Chapter 7 Flashcards
Goal of cap and trade
To limit the rise in global temperature
Depends on their being a substantive link between CO2 emissions and temperature rise
Cap-and-trade
Tax on emitters
Legal emission limit
Revenues to government
Offset costs to industries
Offset energy prices for middle income Americans
Invest in renewable energy, low-carbon transportation, low-carbon economy
Environmental economics
Impacts on the environment as a result of economic activity
Regulation of the economy and economic processes
Balancing environmental and economic goals
Developing economic policy to minimize environmental degradation
Finding affordable solutions to environmental problems
Direct costs
Costs borne by the producer and passed on to the user or purchaser
Raw materials, processing, transportation, sales
Indirect costs (externalities)
Not normally accounted for in cost-revenue analysis by producers
Examples: Air and water pollution, whale watching
Public service functions
Services ecosystem provide to humans and the environment
Economists refers to systems that provide these functions as Natural Capital
The environment as a commons
Land or other resources owned publicly
Public access for private usage
Externality
Indirect cost
An effect not normally accounted for in the cost revenue analysis of producers
Not recognized as part of their costs and benefits
Costs or benefits that don’t show up in the price tag
Benefit/cost analysis
Do the benefits outweigh the costs
(B-D)/C
D= Disbenebits (externalities)
Risk analysis
Risk - benefit analysis: the riskiness of an action relative to the possible beneficial outcome
Expected monetary value (EMV) = p outcome x $ outcome
Marginal cost
Cost to reduce one additional unit of pollutant
Cost to produce one additional unit of whatever
