Chapter 1

Question 1

carrying capacity

Answer 1

the level of population and consumption that can be sustained by the available natural resource base

Question 2

ecological economics

Answer 2

an economic perspective that views the economic system as a subset of the broader ecosystem and subject to biophysical laws

Question 3

nonrenewable resources

Answer 3

resources that are available in a fixed supply, such as metal ores and oil

Question 4

renewable resources

Answer 4

a resource that is supplied on a continuing basis by ecosystems

Question 5

common property resources

Answer 5

a resource that is not subject to private ownership and is available to all, such as the oceans or atmosphere

Question 6

public goods

Answer 6

goods that are available to all (nonexclusive) and whose use by one person does not reduce their availability to others (nonrival)

Question 7

externalities

Answer 7

an effect of a market transaction that changes the utility, positively or negatively, of those outside the transaction

Question 8

third-party effects

Answer 8

effects of market transaction that affect people other than those involved in the transaction, such as industrial pollution that affects a local community

Question 9

solar energy

Answer 9

the energy supplied continually by the sun, including direct solar energy as well as indirect forms such as wind energy and flowing water

Question 10

circular flow

Answer 10

a diagram that indicates the ways resources, such as goods, money, waste, and energy, move through an economy or ecosystem

Question 11

natural resources

Answer 11

resources that occur in a natural state and are valuable for economic activities, such as minerals, timber, and soils

Question 12

economic valuation

Answer 12

the valuation of a resource in monetary terms

Question 13

environmental macroeconomics

Answer 13

the analysis approach that places the human economic system within an ecological context to balance the scale of the economic system within ecological constraints

Question 14

environmental services

Answer 14

ecosystem services such as nutrient cycling, water purification, and soil stabilization; these services benefit humans and support economic production

Question 15

environmental microeconomics

Answer 15

the use of microeconomic techniques such as economic valuation, property rights rule, and discounting to determine an efficient allocation of natural resources and environmental services

Question 16

internalizing external costs/externalities

Answer 16

using approaches such as taxation to incorporate external costs into market decision

Question 17

assets

Answer 17

something with market value, including financial assets, physical assets, and natural assets

Question 18

intertemporal resource allocation

Answer 18

the way resource use is distributed over time

Question 19

discount rate

Answer 19

the annual rate at which future benefits or costs are discounted relative to current benefits or costs

Question 20

property rights

Answer 20

the set of rights that belong to the owner of a resource, such as the right of a landowner to prohibit trespassing

Question 21

cost-benefit analysis (CBA)

Answer 21

a tool for policy analysis that attempts to monetize all the costs and benefits of a proposed action to determine the net benefit

Question 22

biodiversity

Answer 22

the maintenance of many different interrelated species in an ecological community

Question 23

global environmental problems

Answer 23

environmental problems having global impacts such as global climate change and species extinction

Question 24

ecological cycles

Answer 24

the flow of energy and natural resources throughout ecosystems

Question 25

throughput

Answer 25

the total use of energy and materials as both inputs and outputs of a process

Question 26

macroeconomic scale

Answer 26

the total scale of an economy; ecological economics suggests that the ecosystem imposes scale limits on the macroeconomy

Question 27

sustainable development

Answer 27

development that meets the needs of the present without compromising the ability of future generations to meet their own needs