Lecture 4 Flashcards
Define government failure wrt the environment?
Government intervention into markets that has the unintended consequence of damaging the environment
Define genetic diversity?
Variation between individuals and between populations within a species
Define species diversity?
Variation between different types of plant, animal and other life forms within a region
Define ecosystem diversity?
Variation of habitats found within an area
Why is MEC upward sloping?
Because there is a greater cost to biodiversity as land conversion increases
Learn land conversion diagram that explains:
Why is land conversion occurring?
Now
Why does MNPB fall as land conversion increases?
Because firms have to travel further go get to newly converted land tf less profitable
Why is the gov subsidy to promote agriculture and food security not efficient?
From the producer’s point of view the optimum level of output is L(sub) tf more conversion tf government failure
Solution to land conversion problem?
1) remove subsidy tf shift L(sub) to L(p)
2) then (somehow) shift back to L* eq instead of L(p) (internalise cost to society)
What does CAP do?
Gives farmers a guaranteed price for their product
Who is CAP bad for and why? (2)
Consumers - pay higher prices for food
Tax payers - tax revenues used to offer higher price (buy excess food)
CAP encourages overproduction, explain two ways this occurs?
Expanding land area that is farmed
Farming existing land more intensively (tf more fertilisers tf more damage)
2 ways countries indirectly encourage fossil fuel consumption?
Tax concessions
Direct budgetary transfers (subsidies)
What does the international energy agency estimate?
Estimates polices that support the use and production of fossil fuels amount to $580bn dollars in 2013
Production side issues of fossil fuels? (3)
Mining -> land subsiding
Oil spill -> contamination of ground and water
Extracting techniques such as fracking requires lots of water tf aggravating stress on water resources
Consumption side issues of fossil fuels? (3)
Pollutants can:
Cause acid rain
Damage health
Damage the environment
Which consumers benefit most from fossil fuel subsidies and why?
The richer consumers benefit more since they tend to spend more on goods (eg. Petrol) so a reduction in price benefits them the most
REGRESSIVE POLICY
3 problems with fossil fuel subsidies?
Bad for gov. budget
Bad for environment
Socially regressive
3 problems with subsidies in developing countries?
Use up financial resources that are needed elsewhere
Encourages overproduction/over use of resources that are subsidised
Make activity in receipt of the subsidy artificially attractive as potential profits are greater
