Key Terms Flashcards
With a growing global population and increasing economic production, the ________ reveals that overall emissions will increase unless the energy intensity and/or carbon intensity are reduced
Kaya identity
Four factors critical for economic growth are:
Natural resources
Human resources
Capital resources
Policy through Social values / Legal framework
A ______ is a good that can be provided to everybody (in a town or nation) at no more cost than the cost required to provide it to one person. It is non rival and non-excludable.
public good
Price, marginal revenue and marginal cost are equal for a firm in which market structure?
perfect competition
Types of goods in production are: (2)
capital goods
consumer goods
Types of goods for consumption are: (2)
normal goods
inferior goods
Types of goods considered together in a production possibility frontier are: (2)
These also affect the demand of a good or service
complements
substitutes
What is described by all the efficient and attainable combinations of the production of two (2) goods?
A production possibilities frontier
Many production possibilities curves/frontiers compare the production of _______ and ________ goods
Capital
Consumer
What are the four factors of production?
land
labor
capital
entrepreneurship
Which variable embodies some view about how future utility should be valued in terms of present utility?
Social discount utility rate = p
What is the value of consuming an additional unit of a good or service?
marginal utility
The downward slope of the demand curve is explained by ________
the law of decreasing marginal utility
The upward slope of the supply curve is explained by _______
The law of increasing marginal cost
What is the value of the next unit of production?
marginal cost
What are the two sectors and what flows between them in the circular flow of the economy?
Sectors: households, enterprises
Flows of income and consumption
What three things influence household demand after income?
Savings
Taxes
Imports
What three things influence enterprises after consumption?
Investment
Public expenditure
Exports
How does the economy interact with the environment? (4)
Natural resources (energy, materials)
Recycling (natural, industrial)
Waste (emissions, materials)
Ecosystem services (recreation, pollination)
Global population
Global GDP
Global material extraction plus Domestic extraction by region
Global trade in materials
Physical trade balance
Domestic material consumption
Global resource productivity
Can be described as _______
Worldwide drivers for natural resource use
What are the four main material categories of global material extraction?
Biomass
Fossil fuels
Metal ores
Non-metallic minerals
Describe the four changes in UNEP’s “towards sustainability” scenario
Resource efficiency
Climate mitigation and removal
Landscape and biodiversity protection
Healthy diets and reduced food waste
What are the benefits of natural capital? (3)
Life support systems
Sink services
Regulation services
How does economic activity cause environmental unsustainability?
Natural capital deterioration caused by economic activities
What are the three existing approaches to assess natural capital deterioration?
Ecosystem service modeling
Environmental assessment methods (footprints, LCA, MFA)
Economic modeling tools (equilibrium models, integrated assessment model)
How much land and water is required to support human activities is described by which environmental assessment methods? (2)
Ecological footprint
Resource nexus
Ecological footprint accounting tracks _____ for supply and _____ for demand of ecosystem services
Biocapacity (of ecosystem)
Ecological footprint (of production)
Total ecological footprint is the product of two factors:
human population
per capita consumption
An economy showing relative or absolute independence from environmental impacts is described as _____ from natural resources
decoupled
Economic “rent” refers to the price of a factor of production that is perfectly ____
inelastic
If demand for a good changes with price, then it is ______ with a value ____ than 1. The opposite is ______ and if it is equal to ___ it is _____.
elastic
greater
inelastic
1
unit elastic
The _________ describes the necessity of a good where low value means ____ and high means _____
It can also mean how much ____ can be substituted by capital
Constant elasticity of substitution
Crucial, would pay any price (inelastic)
Unnecessary (elastic)
labor
The value a person derives from a good or service is _____
utility
Increased consumption of the same good is not always positive. This exemplifies which law? What is the name of its graphed representation?
The law of diminishing/decreasing marginal utility
Indifference curve
______ is created by market inefficiency due to a lack of equilibrium and is measured by the difference in ___ and ___ of any given good or service including _____
Deadweight loss (DWL)
production/supply
consumption/demand
government tax, quotas (these can also cause DWL)
____ goods are usually provided by the government with _____ revenue
Public
Tax
_____ are used on imports to _____ domestic production
Tariffs
Protect
ASSUMPTION: Self-interest of individuals leads to _______ and _______
economic efficiency
welfare maximization
______ and _______ show the same amount of satisfaction / satisfactory options, graphed along a _____
Indifference
Utility
curve
To assess locality and context in policy, what assessment technique is needed?
Cost-benefit analysis
What factor distinguishes between public and private?
Exclusivity
What are the 3 efficiency conditions, assuming static allocation? What does #3 account for?
