Environmental Market Failure Flashcards
What are the three main functions of the environment?
- Provider of resources
- Provider of Amenities
- Absorber of waste
What is the function of providing resources?
Environment provides resources to allow goods and services to be produced
What is the function of providing amenities?
• Features of the environment that people can directly enjoy.
What is the function of absorbing waste?
The environment is used to absorb waste produced by humans such as pollution and rubbish dumped at landfill sites.
How does production and consumption affect the environment?
The production and consumption of goods can have a major impact on the environment, this impact can be caused by using the environment to provide resources as an amenity, to absorb waste or a combination of the three functions.
How are negative externalities caused?
Using the environment for these three functions can lead to negative externalities.
How is environmental market failure caused?
Ignoring negative production externalities, or negative consumption externalities can lead to environmental market failure.
What is the welfare loss in environmental market failure?
Form of damage caused to the environment by externalities.
What is resource depletion?
Reduction of available natural resources
What is the reduction of natural resources caused by?
It’s a negative externality of using some natural resources, the third party that is affected is the people who can’t use these resources in the future.
What kind of resources does resource depletion affect?
Non renewable resources
How may renewable resources be depleted?
used up more quickly than they’re replaced.
What is resource degradation?
Where a natural resource becomes less productive over time.
What may resource degradation be caused by?
Types of pollution or intensive use of the land.
What kind of externality does resource degradation cause?
Negative externality, the third party is the people who will use the less productive resource in the future.
