Chapter 8 Flashcards
What is a stock pollutant?
A stock pollutant is a pollutant that has long-term consequences.
What is a flow pollutant?
A flow pollutant does its damage relatively quickly and is then either diluted to harmless levels or transformed into harmless substances.
What are the 2 ways that people modify their environment?
- The use of natural resources.
- The exhaustion of environmental sinks.
Resources and sinks can be renewable or non renewable.
Explain whether a stock is renewable or non renewable.
As long as the rate of extraction of renewable resource stocks is balanced by regeneration, resource use will not reduce future availability.
However, any use of non renewable resources reduces their stock.
What is the common definition of sustainability?
Development that meets the needs of the present without compromising the ability of future generations to meet their own needs.
What is weak sustainability?
Requires that the overall capital stock needed to support a high quality of life - including manufactured, human, social, and natural capital - is maintained.
In other words, weak sustainability can be achieved even with the loss of natural capital as long as other forms of capital are adequate substitutes.
What is strong sustainability?
Requires maintaining the total stock of each form of capital separately (natural, manufactured, human, and social).
Focuses on measuring natural capital.
How have discussions around weak and strong sustainability been divided?
Neoclassical and ecological.
What do neoclassical economists believe?
Neoclassical economists view neural and other forms of capital generally as substitutes in production. They view nature as being highly resilient.
Globalization, if it promotes development, can also lead to a sustainable future.
Sustainability is achieved through a well-functioning and properly regulated market system.
What do ecological economists believe?
Ecological economists argue that other forms of capital cannot generally be used to substitute for natural capital.
The global ecosystems in which out economy is embedded are fragile.
They tend to be technological pessimists.
They see for an expanded role for government in aggressively protecting our dwindling stock of natural capital.
How do we value the services of natural capital far into the future?
Use benefit-cost analysis to assess if it is more efficient to protect or to use up the natural capital today.
What is an environmental bond?
Putting money aside into a bank account specifically to compensate future generations for pollution damages or depletion of natural capital.
What does it mean for benefits to be discounted?
When future benefits are not weighted as heavily as current benefits.
What determines an interest rate or market discount rate?
Supply and Demand in the market for loanable funds.
The supply of loanable funds is determined by bank deposits- money in individual and business savings account that, in turn, form the basis for loans by banks.
The demand curve for loanable funds reflects the opportunities for productive investment projects in the economy.
Both the quantity of loans supplied and demanded depend on the interest rate: higher rates lead to a desire for more savings, and less desire for borrowing.
At the same time, reductions in the overall supply of loanable.funds, or an increase in demand, will raise market rates and lead to greater discounting of the future.
What is the positive rate of time preference?
The well-known desire to consume more today, regardless of the consequences for tomorrow.