- Consumption
- Production
- Product mix efficiency; MRT = MRUS to show how slope of indifference curve and production possibility frontier are equal
What is welfare economics?
Economic well-being of individuals is at the center of individual welfare, whereas economic efficiency and general equilibrium are at the center of social welfare which is typically discussed at the level of economy. Theoretically grounded on microeconomics, welfare economics also has important implications for studying a wide variety of macroeconomic issues.
What did Pareto do?
Pareto used the concept of economic efficiency in studying income distribution involving the analysis of individual and social welfare.
He coined the term “welfare economics” in Manual of Political Economy and we derive “pareto improvements” and principles from him
What is required in a well-functioning economy?
the economy has a large number of buyers and sellers, homogeneous products or factors, perfect information, and no barriers to entry and exit to the market (some of these assumptions of don’t hold true for Adam Smith’s welfare economics concepts). Additional assumptions of all private goods, no externalities
What concept assumes allocation of resources to be efficient when the production possibilities from an allocation to various factors of production are in unity with the maximum possible utilities that can be derived from such allocation?
Pareto efficiency
__________ is a broad term typically used in microeconomics in order to denote the state of best possible operation of a product or service market. ________ assumes minimum cost for the production of a good or service, maximum output, and maximum surplus from the operation of the market.
Economic efficiency
Under the neoclassical economics tradition, economic ________ is the sum and outcome of _______ efficiency and ______ efficiency
efficiency
static
dynamic
Under static efficiency, what is it called when every resource is subject to optimal allocation, so every resource produces maximum output or else waste for the production of a given good or service is minimum? And also produces a mix of goods and services that aligns with consumer preferences and maximizes overall utility?
Allocative efficiency
What is the condition when the actual cost of production of a unit of good, that is, unit cost, is the lowest possible cost? It is the sum of _______ efficiency and _______ efficiency levels.
Productive efficiency
technical
scale
The __________ is responsible for allocating resources at their best use, _______ efficiency losses occur when it is above _______, that is, it exceeds consumers’ willingness to pay.
price mechanism
allocative
marginal cost
_______ shows all options for economy using all resources allocated on a graph which can _____ with greater efficiency, technology, capital, or resources
Production possibility frontier
increase
What are two properties of any point along the PPF?
efficient and attainable
Which points on the production possibilities frontier have the highest opportunity costs?
The endpoints, where all resources are used to produce only one good or the other
What law explains the shape of a typical production possibilities frontier?
the law of increasing opportunity costs
________ only happens along a higher welfare point, not higher efficiency point. While lines may intersect, it is not necessarily optimal
Pareto improvement
_________ define efficiency as making 1 person better off while not making anyone worse off
Pareto principles
The fact that “stuff happens” in conditions of _____ led to the concept of the safe minimum standard, known as ________
Uncertainty
Precautionary principle
______ is where a resource has zero demand
P (R = 0) = K and corresponds to SWF maximization if ________
Choke point
Optimized
Combinations of ______ can be assessed with ______ problems. As simple as what to eat, as complex as evolution
Factors
Multi-objective
A ______ solution is one in which no one objective function can be improved without a simultaneous detriment to another. This is considered the condition for _______
Non-dominated
Pareto optimality
What is it called when optimality conditions for supply and demand match socially optimal conditions?
Competitive equilibrium aka Walrasian equilibrium, does not hold up for externalities but this is part of the first theorem for welfare economics
Does the private market interest rate equal the social consumption discount rate in general equilibrium?
Yes
A _______ market has a lower price than with a _______ one, will _____ output and raise prices more _____
Monopolistic
Competitive
restrict
slowly
Showing consequences of what happens under variable changes (interest, more stock, taxes, demand, price of backstop technology, and resource extraction costs) is called _______
Comparative dynamic analysis
Resource _______ is different in competitive and monopolistic markets. Timing is _______ in monopolistic market, price _____ in early years and ______ in later years
Depletion
Longer
Higher
Lower
What is the justification for extraction of non-renewable resources?
Non-renewable resources considered to provide “something over and above the welfare possible from production in its absence” - creates additional possibilities for welfare (W)
In an idealized view, when stock goes to 0 what does it mean for demand and extraction?
Also go to 0
Resource demand function
Hotelling’s efficiency condition
Initial value for the resource stock
Final value for the resource stock
Are used to solve for ____ (2 / 5)
Resource net price / royalties (optimal, initial, interim, and final) as well as resource extraction rates
When interest rates ______, net price grows at market interest rate (i), which also raises growth rate of resource royalty Psubi, reaching a choke price (K) _____ in time
rise
earlier
- Real marginal resource extraction cost
- Marginal exploration and discovery costs
- Real market price indicators and net price indicators
Are indicators of what condition for resources?
