Environmental Policy

Question 1

Give some examples of Environmental Externalities

Answer 1

Oil sands leak cancer-causing chemicals into downstream water supply
Global warming due to greenhouse gases
Acid rain caused by coal burning production releases SO2
Ozone depletion caused by CFCs which are used for refrigeration, foam packaging, and aerosol cans

Question 2

Is the optimal amount of pollution zero?

Answer 2

No, means that efficiency would be low.

Question 3

Abatement

Answer 3

Any technology that reduces negative externalities. example: waste technology

Question 4

Cap and trade

Answer 4

financial incentive for firms to reduce their emission to be able to trade off

Question 5

Global protocol

Answer 5

When a global externality needs to be confronted

Question 6

Tragedy of the commons

Answer 6

lack of property rights lead to an overuse of a common resource

Question 7

Open access problem

Answer 7

with resources that are common good (rival and non-excludable) there is over-harvesting