Environmental Sustainability

Question 1

Define ecologically sustainable development

Answer 1

Economic development that conserves and enhances resources so that ecological processes and quality of life are maintained

Any development must be balanced against its impact on the environment

Question 2

What are private benefits?

Answer 2

Economic benefits for consumers and producers, such as profit and satisfaction levels

Question 3

What is market failure?

Answer 3

When the price mechanism fails to consider social costs - externalities

Question 4

What are negative externalities?

Answer 4

The adverse effects of production

For example, the degradation of the environment due to economic activity

Question 5

What is a private good?

Answer 5

A good owned and used by individual consumers

Question 6

What are the two characteristics of public goods?

Answer 6

Non-Excludable; once it is provided, the producer cannot stop consumers from enjoying the benefit even if they are not prepared to pay

Non-Rival; consumption of the good by one individual does not reduce the quantity of the good available for other consumers

Question 7

What is ‘free rider’ behaviour?

Answer 7

Groups or individuals benefits from a good or service without contributing to the cost of supplying the good or service

This prevents the private sector from producing most public goods

Question 8

What are four key environmental issues?

Answer 8

Preservation of the Natural Environment - failure to do so damages health and lowers future productive capacity

Pollution - can affect human health levels and restrict labour force productivity

Climate Change - failure to keep global temperatures from rising by more than 2% will result in the extinction of 15% of global diversity by 2100

Depletion of Non-Renewable Resources - limits the economic capacity of future generations