Environmental Economics

Question 1

What does the MRU say about the Tragedy of the Commons?

Answer 1

• Common resources are non-excludable and rivalrous; they get depleted the more people use them
• Tragedy of the Commons shows CAR are unregulated, so people overuse them and depletion occurs
• Solutions include property rights, tradable permits and cultural norms; costly and ineffective in many cases

Question 2

What is the issue with Environmental Economics?

Answer 2

• Not always specific Economic Costs
• Often have competing values and rights
• Market failure and Tragedy of the Commons
• Tough to Price the Environment; no-one owns it

Question 3

What does Yandle say about the Tragedy of the Commons?

Answer 3

• A potential 2nd Tragedy; the use of time and energy to increase yield but failing
• Tradable Permits seem the best; the issue of Middle-Ages’ ‘Stints’ being solved
• Could Privatise the Commons; extreme, costly and tough to enforce
• Law can be put in place; what kind? Common? Federal? (Federal being the best)

Question 4

What does the MRU say about Coase Theorem?

Answer 4

• External costs are only an issue with undefined property rights and high transactional costs
• Pollination industry; Bees have a small radius and can be clearly factioned off
• Differs from Pigouvian approach (tax/subsidy) that ignores other people

Question 5

What does the MRU say about Trading Pollution?

Answer 5

• Governments are best off reducing pollution where the cost of pollution is low, not high
• By issuing a finite number of permits, those who need to produce will drive prices up
• This incentivises Green Innovation

Question 6

What does Parkin say about the Sustainable Catch Curve?

Answer 6

• SCC illustrates the rate of unsustainability that fish are being harvested at
• States that harvesting above the stock constraint will lead to an overall diminishing of the total stock