EC 122 — MASTER EXAM NOTES

Practice vocabulary flashcards for EC 122 covering climate basics, economics, policy mechanisms, and adaptation strategies.

Weather

Short-term conditions.

Climate

Long-term pattern/range of weather.

Natural greenhouse effect

Keeps Earth warm by trapping heat; human activities add more GHGs, increasing this effect.

Carbon Sink

Absorbs and stores $CO_2$; examples include forests and oceans.

Positive Feedback Loop

A process where initial warming causes more warming, such as ice melting which reduces reflected sunlight and increases heat absorption.

Mitigation

Reducing the cause of climate change by cutting GHG emissions through methods like renewable energy and carbon taxes.

Adaptation

Dealing with the effects of climate change, such as elevating homes or changing crops.

Reactive Adaptation

Adaptation that occurs after the impact of climate change happens.

Anticipatory Adaptation

Adaptation that occurs before expected impact.

Private Adaptation

Adaptation that mainly benefits an individual.

Public Adaptation

Adaptation that benefits many people.

Economics

Study of how society uses scarce resources; focuses on how people respond to incentives.

Law of Demand

Economic principle stating that as Price $\uparrow$, quantity demanded $\downarrow$, and as Price $\downarrow$, quantity demanded $\uparrow$.

Law of Supply

Economic principle stating that as Price $\uparrow$, quantity supplied $\uparrow$.

Equilibrium

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

Consumer Surplus

The benefit a consumer gets above what they pay.

Producer Surplus

The benefit a producer gets above the production cost.

Total Welfare

The sum of consumer surplus and producer surplus.

Efficient Market

Requires perfect competition, perfect information, and complete markets.

Externality

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

Market Failure

Occurs when the market does not account for the full social cost, leading to potentially too much pollution.

Property Rights

Must be universal, exclusive, transferable, and enforceable for a market to function properly.

Managed System

A system humans can adjust or manage, such as indoor temperature with AC.

Unmanaged System

A system 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 damages with no simple market price, such as impacts on wildlife, ecosystems, or recreation.

Use value

Value derived from using a resource now.

Option value

Value of potentially using a resource later.

Existence value

Value derived from just knowing a resource exists.

Bequest value

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 allowances are bought and sold.

Social Cost of Carbon (SCC)

Dollar estimate of damage caused by $1$ additional ton of GHG emissions.

Discounting

Converts future money or damages into today's value because people prefer benefits sooner and future money can be invested.

High Discount Rate

A rate that causes the future to matter less in present value calculations.

Low Discount Rate

A rate that causes the future to matter more in present value calculations.

$0\%$ Discount Rate

A rate where the present and future are valued equally.

Prescriptive / Normative Rate

A discount rate based on ethical reasoning of what society SHOULD use; usually results in lower rates.

Descriptive / Positive Rate

A discount rate based on observed market behavior of what society ACTUALLY uses; usually results in higher rates.

Carbon Pricing

Putting a price on $CO_2$ so polluters account for climate costs; aims to be flexible and cost-effective.

Carbon Tax

A policy where the government sets the PRICE of carbon; provides price certainty but leave emission quantities uncertain.

Cap-and-Trade

A policy where the government sets the QUANTITY of emissions; provides quantity certainty but leaves price uncertain.

Banking

Saving an emissions allowance for use at a later time.

Borrowing

Using a future emissions allowance now.

Offset

Reducing or storing carbon in one location to compensate for emissions made elsewhere.

Upstream Regulation

Regulating carbon at the producer level.

Midstream Regulation

Regulating carbon in the middle of the supply chain.

Downstream Regulation

Regulating carbon 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 type of tax.

Progressive Distribution

A system where higher-income people pay a larger $\%$ of their income.

Proportional Distribution

A system where everyone pays the same $\%$ of their income.

Regressive Distribution

A system where lower-income people pay a larger $\%$ of their income.

Ecosystem Services

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

Shoreline Stabilization

Coastal adaptation strategy using sea walls, riprap, or breakwaters to protect the shore.

Accommodation

Coastal adaptation strategy of staying in place but reducing risk, such as elevating homes.

Retreat

Coastal adaptation strategy of moving homes and infrastructure away from high-risk areas.

Grey Infrastructure

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

Green Infrastructure

Coastal protection that uses nature, such as wetlands, reefs, and living shorelines.

Moral Hazard

A situation where protection (like disaster aid) causes someone to take MORE RISK because their behavior changes AFTER protection.

Adverse Selection

Occurs when high-risk people are more likely to SELECT into insurance because they know their own risk level.

Green Paradox

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

Sudden-Onset Disasters

Fast-occurring events like hurricanes, floods, or wildfires that cause immediate displacement.

Slow-Onset Disasters

Gradually developing climate changes like sea-level rise or drought.

Climate Gentrification

Process where climate risk or resilience causes wealthier investors to move into lower-income areas, potentially displacing existing residents.

Snowpack

Natural water storage; climate warming causes it to melt earlier or fall as rain, leading to water arriving too early for summer needs.

Salmon Climate Threats

Factors including warmer water, drought, low streamflow, and parasites that threaten fish populations.