Scarcity
Scarcity tends to mean that a natural resource is _________
Becoming harder to obtain
What are the 3 types of EI resource stocks and what is the main difference between them?
Proven reserves
Probable reserves
Possible reserves
Price to extract known (proven) or unknown
When change in resource extraction occurs, cost _____ initially but then falls to “_______”, fall in extraction prices incurs the opposite
Rises
old gross price path
What are the characteristics of a monopolistic market? (6)
Not fixed price
Doesn’t allow for socially optimal allocation of profits
Profits maximized when marginal profit increases at the rate of interest
No substitute products
no one entering market
Price maker
What are the characteristics of a competitive market? (5)
In perfect conditions, market price is fixed so marginal revenue equals price
Shared information
Profits are zero
Lots of small firms providing the same service for the same price
Price taker
Efficiency is a necessary _____ condition that must be satisfied for an optimal extraction; states that an efficient extraction program requires the net price of the resource to grow at a proportionate rate of _____ over time
Hotelling rule
10%
Elasticity of natural resources is ____.
Other (replaceable) goods is ______.
low
high
What will cause a production possibility frontier to bow outward?
An increase in a factor of production
What does a non-renewable resource imply?
Fixed stocks
What characterizes a base resource (R)?
Available in Earth’s crust
There is resource ________ when it’s possible to get with technology
potential
How to describe the resources that are economically beneficial to extract now?
At a global level?
Reserves
World reserve base
What property shows how much to extract now vs. later?
Constant marginal costs of extraction
Gross social ______ (___) are derived from extraction and consumption of Rt
Benefits
B
The discount rate is a critical variable that influences the extraction of a resource in different ________
periods
At a discount rate of 0, future net benefits are ______ to current net benefits. The extraction is ______ between two periods.
exactly the same
divided evenly
At a discount rate above 0, ______ consumption is favored over ______ consumption. The higher the discount rate, _____ benefits are more highly weighted.
present
future
present
Net _____ is a function of quantity extracted R. This derives from the relationship of marginal ________ to the price and to the resources’ constant marginal _______
price
Social utility
Cost of extraction
An ______ extraction program requires the net price of the resource to grow ______ as the social utility discount rate
efficient
at the same rate
According to the Hotelling rule:
The owner’s profit per ton is ______ to the net price
The owner will _____ the net price available today against ______
equal
weigh
a possible higher future net price
Non-renewable resources are _____genous
Hetero-
ASSUMPTION
Non-renewable resources have _____ possibilities
substitution
ASSUMPTION
Utility comes directly from _______ resources
Consuming [the extracted]
ASSUMPTIONS
There are no ___, ____ or ____, or _____ to the extraction or consumption of non-renewable resources
externalities
taxation or subsidies
technological changes
A two-period model represents
A planning horizon of P0 and P1 for a non-renewable resource
The value of social welfare over an interval of time from period 0 to period T is a _____ model that can be calculated with an integral modeling _____________
multi-period
time to resource depletion / choke point
Optimality conditions for the multi-period model
Royalty, P =
Extraction R =
Depletion time =
K
0
sq. root of stock over discount rate
In the optimal resource depletion model, the net price rises at the _____, satisfying Hotelling’s rule
social utility discount rate
In the optimal resource depletion model, the ______ curve has a _____ where the demand for the resource is 0
resource demand
choke point (K)
The ____ path of the non-renewable resource is a linear declining function of time
extraction
Why does the optimal resource depletion model include a 45-degree line in the bottom-right quadrant?
To relate the net price to the optimal resource extraction
What are the four axes in the graphical representation of the optimal resource depletion model?
Net price + Y
Resource - X
Time + X - Y
_______ (and not the net price or royalty) should increase at the rate of _______ in order to maximize the discounted profits over time
marginal profit
interest
ASSUMPTION
For extraction of non-renewable resources ____(4)_____ are constant
Stock (size known)
Demand curve
Marginal extraction costs
Choke price (fixed)
An increase in the interest rate of a non-renewable resource results in an ____ of growth rate, meaning the graph gets _____ and time to exhaustion is _____
Increase
steeper
quicker
An increase in resource stock of a non-renewable resource causes the net price to ______ (initial royalty is _____) and when K is reached some portion of reserves _____. Therefore, time to exhaustion is ________ and curve becomes ______
decrease
lower
remain
extended
less steep
An increase in the resource stock for NRR will affect the net price path how?
look like a bunch of decreasing Ws in discrete steps along the curve
An increase in demand for a NRR will shift the curve _____, showing _____ extraction levels and initial ______. The resource will be _______ by the time it reaches K
Outwards
higher
net price
depleted
If the demand for a NRR increases, will net price reach the choke price?
