Chapter 5 - The Economics of Environmental Quality Flashcards
What is the “Policy Question”?
If we do not like the way things are currently turning out, what steps should be undertaken to change the situation?
What three key things does the Policy Problem include?
- Identifying the most appropriate level of environmental quality we ought to try to achieve.
- Dividing the task and costs of meeting environmental quality goals.
- Distributing benefits and costs across society appropriately.
What is the Scientific Basis of Environmental Policy?
The study of how firms and consumers normally make decisions in the market economy.
What are the two sides of trade-offs referred to as?
- Damages
- Abatement Costs
Define Damages:
All the negative impacts that users of the environment experience as a result of the degradation of that environment.
Define a Damage Function:
It shows the relationship between the quantity of a residual and the damage that residual causes.
What are the two types of damage functions?
- Emission Damage Functions
- Ambient Damage Functions
______________ Damage Function: These show the connection between the quantity of a residual emitted from a source or group of sources and the resulting damage.
Emission
______________ Damage Functions: These show the relationship between the concentration of particular pollutants in the ambient environment and the resulting damage.
Ambient
How are Damage Functions expressed?
Marginal Damage Functions
______________ Damage Function: Shows the change in damage stemming from a unit change in emissions or ambient concentration.
Marginal
Why do we use Damage Functions?
To discuss total damages because we know that the areas under marignal damage functions correspond to total damages.
What do the height and shape of a damage function depend on?
Pollutant and other circumstances
What do the horizontal (x) and vertical (y) axis’ of a damage function represent?
x: Q of a Pollutant
y: Environmental Damage (miles, number, quantity, etc.)
What are Thresholds?
Values of emissions or ambient concentrations below which marginal damages are zero.
True or False: Thresholds mean that a pollutant can increase to these threshold levels without causing any increase in damages.
True
The Damage Function is _________ specific.
time
What are some factors that move Damage Functions upward?
- More or less people exposed
- Different time periods
- Different ecosystem conditions
- New scientific estimates of pollution impact
True or False: Damage Functions are reversible.
False, once a pollutant has been exposed it is rarely reversible.
Define Abatement Costs:
The costs of reducing the quantity of residuals being emitted into the environment, or of lowering ambient concentrations.
True or False: Abatement costs will differ from one source to another.
True, each pollutant will require a different treatment.
True or False: Marginal Abatement Cost and Marginal Damages share the same x and y axis titles.
True.
What does the Marginal Emission Abatement Cost show?
The added costs of achieving a one-unit increase/decrease in emission level.
True or False: The Marginal Abatement Cost curve is downward sloping.
True.
The larger the reduction in emissions, the _________________ the marginal costs of producing further reductions.
greater
The marginal abatement cost function can express ___________ marginal costs of a source or the __________________ marginal abatement costs.
actual, lowest possible
How do you find the total costs of abating emissions at a certain level?
From the area under the marginal abatement cost curve, a+b (reading from right to left on the graph)
Define Technological Change in Abatement Costs:
A critical factor in the long-run effort to reduce environmental pollution.
What three steps is Technological Change divided into?
- Research and Development (R&D)
- Innovation
- Adoption
What is R&D?
Research and Development: Basic research that identifies potentially new procedures and techniques for educing emissions.
Define Innovation:
Incorporating the results of R&D into real-world technologies that are economically feasible.
Define Adoption:
The widespread application of the technology, spreading from early adopters to entire economic sectors.
What is the central idea of the Abatement Cost function?
A function that shows the least costly way of achieving reductions in emissions.
Define the Efficient Level of Emissions:
The level at which marginal damages are equal to marginal abatement costs.
The idea of the efficient level of emissions comes under ______________ economics.
normative
Abatement costs depend critically on the ____________ available for reducing effluent streams.
technology
What doe she application of the Equimarginal Principle say?
If there are multiple sources of a pollutant with differing marginal abatement costs, and if it is desired to reduce aggregate emissions at the least possible cost, then emissions from the various sources must be reduced in accordance to the equimarginal principle.
True or False: The equiproportionate Reduction violates the equimarginal principle.
True.
MAC are not equalized when each source reduces its effluent.
