Environmental Market Failure

Question 1

What are the three sectors that the structure of an economy is based around?

Answer 1

• Primary ( mining, agriculture and fishing )
• Secondary ( construction and manufacturing, capital goods )
• Tertiary ( Services )

Question 2

In less developed countries, what sector is the largest?

Answer 2

• Less developed economies have a large primary sector.
• If these economies are relatively unmechanised , then the impact that these industries will have on the environment will be fairly limited.

Question 3

What kind of impact may less developed economies have on the environment?

Answer 3

• If these economies are relatively unmechanised , then the impact that these industries will have on the environment will be fairly limited.

Question 4

What does the growth of the secondary sector lead to?

Answer 4

• The mechanising of the primary sector, so more machinery will be used for things like agriculture and mining to provide more resources for the secondary sector.

Question 5

What impact does the growth of the secondary sector have on the environment?

Answer 5

• As the primary sector becomes more mechanised, the primary sector will have a greater negative impact on the environment

Question 6

What does the continuation of a country’s development result in?

Answer 6

• The economy being dominated by the tertiary sector.

Question 7

How does continued development of a tertiary sector affect the environment?

Answer 7

• Industries in the tertiary sector will often have a smaller impact on the environment as they require fewer natural resources, and they may produce less pollution
• This country will begin importing the goods it no longer produces, so the pollution is likely to have moved to the countries it is importing from.

Question 8

How does development affect the environment ( wealth )?

Answer 8

• As a country develops and its inhabitants become wealthier, the population may want an improvement in their environment, and have the means to achieve this.
• This could lead to firms producing more environmentally friendly goods, or production methods may become more environmentally friendly due to green legislation passed by the government.

Question 9

What does the environmental kuznets curve show?

Answer 9

• The relationship between environmental damage and the level of wealth in a country.
• As per capita income increases the environmental damage also increases until a turning point is reached.
• After the turning point is reached, the as per caipta income increases environmental damage decreases.

Question 10

What are the various ways in which governments can reduce the rate of resource degradation and resource depletion?

Answer 10

• Indirect taxation and subsidies
• Legislation and regulation
• Provision of information
• State provision/government spending
• Public and Private partnerships