No
Open-access with no private property rights is characterized by… (3)
Individualistic competition
Inability of owner to appropriate gains of their investment in stocks (eg fishery)
Exploitation likely, but not efficient or optimal
To maximize, you can use a curve to take _____ where it is = 0
partial derivative
A resource that has the capacity for _________ and growth is _______
reproduction
renewable
A human-_____ time frame (___) is necessary for renewable theory
relevant
t
____ is movement of stocks
flow
The actual growth rate (___) is the rate of change over time, _____ at first but _____ at carrying capacity. The typical form is ______, derivative ______ G(S)
g
exponential
asymptotic
logistical
upside-down u
The maximum stock size (____) supported by the environment is at the ____ of the parabola
Smax
top
Maximum growth under certain conditions
Msy
The logistic form of the biological growth function assumes a _____ stock/population threshold level Smin
If _____ = 0 then it is ______ growth
positive
Smin
simple
What happens if stock/population goes below Smin?
It inevitably and permanently declines to 0
The turning point S^D marks a change in stock growth from _______ to ______
despensation
compensation
______ is the stock size at which the quantity of net natural growth is at a ______ and preferable for fishing or harvesting with ______
Maximum sustainable yield (MSY)
maximum
maximum replacement
The simple logistic growth model is known as the ______ sub-model while net growth subject to harvest, effort, size of resource stock and catch coefficient is know as the ______ sub-model
biological
economic
The economic sub-model for net growth depends on _____(4)_____
harvest, effort, size of resource stock and catch coefficient
H E S e
Perfect competition and open-access model share which 2 characteristics?
- Large number of firms
- No barriers to enter or leave; implying: enter if profit per boat is positive, leave if negative
(Drawback is no property rights)
Costs of the renewable model are subject to _____ (c), ____ (E), and _____ (w)
Total cost
Effort
Cost per unit of harvesting effort
Benefits of the renewable resource model are ______ (B), dependent on ____ (H) and _____ (P)
Gross Benefit
Harvest
Price
What other variable can change the model assumption for theory of renewable resources?
Change in industry size to profitability, like elastic or marginal productivity
represented by a squiggly delta symbol
In _____, net benefit (profits) = 0 and resource stock is _____ over time
equilibrium
constant
Can go from harvest-stock to harvest-effort representation by finding the _____ harvest level for each _____ (E1 > E2 > E3)
steady-state
level of effort
Another word for steady-state is _____
equilibrium
- Usually unobservable but gross price is observable
- Varies over time unless steady-state
- Can be made equal to the difference between the market price and marginal cost of an incremental unit of harvested fish
Are characteristics of what?
Net price
_________ proposed as antidote to biological and economical over-fishing. Assumptions of price = marginal revenue, wanting to maximize wealth, and enforceable. Essentially, govern what is there to fish as if it were yours to fish resulting in profit-maximizing model
private property
What framework is described by this?
A private-property fisher will look to maximize the discounted present value (PV) of the fishery and knowing the fundamental equation is implicit in this. What happens is fishery owners select a harvest rate for each period over the relevant time horizon to maximize the present value (or wealth) of the fishery, given an interest rate i
intertemporal optimization framework
Commodity-driven deforestation (worst one), shifting agriculture, forestry (natural and plantation harvesting), wildfire, urbanization
Are what?
5 drivers of tree cover loss
Main economic driver for ________ is cattle, then oil palm, soy, cocoa, rubber, coffee wood (fiber)
deforestation
Rho as the discount rate is also known as? (3)
Time discounting
Euler’s number
Natural exponent function
What are potential solutions to tree cover loss?
New regulations, new incentives, payment of environmental services
Forest resources are what kind?
Natural and non-renewable OR semi-natural and hybrid if plantation forest
_______ and fisheries can be modeled the same with which similar assumptions? (2)
Forests
Full cut only
Renewable resource
Model showing optimal time for felling
Timber stand / single stand aka single-rotation model
Maximum _____ at optimal time T
Present value
The constants in the single rotation model describe what?
