Chapter 5 Flashcards
Economy
a social system that converts resources into goods and services
Economics
the study of how people decide to use potentially scarce resources to provide goods and services that are in demand; study of how people use resources in the face of demand
Capitalist Market (capitalism)
free market; determined by the people rather than the government; private buyers and sellers
Centrally Planned
socialism; economic decisions made by the state or government rather than interactions between consumers and businesses; i.e. China and North Korea
Mixed Economy
Combination of private and public enterprise; features characteristics of both capitalism and socialism; i.e U.S. (army, navy, etc/ hurricane relief/ govt regulation to make things fair)
Classical Economics
the study of the behavior of buyers and sellers in a capitalist market economy; founded by Adam Smith
Adam Smith
Scottish philosopher’ argued that self-interested economic behavior can benefit society, if the rule of law and private property rights constrains it in a competitive market place; economy led by invisible hand (quote on page 149)
Neoclassical Economics
examines consumer choices and explains market prices in terms of our preferences for units of particular commodities; buyers want low price and sellers want high price; more quantitative
Cost-benefit analysis
to evaluate a decision; compares estimated costs with the estimated benefits; if costs outweigh/exceed benefits it should not be done; controversial: not all costs and benefits are clear/hard to measure
Demand
quantity of a good consumers want at a given price; low price want to buy a lot; high price want to buy little
Supply
quantity produced at a given price; high price producers want to produce a lot and low price little quantity
Replacing Resources
market imposes no penalties for depleting resources b/c it is assumed that we will always have replacements; run out of oil replace w/ something else, trees replaced with bamboo; assumes all resources are abundant and replaceable
External Costs
costs of a transaction that affect people other than the buyer or seller; i.e pollution in factory town in China; external costs tend to affect the poor the most
Discounting
in the future something will have less value than in the present; reflects how people value things; present things more important than future things
Growth
an increase in an economy’s production and consumption of goods and services; growth=good; criticism: b/c economy is growing doesn’t mean people’s lives are better
Environmental Economics
modifies neoclassical economics to address environmental challenges; believes sustainability can be attained within our current economic systems
Ecological Economics
applies to ecology; stresses in nature, every population has a carrying capacity and systems are self-renewing cycles; sustainability requires more far-reaching challenges
Steady-state Economy
economy that does not grow or shrink but remains stable
Accounting for non-market values
may help us make better economic and environmental decisions
Use Value
the worth of something we use directly
Existence Value
the worth of knowing that something exists even if we never experience it ourselves
Option Value
the worth of something we might use later
Aesthetic Value
the worth of something’s beauty or emotional appeal
Scientific Value
worth of something for research
Cultural Value
worth of something that sustains or helps define a culture
Monetizing Natural Resources
estimate of the value of the world’s ecosystem services; $143 trillion dollars
Contingent Valuation
survey-based economic technique for the valuation of non-market resources, such as environmental preservation or the impact of contamination; how much would you be willing to pay to protect this? may overinflat it
Full Cost Accounting
attempts to summarize all costs and benefits by assigning monetary values to entities without market prices and then generally subtracting costs from benefits
Gross Domestic Product (GDP)
Calculating the total monetary value of final goods and services the nation produces each year to assess the nation’s economy; GDP always going up: misleading
Genuine Progress Indicator (GPI)
Differentiates between desirable and undesirable economic activity; benefits = volunteering; costs= environmental degradation; GPI more steady/ how people actually feel
Policy
formal set of general plans and rules intended to guide decision making
Public Policy
Policy made by the government
Environmental Policy
Pertains to our interactions with the environment; aims to regulate resource use, reduce pollution, promote human welfare and protect natural resources
Tragedy of the Commons
when publicly accessible resources are open and unregulated they become exploited and degraded; taking more than your share; forests, fisheries, clean air, clean water
Economic rationale to tragedy of the commons
you benefit from taking more and negative spread out among everyone; you get the full benefits and cost and spread out
Free Riders
a party that fails to carry out environmentally responsible activities and relies on others to do so
Obstructions to Environmental Policy
- Environmental protection means economic sacrifice
- Regulations viewed as restrictive, costly
- time and money lost
- reviews by government agencies
- env controls, monitoring and mitigation
- env problems are long term and that’s not how humans act
- checks and balances in democracy
Role of Science in Policy
whether to regulate a substance that may pose public health issues/risk; bill to reduce pollution; impacts of pollution/ benefits from the bill
Congressional Legislation
laws created by Congress by crafting bills that can become law with the signature of the head executive branch, the president
