Environmental Economics, Policy and Justice

Examination Overview

  • Exam Title: Environmental Economics, Policy and Justice
  • Course: Environ 235
  • Total Points: 100
  • Time Limit: 70 minutes
  • Instructions:
    • Answer all questions clearly and succinctly.
    • Show all work for calculation problems to receive partial credit.
    • Numerical answers should be rounded to two decimal places (e.g., 0.00).
    • Label all graphs adequately.
    • Write legibly.

Climate Change Considerations

  1. International Agreement Challenges:

    • Developmental Status:
      • Less developed countries may lack the capacity to adopt stringent policies compared to developed nations.
    • Public Goods and Free Riding:
      • Reducing greenhouse gases is a public good; countries may opt out of participating, benefiting from others' efforts without contributing.

  2. Carbon Emissions Understanding:

    • Not all emissions labeled as carbon contain solely carbon. The term typically encompasses a broader range of greenhouse gases compared to carbon dioxide, which is the most prevalent greenhouse gas.

  3. Sequestration Explained:

    • Definition: The natural process of capturing and storing greenhouse gas emissions. Enhancing this process is a significant goal of climate change policy.

Energy Policy Solutions

  1. Reducing Foreign Oil Dependency:
    • Gasoline Consumption Tax:
      • Reduces overall gasoline use, thus decreasing dependency on foreign oil while potentially resulting in limited gasoline consumption overall.
    • Import Tariffs:
      • Directly lowers foreign oil imports and generates government revenue.
    • Strategic Stockpile:
      • Government buys oil during low prices for future use to buffer against reductions in foreign sources.

Hydraulic Fracturing Concerns

  1. Fracking Differences:
    • Involves drilling that creates cracks through high pressure and does not rely on existing oil reservoirs.
    • Potential environmental concerns:
      • Groundwater contamination from chemicals.
      • High water usage leading to depletion of local sources.
      • Air quality issues due to toxic emissions.
      • Methane emissions linked to escaping gases.
      • Induced seismicity causing minor earthquakes.

Carbon Pricing Policies

  1. Definition of Carbon Pricing:

    • Policies that establish a cost for greenhouse gas emissions that can guide emissions reductions.

  2. Types of Carbon Pricing Policies:

    • Carbon Emission Taxes: Provides a direct cost on pollution.
    • Carbon Cap and Trade: Sets a limit on emissions with market trading options for permits.

  3. Leakage:

    • Refers to production shifts and pollution moving from regulated to unregulated areas, undermining pollution reduction efforts.

  4. Revenue Neutrality:

    • Generated revenue is used to offset other tax losses, maintaining overall tax burden neutrality.

  5. Displaced Workers:

    • Individuals who lose jobs due to climate policy changes, whom the generated revenue may help.

Adaptation Strategies

  1. Adaptation vs. Mitigation:
    • Adaptation: Specific actions that accommodate immediate local needs vs. the global impact of mitigating climate change.
    • Proactive vs. Reactive Policies: Proactive policies aim to prevent future issues, while reactive policies respond to events after they occur.
  2. Flood Insurance Styles:
    • Current U.S. system: Government-funded and optional flood insurance.
    • Positive Impact: Ensures access to flood insurance, as private entities struggle with profitability in high-risk scenarios.
    • Negative Impact: Government pricing can be inefficiently low, affecting market pricing.
  3. Rebuilding Issues:
    • Rebuilding on flood-prone sites fails to adapt to climate change, representing a reactive rather than proactive approach.