Maturity and growth
Infinite rotation model definition and alternative name
= infinite geometric projection
Showing present value of profits for any rotation length T
Timber reaches maturity after ___ years
135
What conditions provide the optimum time to fell trees in the single rotation model? (2)
Maximize present value of profits
Rate of growth of the (undiscounted) net value of resource stock is equal to the private discount rate > i = p (ds / dt) / pSsubt
- Is return from the forest higher than the interest rate?
- Beyond this point, expected rotation is less than interest rate
- PV slope: where does it inflect? Reach 0? Decrease or increase?
Ways to assess the maximum (slope = 0) for forest resources
Discount rates of ___ or higher result in negative present values at any rotation, at these rates commercial forestry not viable
6%
Model to explain value of land as a capital asset is ____
land rent
______ is payment for a factor of production with a fixed supply e.g. land
rent
Assumptions for single stand / single rotation forest model
Biological growth fraction is quadratic
G(S) on y-axis and S on x-axis
- Not replanting forest
- All trees planted at same time so age and growth uniform
- Land has no alternative uses, opportunity cost is zero (not in calculation)
- Planting costs (k), marginal harvesting costs (c), and gross price of felled timber (P) are constant in real terms over time
- Forest generates value only through timber produced, no external effects
Infinite model rotation assumptions
Considered more realistic
Decision to defer harvesting shows an additional cost over that of the previous model, happens to all subsequent planting cycles (delays)
Therefore, optimal calculation must equate benefits of harvest and plant deferred
Present value means…
Economic value
Land is what kind of asset, which can be measured with present value?
Capital
Land (__) is an appreciating or depreciating asset. At ______, land rent is also equal to the revenue net of transportation cost minus labor cost and profits are ____
h
equilibrium
0
Fertility of land dictates _____. Therefore, F > Fmin increases with ____ and psubz increases, F’min < Fmin shows new viable lowest amount
value
Labor use of land is diminished with ______
distance
Condition at Fmin means land earns _____ and any less, abandon because not economically feasible
No rent
Therefore, F > Fmin increases with F
psubz increases, F’min < Fmin shows new viable lowest amount.
What approach is this?
Ricardian approach
Factors of distance to a crucial location affects profits is the theory of what?
Land rent
If product price from land increases, _____ > Dmax. Same if transportation costs ______
D’max
decrease
A composite good (Z) can be modeled with which two functions in a “bundle” concept
Von Thunen model
Urban land rents
4 types of water?
Green, blue, grey, black
In addition to green and blue water -
______ : non-drinkable water that can be reused for irrigation, flushing toilets, and other purposes
______ : contains polluting chemical and biological constraints
Grey water
Black water
Water use by humans (does/doesn’t) depend on the size of the local stock S(t)
Doesn’t
What is needed at a minimum for allocating resources?
Allocation must follow basic need principle with minimum output to survive
What are the two types of scarcity?
Physical and economic
Ways to remunerate people in proportion to their effort (2)
Proportional shares based on what’s available
In proportion to production output
Dividing remuneration by output solves both ____ efficiency and ____ output
Production
Fair
What is the drawback of an informal sector? e.g. private ways to distribute water
Distribution of commodities in an unregulated way
Mechanisms to control and shape the quantity and quality of land development combined with economic principles are used to assign land to ________
the highest market value of alternative uses
______ are produced at a constant marginal cost
Virgin materials
_______ material subject to increasing marginal costs
Recycled
Switch point for renewables is when they become cheaper through _______
Hotelling’s rule
The resource discovery function follows _____ curves and depends on technology and economic feasibility depending on grade
Marginal cost
Production is divided into ____, ____, and ____-products
main
co -
by -
On _____ curve, economic growth goes hand-in-hand with demand, then declines. This can exacerbate _____ and ______
Kuznet’s
income inequality
environmental effects / un sustainability
For energy and mining, key inputs of ____ and _____ affect production
Energy
Labor
Price, efficiency, availability are determinants off what?
Demand
Y - wealth
P0 - price of m&e product
Pc - price of complements
C - consumer preferences
T - technology
[labor and disruptions]
Gov - Government policies
Market structure
Are determinants of ?
Mining and energy resource demand (typically 7)
______ can be a major alternative source of supply in M&E
Secondary production e.g. scrap
Foreign, industrial, and trade policies can all be modeled with what?
Kuznet’s curve
M&E demand is for (short/long)-term changes due to ____
short
business cycles
M&E supply is for (short/long) run
Both!
These are all what?
Own price (P^o): firm looking for marginal costs to equal marginal revenues, maximizing profits and increase production, responsive to price signals
Input costs (C): an increase in labor costs will directly shift the supply curve, e.g. labor, energy affecting production cost
Labor: if disrupted, has a significant effect on supply
Market structure: huge impact on supply, especially where cartels or oligopolies exist (i.e. oil and potash which is fertilizer for industrial applications markets)
Gov reframed as Government activities
6 determinants of M&E supply
What are the 2 types of mineral markets?
