Enviro Test 1 Flashcards
Economics
The study of decision making
The allocation of scarce resources
Positive Economics
What is
Normative Economics
What should be
Renewable Resource
Can be replenished over time
Ex. Fish
Non-renewable Resource
Cannot be replenished
Ex. Fossil fuels
Ambient Quality
Air, nebulous
Environmental Quality
World around us
Residuals
Leftovers
Emissions
Pollution, residuals
Pollutant
reduces ambient quality
Recycling
Returning something to the production process
Reusing
Damages
Negative impact – reduction in utility or surplus
Effluent
Byproduct
Cumulative vs. Non-cumulative
Mercury vs. CO2
Point source vs. Non-point source
Coal fired electric generator vs. a car
Local vs. Regional vs. Global
Sound vs. nuclear reactor leak vs. CO2
Continuous vs. Episodic
NOx vs. Bhopal India Methyl isocyanate (pesticide)
Environmental Kuznit’s Curve
Poor countries have a very clean environment because they cannot afford/don’t have resources to damage –> Middle countries have a lot of pollution –> Wealthy countries have very clean environment because they no longer want to live in dirty conditions & can afford to clean it up.
Horizontal summing used for…
Private goods
Vertical summing used for…
Public goods
Opportunity costs
What you give up to get something
Equimarginal principle
Marginal cost per unit for each firm
Efficiency always = equity?
NO!
Public good
Non-rival- use by one person does not reduce availability to others
Non-excludable- anyone/everyone can use
Ex. National parks
Private good
Ex. Nutella
Marginal damages
Damage caused by each additional unit of pollution
Marginal benefit
Happiness resulting from each less additional unit of pollution
Marginal willingness to pay
How much you are willing to pay to reduce each unit of pollution
Environmental Impact Analysis
- A description of the environmental impact of the proposed action
- Any adverse environmental effects that cannot be avoided should the proposal be implemented
- Alternatives to the proposed action
- The relationship between short-term uses of human’s environment and the maintenance and enhancement of long-term productivity
- Any irreversible and irretrievable commitments of resources that would be involved in the proposed action should it be implemented
Economic Impact Analysis
Employment Real incomes GDP Rates of inflation Trade balances
Cost effectiveness Analysis
Assume a certain outcome– What is the best way to get to that outcome
Used in Public policy
Damage assessment
Estimate the value of the damages to an injured resource
Department of Interior determines damages
Equal or lesser value of– Lost value of the resource or Value of restoring the resource
Problems:
What was the baseline?
How do you restore?
What is the natural environment?
Cost Benefit Analysis
Marginal Social Benefit >=Marginal Social Cost
Steps:
- Decide on a perspective
- Specify the project
- Measure inputs and outputs
- Value inputs and outputs
- Compare benefits and costs
What is the scope of the project?
With/Without principle–Compare the state of the world with/without the program, don’t discount what will happen without the program
Net Present Value
FV/(1+r)^t
