End of Unit 6 - Carbon Tax and Subsidy Shifting

Question 1

Payment for Ecosystem Services (Subsidy)*

Answer 1

Anytime that you are paying someone who preserves land they own for the public good

Question 2

Conservation Easements*

Answer 2

Cases where those who want to protect natural land from being developed with houses & buildings will buy the right to develop the land from the land owner

The land owner retains ownership over the land, but loses the right to develop

Question 3

What is the outcome of the 2 farms on a stream example from class?

Note: the pigs on the stream contaminate the water and violate the other farmer’s rights

Answer 3

The house and the farm come to an agreement where the farmer will pay the house $1000/Year to have his pigs.

Essentially the house is giving up its right to clean water

Economists perceive this interaction as the most efficient because both parties achieve their desired outcome

Question 4

Why did NYC go the subsidy route to protect the Catskills?

Answer 4

It’s very difficult to take away someone’s rights, especially when they have held them for years (i.e. no longer allowing certain septic systems in the area).

Instead, governments can use subsidies to PAY those who need to change their behaviors, in this case septic systems

People who have the right to pollute, can be subsidized to not do so

Question 5

Examples of perverse subsidies

Answer 5

Tax breaks on oil sands companies

Subsidies on beef and milk farms, even though they have the highest GHG emissions

Question 6

Deposit and Bond Schemes

Answer 6

Involves the application or deposit or bond at the start of an activity
If proper actions are taken to avoid environmental harm, then the deposit is returned

You get charged a fee for buying a bottled drink, but if you bring it back to recycle then you get that money back