Fuel (coal, oil, gas) and non-fuel (metals, industry)
Intersection between ____ and _____ shows the market price that will be established for quantities in reserves
Supply and demand
M&E price sensitive to: technological changes modeled in ________, shifts curve down MC1 and MC2
Resource discovery function (RDF)
- Two approaches to ______: Thunen and Ricardian
- Thunen model: _ imposes a cost and enters the profit function
- Ricardian: _ enters the production function
Land rent model
D - distance
F - fertility
What is a nexus?
Interdependences between systems i.e. trilateral interfaces of water, energy, food
Resource supply
End-use demands and requirements
Natural and human engineered technologies
Processes and infrastructure
Are what?
Linkages to produce, supply, and deliver the resource to meet the end-use demand
How can a nexus ie WEF be used?
Defined as an approach to assessment, policy development and implementation that focuses on socio-ecological systems
The water, energy, and food system are obtained from a common _____ of natural resources and require connected ______. This requires common policy spaces and may result in cross-sectoral and cross-scales _____
Stock
Infrastructure
Risks and uncertainties
What links a nexus?
Network of feedback which vary in intensity and timing
Global risk landscape
Respond adequately to shocks and crisis
Unsustainable patterns of growth and resource constraints
Ecosystem goods and services
Competing land uses
Competing water sectoral demands
Value chain
SDGs
…and more are all examples of what?
Conceptual frameworks [applications] for the resource nexus
How is climate change expected to modify agricultural productivity worldwide?
Lower food production and higher food prices
Global welfare and GDP decrease
At regional level produces winners and losers
Worldwide analysis is needed to account for impacts
Most important nexuses:
______ > it supports population growth, projected to ~10B by 2050
______ > everything has a cost to productivity, also consider bioenergy and biofuels
water - food
energy - food
Models each have a generic nexus type, ____ application, ______ technique and limitations / caveats
______ is one of the main limitations
geographic
modeling
data
Nexus is meant to show how everything is ______ and requires _____
interrelated
trade offs
_________ are often used in scenarios like modeling socio-political feasibility of energy transition or understanding the dynamics of resource usage
System dynamics
The _______ is that for many mineral resource-rich countries, they experience a relatively low rate of growth. This seems counterintuitive, as abundance of natural resources should promote economic development.
Resource curse/paradox
To combat the resource curse, _______ play a key role who are responsible for economic management and growth
Institutions
Lower economic growth
Increased inequality of wealth
Entrenchment of democratic regime
Poor decision making
Failure to create a productive, efficient economy
Increased conflict in society
Degradation of environment and human rights
Are alleged symptoms of what?
The resource curse
How can governments turn _____ to riches?
rents
Gross _____ + ______ added + profit = derivation of _____
income
value
rent
Land rent requires what to be of economic value?
extraordinary profit
The sales price of rent is comprised of:
_____ profit
_____ profit
_____ costs (wages)
Cost of intermediate ____
Capital cost (_____)
Extraordinary
Normal
Labor
Inputs
Depreciation
What government sector manages generating and distributing resource rents?
Ministry of finance
What are the four institutional mechanisms for rent capture?
[TOLP]
Ownership and control
Legal framework
Taxation
Processing requirements
Which country has the largest oil reserves?
Venezuela
What is a tax on profits called?
Corporation tax
What is a tax on production or sales
Royalties
Extraction contracts and taxation are the link between _____ and ______ in the state-society-developer triangle
Developer
State
Spending and investment are links between ____ and _____ in the state-society-developer triangle
State
Society
Local content programs/oversight are the link between _____ and _____ in the state-society-developer triangle
Developer
Society
Type of rule that’s less inclusive/less collectively oriented and less credible/weaker enforcement
Patrimonial rule - individualized political authority built on a hierarchy of cronyism
Type of rule that’s less inclusive/less collectively oriented and more credible/stronger enforcement
Hegemonic government
Type of rule that’s more inclusive/more collectively oriented and less credible/weaker enforcement
Clientelist pluralism - political competition based on extensive use of clientelismo; low horizontal accountability
Type of rule that’s more inclusive/more collectively oriented and more credible/stronger enforcement
Programmatic pluralism - electoral competition based on programs geared toward collective welfare enhancement; provision of public goods; horizontal and vertical democratic accountability
Global CO2 emissions have _____ since 1900
more than tripled
The warmest period of global surface temperature began in ______
1850
The biggest sectors for CO2 emissions are:
_____ 29%
_____ 23%
_____ 23%
Power coal
Transport
Industry
________ shows the emission abatement potential and associated abatement costs
Marginal abatement cost
________ is the net present value of climate change impacts of one additional ton of carbon emitter to the atmosphere today
Social cost of carbon
SCC and MAC (marginal abatement cost) can be graphed against _____
GHG abatement in period 0
Rising social cost of carbon requires higher ____ projects
marginal cost
Ordinal utility = _______; defined by ______, with more money U is higher for a person
happiness
resources
Functions of navigation, flood control, power production, erosion control, irrigation, recreation and public health are examples of what?
