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A - Economics spring > 7 - Economics and the Environment > Flashcards

7 - Economics and the Environment Flashcards

1
Q

what is this specific unit about?

A

how the economic activity affects the fragile biosphere of our planet and how the resulting problems can be addressed

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2
Q

how is this chapter linked with previous chapters?

A

we saw that production and distribution of goods and services (the economy) takes place within society and the biosphere and therefore affects the environment

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3
Q

what is the chapter about at the bigger picture?

A

the conditions in which affect the overall interaction between markets, households, firms, governments and the world
(affect but also affected)

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4
Q

why do environmental problems matter?

A

next generations will suffer from the consequences of actions taken by previous generations and as human beings we care about others

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5
Q

how can environmental damage be reduced?

A

through well designed environmental policies that balance the cost of reducing environmental damage against the benefits

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6
Q

what is an overview of the environmental policies that can be used?

A
  • ones that use taxes or subsidiaries

- others use direct prohibition or limit the use of environmentally damaging materials and practises

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7
Q

what has happened to many mineral resources over the last 200 years?

A
  • prices haven’t changed much (overall trend is flat, even with some fluctuations)
  • extraction has increased drastically
  • indicates that supply of raw materials is vast
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8
Q

what has the transformation is living standards been a result of?

A

combination of human ingenuity and available resources such as coal, soil and water

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9
Q

what has happened to some available resources?

A

not abundant anymore or free
others such as minerals are still abundant

(forests, biodiversity and clean water ar becoming scarce)

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10
Q

why is managing renewable resources so hard?

A
  • absence of prices
  • fragility of enviro under pressure from growth of echoic activity leading to progressive degradation and self reinforcing collapse
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11
Q

what happened to the atlantic cod?

A

due to it being an open access resource, many used the area for industrial fishing and round the mid 70’s cods numbers started to decline and less than fifty years after they have almost completely gone, showing how our need to supply is harming the biotic environment

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12
Q

what is a self reinforcing ecosystem collapse?

A

whereby the initial effects by humans are then made worst by the ecosystems themselves (positive feedback system)

amazon rainforest is likely to become a self reinforcing, e.g reduce size, reduce rain, drought, fires

also global warming

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13
Q

what are two aspects of environmental degradation and what is the difference between them?

A
  • depletion of commodities
  • global warming

commodities are priced and traded (some resources may self correct as prices of scarce commodities rise)
enviro effects usually only corrected through policy or political action (which is harder)

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14
Q

how can this chapter be linked with last semester?

A

externalities, incomplete contracts and missing markets

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15
Q

where is the economy embedded?

A

within society which is embedded in the environment

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16
Q

what is the cost/beneift, market faille and remedies associated with taking an international flight?

A
  • increase in carbon emissions
  • private ben and external cost
  • taxes/quotas
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17
Q

similar to market failures how does climate change arise form?

A

missing markets

when free markets don’t maximise their sociertal welfare

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18
Q

what is the difference between local enviro problems and climate change?

A

climate change is global and effects everyone with different interest who will all be affected in different but similar ways

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19
Q

what do scientists think is the greatest threat to future human wellbeing?

A

climate change

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20
Q

why is climate change used as a focus of efficiency and fairness?

A

shares five features with other environmental problems

  • stabilising yearly emission is not sufficient (need to decreasE)
  • irreversibility
  • worst case scenario (uncertainty of the scale of damage)
  • global problem needing international cooperation
  • conflicts of interest (impacts differ - future gen)
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21
Q

how is economic activity linked to climate change?

A

burning of fossil fuels for energy, industrial revolution

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22
Q

why will stabilising emissions not cause a benefit in terms of climate change/

A

cfhangingthe flow of carbon dioxide will cause a constant increase in the stock of co2

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23
Q

what are abatement policies?

A

policy designed to reduce environmental disaster

24
Q

how are enviro problems including climate change addressed?

A

through abatement policies

25
Q

what re examples of abatement policies?

A
  • discovering and adopting technologies that are less polluting
  • consume fewer or less enviro damaging goods
  • banning or limiting use of enviro harmful substance
26
Q

what is problems with eliminating all co2 emissions?

A

the economic costs would exceed the enviro benefits

27
Q

what are people views influenced by?

A

self interest

but also about the effects on others

28
Q

what do abatement policies include?

A

taxes on emissions s and incentives to use fuel efficient cars

29
Q

how can a cost curve be used in abatement policies?

A

show the relationship between the reduction in enviro probs and the cost of this abatement

30
Q

how come the cost curve for abatement and greenhouse gases is likely to be inaccurate?

