environmental prelim 1

the three risks for coase theorem

think TWE. (transaction costs for lawyers, WTP =/WTA, and Equity (who gets the property rights determines who gets paid).

when measuring benefits w/out markets, the three values are:

1. use value (using the good)

2. option value (option of using good)

3. existence value (jus tknowing it exists)

types of valuing WTP

1. contingent valuation (asking how much someones wtp is

2. Travel cost (adding up things like transportation. however there’s risks w/ this

3. Hedonic Regression (value contained in price of the good. need to regress to control for other changing factors (like size of a house))

risks associated w/ travel costs?

1. multi purpose trips

2. opportunity cost of time hard to measure

3. proximal people hv low costs

ways to measure statistical life

1. VSL (how much ppl willing to pay to cut risk by 1/x)

2. VSLY (one year of life, adjusts for remaining life expectancy. values older ppl less)

3. QALY (quality of life, but can devalue ppl w/ disabilities)

why profit maximizing firms not adopt efficient tech?

1. management issues

2. focused on short term porfits

pollution havens considerations

1. trading partners

2. mobility

3. share of costs (how much cost make up total costs)

efficiency standard v. safety standard

efficiency: social benefits outweigh social costs. safety: increase safety regardless of costs.

cost effective v. efficienct relationship

policy can be cost effective but not efficient. if it’s efficient, it’s already cost effective (bc max net benefits)