EC 122 — MASTER EXAM NOTES

Vocabulary flashcards covering the core concepts of EC 122, including climate science basics, economic principles, policy instruments, and adaptation strategies.

Weather

Short-term conditions of the atmosphere.

Climate

The long-term pattern or range of weather.

Natural Greenhouse Effect

The process that keeps Earth warm; human activities increase this by adding greenhouse gases (GHGs).

Carbon Sink

A system that absorbs and stores $CO_2$, such as forests and oceans.

Positive Feedback Loop

A process where initial warming causes further warming, such as ice melting which leads to less sunlight being reflected and more heat being absorbed.

Mitigation

Efforts to reduce the cause of climate change, such as cutting GHG emissions or implementing a carbon tax.

Adaptation

Efforts to deal with the effects of climate change, such as elevating homes or changing crops.

Reactive Adaptation

Changes made after a climate impact has occurred.

Anticipatory Adaptation

Changes made before an expected climate impact happens.

Private Adaptation

Actions that mainly benefit the individual person taking them.

Public Adaptation

Actions that provide benefits to many people.

Economics

The study of how society uses scarce resources and how people respond to incentives.

Law of Demand

The economic principle stating that when Price $\nearrow$, Quantity Demanded \text{\textdownarrow}, and when Price \text{\textdownarrow}, Quantity Demanded $\nearrow$.

Law of Supply

The economic principle stating that when Price $\nearrow$, Quantity Supplied $\nearrow$.

Equilibrium

The point where supply and demand meet, determining the equilibrium price and quantity.

Consumer Surplus

The benefit a consumer receives above what they actually pay.

Producer Surplus

The benefit a producer receives above the cost of production.

Total Welfare

The sum of consumer surplus and producer surplus.

Externality

A cost or benefit that affects someone outside of a transaction; $CO_2$ pollution is a negative externality.

Market Failure

A situation where the market does not account for the full social cost, often leading to too much pollution.

Property Rights

Resources that are Universal, Exclusive, Transferable, and Enforceable.

Managed System

Systems humans can adjust or manage, such as indoor temperature controlled by AC.

Unmanaged System

Systems that are hard for humans to control, such as hurricanes.

Attribution

The process of figuring out how much climate change contributed to a specific event or damage.

Market Impacts

Climate damages that have observable dollar prices, such as destroyed timber.

Nonmarket Impacts

Climate impacts with no simple market price, such as effects on wildlife, ecosystems, or recreation.

Use Value

Value derived from using a resource right now.

Option Value

The value of potentially using a resource later.

Existence Value

The value of simply knowing a resource exists.

Bequest Value

The value of preserving a resource for future generations.

Tipping Point

A threshold where a system changes sharply into a different, potentially irreversible state.

RGGI

Regional Greenhouse Gas Initiative; a regional cap-and-trade program where the government sets an emissions cap and firms buy/sell allowances.

Social Cost of Carbon (SCC)

A dollar estimate of the damage caused by one additional ton of GHG emissions.

Discounting

The process of converting future money or damages into today's value.

High Discount Rate

A rate that implies the future matters less in current decision-making.

Low Discount Rate

A rate that implies the future matters more; a $0\%$ rate values the present and future equally.

Prescriptive (Normative) Rate

A discount rate based on ethical reasoning about what society should use; usually lower.

Descriptive (Positive) Rate

A discount rate based on observed market behavior; usually higher.

Carbon Tax

A policy where the government sets a fixed price on entries/emissions, creating price certainty but uncertainty in the final quantity of emissions.

Cap-and-Trade

A policy where the government sets a fixed quantity of emissions, creating quantity certainty but price uncertainty for allowances.

Banking

Saving carbon allowances for use at a later date.

Borrowing

Using a future carbon allowance in the present.

Offset

Reducing or storing carbon elsewhere to compensate for one's own emissions.

Point of Regulation: Upstream

Regulating at the level of the producer in the supply chain.

Point of Regulation: Downstream

Regulating at the level of the emitter or user.

Carbon Dividend

Giving carbon pricing revenue back to households.

Tax Swap

Using carbon revenue to reduce another existing tax.

Progressive Distribution

A system where higher-income people pay a larger percentage of their income.

Regressive Distribution

A system where lower-income people pay a larger percentage of their income.

Ecosystem Services

Benefits nature provides to society, including water protection, carbon storage, and habitat.

Grey Infrastructure

Man-made coastal protection structures like sea walls and barriers.

Green Infrastructure

Nature-based coastal protection using wetlands, plants, and reefs.

Moral Hazard

When protection (like insurance or disaster aid) causes someone to take more risk after the protection is in place.

Adverse Selection

When high-risk people are more likely to select into or purchase insurance because they know their risk is high.

Green Paradox

When a climate policy accidentally causes behavior that worsens the climate problem, such as rushing to build before restrictions take effect.

Sudden-Onset Event

Rapid disasters like hurricanes, floods, or wildfires that cause immediate displacement.

Slow-Onset Event

Gradual climate changes like sea-level rise or drought that develop over time.

Climate Gentrification

A process where wealthier residents move into lower-income areas due to climate resilience or lower risk, potentially displacing existing residents.

Snowpack

Natural water storage that, when reduced or melted early due to warming, affects water availability for agriculture, salmon, and hydropower.