Chapter 1 - Introduction Flashcards
Define Economics:
The study of how and why individuals and groups make decisions about the use and distribution of valuable human and non-human resources.
Define Environmental Economics:
The application of the principles of economics to the study of how environmental resources are managed.
What is Microeconomics?
The study of the behaviour of individuals and small groups.
What is Macroeconomics?
The study of the economic performance of economies as a whole.
Does environmental economics draw from macro or microeconomics more? Why?
Microeconomics, because it focuses on why people make decisions that have consequences for the natural environment.
What does Environmental Economics focus on?
A societies natural and environmental resources, and examines the way people make decisions that lead to environmental destruction and environmental improvements.
Environmental economics is an ___________ subject.
analytical
What are analytical models?
A simplified representation of reality.
What are the two distinguishing factors of economics?
- Positive
- Normative
______________ Economics: The study of what is.
Positive
______________ Economics: The study of what ought to be.
Normative
What does Positive Economics seek to understand?
How an economic system actually operates.
In relation to environmental issues, what is the economic approach regularly contrasted with?
The Moral Approach
What does the Moral Approach state?
That environmental degradation is the result of human behaviour that is unethical or immoral.
Provide some incentives, beyond money:
- Time
- Reputation
- Risk
- Guilt
Define Behaviour Economics:
An attempt to introduce psychological and perceptual factors into economic models, in order to make these models more realistic and more accurate in understanding human behaviour.
Define an Institution:
The fundamental set of public and private organizations, laws, and practices that a society uses to structure its economic activity.
What is pollution often associated with?
Profit Motive
Define Economic Incentive:
Something in the economic world that leads people to channel their efforts at economic production and consumption in certain directions.
Provide an example of a nonmaterial incentive:
Self-esteem, the desire to preserve a beautiful visual environment.
What is a PAYT Program?
‘Pay as you throw’, a system many communities have structured to give people the incentive to reduce their waste streams.
What is PAYT an example of?
Incentive
What is a drawback of the PAYT program?
The increase in illegal dumping.
Define Unit Pricing:
Reduce their solid waste to one where there are such incentives.
What is a common way of environmental economists identifying policy alternatives?
Command and control
What is one of the most agreed upon method of reducing GHG emissions?
Emissions Charges
____________ has a major role to play in the design of public policies for environmental quality improvement.
Environmental economics
What is included in the total social cost of environmental pollution?
- Expenditures +
- Damage Costs +
- Planning Costs
What is an important problem in environmental policy?
Perverse Incentives
___________ Incentives:
Incentives created by a policy that actually work against the overall objectives of that policy.
Incentives are _______________ problems because they deal with the behaviour of individuals.
Microeconomic
What kind of shape does the curve representing the relationship between GDP Growth and the Environment have?
Inverted-U
Effective decision-making requires that there be adequate information about the ______________ of the decisions.
consequences
What is the main type of public-sector analysis in environmental policy?
Benefit-cost-analysis
In the benefit-cost approach, environmental groups typically stress the ____________; business groups usually focus on the _________.
Benefits, costs
What variable complicates the benefit-cost analysis?
That the benefits are usually non market in nature.
What two groups are countries often divided into?
Developed and developing
What is IB Approaches?
Incentive-based Approaches
Provide an example of a global environmental problem?
Destruction of the earths stratospheric layer by chemicals.
Define Globalization?
The perceived changes that are taking place int he world economy, including trade, privatization, flow of financial capital.
What kind of resources does Resource Economics consist of?
Renewable and Non-renewable.
What does Environmental Economics consider?
Residuals from production and consumption.
What are two reasons why individuals choose to pollute?
- Scarcity
- Tradeoffs
Given that individuals have an incentive to pollute, what can be done to improve social welfare?
- Efficiency
- Equity
What are externalities?
When A’s consumption or production activity has an indirect effect on other members of society that is not internalized by A.
When are externalities more likely to occur?
With a lack of property rights.
What are two key ways of mitigating emissions?
- Reduce Production
- Reduce residuals intensity of production.
How can you reduce residuals intensity of production?
- Technological improvement
- Shift composition of goods
- Recycling
What are the three types of Equity?
- Horizontal Equity
- Vertical Equity
- Intergenerational Equity
__________ Equity: When an environmental policy has the same impact on different groups of people with the same income level.
Horizontal
______________ Equity: When an environmental policy has the same impact on different groups of people with different income levels.
Vertical
_____________ Equity: Pollution by current generation may negatively affect quality of life of future generations.
Intergenerational
Provide the five types of pollutants:
- Accumulative vs. Non-accumulative
- Local vs. Global
- Point Source vs. Non-point source
- Continuous vs. Episodic
- Damage unrelated to emissions.
What is the PPF / PPC?
Production Possibility Frontier / Curve
What does the PPF / PPC tell us?
It shows the maximum amount of environmental quality that a given society/economy can achieve or produce given the amount of other goods that are produced given the resources and technological constraints (all under the idea of scarcity).
Draw the PPF / PPC:
Week 1