A

as technologies are being produced all the time, prices fall so the ways in which we abate and the prices we do it for a likely to change

31
Q

what can we use the marginal cost curve for abatement for?

A

estimate how much abatement we get for any level of expenditure, assuming we implement the most efficient methods first

(feasible set would be anything within this marginal cost curve)

ou wouldn’t pick a point in the interior of the feasible set as it would be inefficient e.g. you can get another method for a cheaper price

32
Q

how do you calculate marginal rate of transformation for enviro quality and decrease in consumption?

A

increase in enviro quality / decrease in consumption

steeper the slope = smaller opportunity costs of further enviro improvements

33
Q

what two principles will the policy maker use to make decisions on level of abatement?

A
  • consider only abatement policies on the frontier of the feasible set
  • chooses combination of enviro quality and consumption that puts her on the highest possible indifference curve

to satisfy both condition must find point of feasible frontier that equates the MRT with the MRS

34
Q

what would produce different choice about abatement levels in terms of policy markers?

A
  • different values: if people cared less about enviro

- costs of abatement: if it was cheaper then feasible set would be steeper

35
Q

why do conflicts of interest arise?

A

enenvironmental quality is never the same for everyone

some people benefit more than other depending on location and income

36
Q

who bears the cost of abatement?

A

outcome depends on who has the most bargaining power

would like to chive a middle point in which both parties benefit

37
Q

what are two types of policy based decisions?

A
  • price based policies

- quantity based policies

38
Q

what is a price based policy?

A

a policy that uses taxes or subsidiaries to affect prices, effect to internalise the decision on individual

39
Q

what is a quantity- based policy?

A

policies that use environmental objectives using bans, caps and regulations

40
Q

what is the policy cap and trade?

A

combines legal limit on amount of emissions with incentive based approach assigning abatement required to meet this legal limit

  • gove set total level of abatement required
  • give creates permits
  • permits are traded (kyoto protocol)
  • firms submit permits to gov to cover their emissions
41
Q

what is the largest co2 cap and trade scheme in the world?

A

2005 EU trading scheme

11,000 polluting installations across the EU

42
Q

why has cap and trade been more favourable over tax in terms of carbon?

A

advantage of flexibility, ability to set carbon price and then control way n wchih permits are allocated and traded gives policy marker two levers in contrast to single tax

43
Q

to implement enviro policies what is needed?

A

need to measure the value of abatement

44
Q

what two methods can be used to measure the benefits of abatement?

A
  • hedonic pricing

- contigent valuation

45
Q

what is hedonic pricing?

A

called a revered preference approach as it uses people economic behaviour to reveal what their preferences are

e.g. studying house prices

identifies price factors

46
Q

what is contingent valuation?

A

easiest and widely used

survey technique used to asses the value of non market techniques

simply ask people

e.g. 1989 oil spill in Alaska court survey asking respondents how much they would pay to prevent another oil spill

stated preference approach, accepts statements of their values as indicative of their true preferences

47
Q

what is the green growth accounting framework?

A

environment is considered an asset that can be used up

therefore envrinoental degradation reduces the assets of the society in much the same way

48
Q

how can tax affect how consumers alter their behaviour?

A

through the income and substitution effect
IE = choices more limited than before as price gone, real income fallen
SE = as prices rise you substitute for something cheaper

49
Q

what is a challenge to policy makers ni regard to the dynamics of the biosphere?

A

environment has its own natural processes so that small initial changes could lead to mush larger effects, resulting in faster and greater deterioration n

50
Q

what is a prudential policy

A

used when there is a potential tipping point in an unstable equilibrium
places high value on reducing the likelihood of disastrous outcome even if its has high costs compared to other objectives

51
Q

what unusual challenges does climate change pose?

A
  • those affected by our choices today include regeneration in the distant future
  • problem cannot be solved by national govs acting alone
52
Q

what does game theory help to understand in terms of climate change?

A

the obstacles to its solution

53
Q

complete self interest in climate change game theory does what?

A

makes the ‘business as usual’ scenario the dominant strategy

54
Q

what temp was targeted in the paris meeting 2015 UN conference on climate change?

A

stables temp at 2 degrees above pre industrial level, virtually all countries committed

55
Q

what can be used to measure effects on future generations?

A

discount rate

social discount rate puts a present value on costs and benefits that will occur at a later date

important in working out how much todays society should invent in limiting effects of climate change in future

56
Q

what does high discount rate mean?

A

less weight on the future and less investment is needed to guard against future costs

57
Q

what does low discount rate mean?

A

supports view that we should act now to protect future generations from climate change impacts

A - Economics spring (9 decks)

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