Executive Legislation
implements and enforces laws once they are enacted
Judicial Interpretations
consists of the Supreme Court and various lower courts, interprets law and is an important arena for environmental policy
Federal Government
divides up power into national and local governments; the three branches
State Government
shares political power with the federal government
Local Government
Administration of a particular town, county or district
Frontier Expansion and Development
- 1780’s- late 1800’s
- promoted western settlement and the extraction and use of the continent’s abundant/inexhaustible natural resources
- General Land Ordinances: govt’s right to manage land it was taking from the Native Americans
- relieved crowding in Eastern cities
Conservation and Preservation
- 1800’s - mid 1900’s
- emerging conservation and preservation ethics; laws to relieve environmental impacts of westward expansion
- Yellowstone first national park
- national park system, forest system and wildlife refugee system
- understanding that the continent’s resources are exhaustible and required protection
Pollution Control
- 1960’s - 1990’s
- densely populated nation driven by industry and technology and intensive resource consumption
- Rachel Carson’s book Silent Spring: health impacts of pesticides
- Ohio’s Cuyahoga River fire; so polluted with oil and industrial waste; higher water quality and public health
- public demand for a cleaner environment during this time
Clean Air Act
- 1963
- amended 1970 and 1990
- set standards fro air quality, restricts emissions from new sources, citizens can sue violators, funds research
Endangered Species Act
- 1973
- protects species threatened with extinction
- forbids destruction of habitat, provides funding for recovery efforts
Safe Drinking Water Act
- 1974
- authorizes EPA to set quality standards for tap water provided by public water systems and to work with states to protect drinking water sources from contamination
Toxic Substances Control Act
- 1976
- Directs EPA to monitor thousands of industrial chemicals and gives power to ban those found to pose too much of a health risk
Resources Conservation and Recovery Act
- 1976
- sets standards and permitting procedures for the disposal of solid waste and hazardous waste
Clean Water Act
- 1977
- regulates discharge of wastes, esp from industry into streams and rivers; aims to protect wildlife and human health and helps clean up U.S. waterways
Soil and Water Conservation Act
- 1977
- directs the U.S. Department of Agriculture to survey and assess soil and water conditions across the nation and prepare conservation plans
- responds to worsening soil erosion on farms
CERCLA (“Superfund”)
- 1980
- funds the Superfund programs to clean up hazardous waste at the nations most polluted sites; costs were paid by polluters at first but now borne to taxpayers
- Comprehensive Environmental Response Compensation and Liability Act
National Environmental Policy Act (NEPA)
U.S. law enacted on January 1, 1970 that created an agency called Council on Environmental Quality and required that an environmental impact statement be prepared for any major federal action
Environmental Impact Statement (EIS)
a report of results from detailed studies that asses the potential effects on the environment that would likely result from development projects or other actions undertaken by the government
Environmental Protection Agency (EPA)
conducts and evaluates research, monitors environmental quality, sets and enforces standards, assists states in meeting standards and goals for environmental protection and educates the public
Political Backlash
- 1990’s - now
- environmental issues predominantly Democratic concern
- bipartisan advances rarely occur and U.S. is not advancing like other countries in regards to the environment
Environmental Policy Today
focused on sustainability and sustainable development; big issue of global climate change
Lawsuits
- how most environmental policy questions were addressed in court before legislation in the 1960s and 1970s
- people suffering external costs from pollution would sue polluters but with industrialization there was too much
- legislation and regulation was better
Command-and-Control Policy
a regulating agency prohibits certain actions or sets rules/standards/limits and threatens punishment for violators; government can regulate emissions
Economic Policies (i.e. market based approaches)
- economic policy tools can create financial incentives to promote desired outcomes to encourage entities to generate new and better solutions at lower cost
- a factory that pollutes less will outcompete the one that pollutes more through permit trading, avoiding green taxes or selling ecolabeled products
- benefits the public
Green Taxes
taxes on environmentally harmful activities and products; business is reimbursing the public for environmental damage it causes
Subsidies
a government giveaway of money or resources that is intended to support or promote an industry or activity; takes many forms and one is a tax break
Ecolabeling
sellers who use sustainable practices in growing, harvesting or manufacturing products advertise this fact on their labels, hoping to win approval from buyers
Emissions trading
a government creates a market in permits for the emission of pollutants and companies, utilities or industries then buy and sell permits among themselves
Market Incentives
rebates to residents who buy water-efficient toilets and appliances, discounts to high-efficiency appliances, etc
Sustainable Development
economic progress that maintains resources for the future
Triple Bottom Line
a trio of goals including economic advancement, environmental protection and social equity which will lead to sustainable development