Integrated water resource management (IWRM)
To explore ____ formulation related to the resource nexus, the best candidates are management tools eg ____ WEAP, ____ LEAP, or combination (Spataru)
policy
Water Evaluation and Planning
Long-range Energy Alternatives Planning
_____ is about maximizing efficiency at a given point in time, while _____ is about achieving efficiency over time
static efficiency
dynamic efficiency
______ is the condition in which the economy cannot increase the production of one good without decreasing the production of another good
Static efficiency
What did Adam Smith do?
Coined the terms “self interest” and “invisible hand” in Wealth of Nations (1776) that describe market function to reach equilibrium in a way that benefits individuals
What did Bergson do?
Defined “social welfare function” to determine social utility by way of welfare of each member of the community
For the second fundamental theorem of welfare economics, what does a Pareto-optimal allocation of resources depend on?
Appropriate distribution of initial endowments and property rights through optimization of individual behavior aka perfect competition; but depends on efficiency in allocation corresponding to utility from further reallocation
What do the first and second theorems of welfare economics describe?
What is efficient?
What alternative allocations can also lead to efficiency?
The _____ is the total cost of a product or service before any deductions such as taxes or discounts. On the other hand, the ____ is the amount that remains after all such deductions have been made. It represents the actual amount paid or received for the product or service.
Gross price
Net price
______ in economics refers to a situation in which different entities such as individuals or companies strive for the same resources or customers within a particular marketplace. It is a fundamental concept in capitalism and is considered essential for the functioning of a ______ economy, as it often leads to innovation and development.
Competition
Dynamic
Taxation rates are based on what?
Marginal external cost, the willingness to pay
Externalities are a source of market ____. The solution is to ______ and bargain. In some cases, the individual bargaining can also apply to firms but ______ hardly happens.
Failure
Assign property rights
Joint profit maximization
When there is more than one source of market failure, only correcting one of them may make the problem worse. What kind of problem is this?
“Second-best” problems that do not improve efficiency
Dutch disease model divides economy into 3 sectors: a tradeable ______ sector, a tradeable ______ sector, and a ______ sector. The higher resources are, the smaller the others are
Natural resource
Manufactured (non-resource)
Non-traded
Bid-rent refers to the maximum amount that a person or business is willing to pay for a specific location. The bid-rent function describes how the _________ changes as the distance from a central point increases. It’s typically used to explain the distribution of different types of land uses in a city, in relation to the distance from the city center
Willingness to pay (or rent)
Sector organization, regulation, collection of taxes/royalties, revenue distribution, and implementation of sustainable development policies are referred to as what?
Natural resource management value chain
[SeOrg Reg! Colonel TR; RevD SustyD Pol]
What are the four key dimensions of sector organization?
[LfARMo]
Legal and regulatory frameworks
Models of ownership
Allocation of rights (exploration, production, extraction)
Regulating and monitoring capacity of gov’t agencies
What are the four allocation principles?
Efficiency
Accountability
Basic needs
Strict equality
Two climate system impacts of climate change
Water resources
Extreme temperatures
What are the policy goals of IWRM?
3 Es:
equity - basic need and therefore everyone should have it
ecological integrity - sufficient quantities and quality of water should persist in the environment, use sustainability
efficiency - used with maximum possible efficiency because of its finite and vulnerable nature, priced according to economic value
Enabling ____, _____ roles, and ______ instruments are the toolbox for IWRM
Environment
Institutional
Management
_____ principle: persons should be remunerated in proportion to their effort
_____ principle: distributed according to users’ productivities
_____ principle: ensure all members of society survive in a decent way
_____: egalitarian view
Accountability
Efficiency
Basic need
Strict equality
- Utility possibility frontier can be derived if output transfers are feasible (helpful for allocation/redistribution)
- If no transfer possible, allocation determined by _________
Maximizing the sum of utilities
Integrated water and environmental management
Follow a systems approach
Full participation by all stakeholders, including workers and the community
Attention to social dimensions
Capacity building
Availability of information and the capacity to use it to anticipate developments
Full-cost pricing complemented by targeted subsidies
Are principles for what?
