by giving forest owners credit for the additional carbon they remove from the atmosphere