Environmental Policy Notes

Free Market

An economic system where consumers decide how to use resources, letting the market dictate choices based on preferences.

Planned Economy

An economic system where the government regulates and controls resource allocation and environmental policy.

Negative Externality

A situation where the actions of one party result in negative impacts on another party, with costs borne by the impacted party.

Free Riders

Individuals or entities that benefit from resources, goods, or services without paying for them, imposing costs on others.

Limited Resources

The concept that most natural resources are finite, creating questions about the incentives to limit their capture and use.

Risk

The threat to health and life resulting from exposure to certain activities or substances.

Risk Assessment

The process of determining the level of risk associated with a particular activity or exposure.

Risk Management

Actions taken to mitigate risks based on risk assessment outcomes.

Risk Averse

A behavior characterized by an attempt to avoid risks and take measures to reduce exposure.

Risk Tolerant

A behavior where individuals are less concerned about avoiding risks and do not take actions to mitigate them.

Performance Standards

Regulations that set a goal or requirement but allow flexibility in how to meet that goal.

Design Standards

Regulations that specify not only the performance requirements but also how to achieve those requirements.

Inducements

Policy tools such as charge systems, tradable permit systems, and subsidies used to encourage compliance or behavior change in economic activities.