IWRM
Simplifying assumptions for welfare economics:
Economy consists of _____ people
_____ goods
_____ productive resources, each available in ____ quantity
____ externalities
All goods produced are _____ goods
Two: A, B
Two: X, Y
Two: K, L - capital, labor, fixed
No
Private
______ describes what goods are produced and in what quantities they are produced, which combinations of resource inputs are used in producing those goods and how the outputs of those goods are distributed between persons
Allocation of resources
Two components of an open-access model (e.g. fishery)
Biological and economic sub-models
Steady-state solution for fishery:
Resource stock size (doesn’t/does) change over time i.e. biological equilibrium
Fishing fleet (doesn’t/does) have net inflow and outflow i.e. economic equilibrium
Both of these equilibriums are referred to as ______
Doesn’t
Doesn’t
Bioeconomic equilibrium
What is an adjustment path?
Moving from one equilibrium point to another as conditions change
What are the ways to increase recycling?
Reducing the total demand for a material
Investing in the recycling industry
Increasing the cost of virgin materials
What is the difference between the accountability principle and the efficiency principle?
One is based on effort and the other output
Changes in price and time all change quantity of ______. Graphs that show this subject to ___ and ___.
Resource extracted
Social utility discount rate
Depletion (e.g. water goes down)
For maximization of utility and social welfare over any time, need conditions (4) of resources
QORC
- Quantity of resource to be extracted in each period; subject to constraint of initial stock (S-bar)
- Optimal value for T; point in time at which depletion of stock ceases
- Remaining stock of resources at time St
- Change in stock wrt time Sd = ds/dt
FROM ALVARO’S STUDY IN SOUTH AFRICA:
Climate change would modify agricultural productivity through five main factors:
changes in precipitation, temperature, carbon dioxide (CO2) fertilization,climate variability, and surfacewater runoff > P-SWR T CO2 CV
Crop production is directly influenced by changes in precipitation and temperature. Precipitation is the main source of allfreshwater resourcesand determines the level of soil moisture, which is a critical input for crop growth.
According to the Stern Review, emissions can be decreased by (3)
increased energy efficiency, changes in demand, and adoption of clean tech (power, heat, and transport)
What are 4 shared frameworks for international action on climate change?
[AATE]
- Emissions trading
- Technology cooperation
- Action to reduce deforestation
- Adaptation > particularly for development policy
Large revenue flows plus insecure property rights, poorly functioning legal systems, and imperfect markets leads to ______
Rent-seeking / exploitation
These are all what?
income (Y), own price (P^o), the price of substitutes and complements (P^S and P^C), technology (Tt), consumer preferences (Cons), and government policies (Gov)
Determinants of M&E demand elasticity during period t
How does M&E demand and supply elasticity change over time?
Immediate
Short
Long
Very long
Changes from inelastic to elastic
Own price elasticity of demand is < 1 (inelastic) in short run and > 1 (elastic) in the long run
Linear declining function gets steeper for each
Supply is inelastic in the short term due to output, capacity constraint and then changes in technology over time make it more elastic only subject to known deposits / reserves
- Award of contracts and licenses
- Regulation and monitoring of operations
- Collection of taxes and royalties
- Revenue distribution and management
- Implementation of sustainable development policies and projects
All form part of what?
Extractive industries value chain
What are examples for the two types of economic instruments for recycling:
those that create a financial disincentive for not recycling (2),
those that create a financial incentive (2),
and a mix of both (2)
Polluter pays = taxes and charges
Subsidies and public facilities
Deposit-refund schemes and variable pricing
There are two main types of static efficiency: ___ efficiency and ____ efficiency. _____ efficiency occurs when a firm is producing at the lowest point on its average cost curve. _____ efficiency occurs when a firm is producing the goods that consumers want at the lowest possible cost.
Productive
Allocative
If produce price were to increase, what is the effect on land rent?
New D’max is established (which reaches zero output per hectare), previously submarginal land not used in Dmax now used for production
Renewable resources are ____-genous
Homo
Dynamic optimization problem involves the choice of a path of resource extraction
Rsubt over the interval t = 0 to t = T that satisfies ____ (2)
To maximize, _____ rate must be equal at each point in time. If this weren’t the case, ____ could increase by shifting extraction.
The resource stock constraints and maximizes welfare
Discount
W
