Module 2 (Part 1)

Question 1

Consists of households and firms.

Answer 1

Economic System

Question 2

Households provides and consumes what?

Answer 2

provides labor (L) and consume goods & services (G&S).

Question 3

Firms use what to produce what?

Answer 3

use labor (L), capital (K), and natural resources (R) to produce G&S.

Question 4

is produced by both households and firms—some is recycled, and some is discharged into the environment.

Answer 4

Waste

Question 5

Encompasses the earth and its atmosphere.
Provides inputs like natural resources and acts as a waste sink.
Offers life support and amenity services.

Answer 5

Environmental System

Question 6

Four Classes of Environmental Services

Answer 6

(NLAW)
Natural Resources
Life Support Services
Amenity Services
Waste Sink

Question 7

Raw materials from the earth that support economic activities.

Answer 7

Natural Resources

Question 8

Natural Resources includes these two

Answer 8

R and CPR
Includes renewable resources (e.g., timber, fisheries) and common property resources (e.g., clean freshwater).

Question 9

can be depleted if used faster than replenished (e.g., mineral stocks).

Answer 9

critical zone resources under flow resources

Question 11

renewable regardless of use (e.g., solar energy, wind).

Answer 11

non-critical zone resources under flow resources

Question 12

can be depleted completely.

Answer 12

Stock Resources

Question 13

finite, exhaustible resources (e.g., fossil fuels, ores).

Answer 13

Non-renewable stock resources

Question 14

naturally renewed quickly.

Answer 14

Flow Resources

Question 15

regenerate naturally (e.g., timber, fish stocks).

Answer 15

Renewable Stock Resources

Question 16

Essential conditions for human survival (e.g., oxygen levels, temperatures).
Enable human life and economic activities.

Answer 16

Life Support Services

Question 17

Directly consumed experiences without transformation (e.g., walking in a forest, swimming in a lake).

Answer 17

Amenity Services

Question 18

Generally do not reduce future availability of these services. However, activities like mass tourism or illegal harvesting can negatively affect these services.

Answer 18

Amenity Services

Question 19

The environment absorbs waste products from economic activities.
Waste includes chemical, plastic, organic, and gaseous by-products (e.g., CO2 emissions).
Waste can be recycled or accumulated in the environment.

Answer 19

Waste Sink

Question 20

Waste can be recycled or accumulated in the environment.
High quantities of waste can lead to harmful environmental changes (e.g., climate change due to greenhouse gas emissions).

Answer 20

True; Waste Sink

Question 21

What are the four functions of the environment?

Answer 21

Natural Resources: Raw materials used in economic activities.
Life Support Services: Essential conditions that make human life possible (e.g., air quality).
Amenity Services: Environmental experiences directly enjoyed by households (e.g., recreation in natural areas).
Waste Sink: Absorption and recycling of waste generated by economic activities.

Question 22

What are included in the economic system? In the environmental system?

Answer 22

Economic System
1. Households (providing labor and consuming goods) and
2. firms (producing goods and services using labor, capital, and natural resources).

Environmental System
1. Planet earth and its atmosphere, providing NLAW natural resources, life support, amenity services, and functioning as a waste sink.

Question 23

How would you define public goods? What is the deciding factor to distinguish a public good?

Answer 23

Public Goods:
Goods that are 1. non-excludable (cannot prevent others from using) and 2. non-rivalrous (one person’s use does not reduce availability for others).

Deciding Factor: The inability to exclude individuals from using the good is key to defining a public good (e.g., clean air).

Question 24

What is the difference between emissions and pollution? Can you give examples?

Answer 24

Emissions: The release of substances into the environment (e.g., CO2 emissions from cars).

Pollution: When emissions cause a negative impact on the environment (e.g., smog from emissions affecting air quality).

Question 25

Pollutants influence the quality of environmental services and environmental quality. What are the examples?

Answer 25

1. Heavy metals in water can harm aquatic life. 2. Pesticides can degrade soil quality and affect food safety. 3. Plastic waste in oceans can harm marine life. 4. CO2 emissions can contribute to global warming, affecting climate patterns.

Question 26

Give examples on how the environment provides space for the location of the economic system.

Answer 26

(fofu) 1. Farmland provides space for agriculture. 2. Oceans serve as fishing grounds. 3. Forests offer locations for tourism and recreation. 4. Urban areas provide space for industrial and commercial activities.

Question 27

Interaction Among Environmental Services

Answer 27

1. Environmental services interact not just with the economy but also among themselves. 2. These interactions make the relationship between the environment and economy more complex

Question 28

Fossil Fuel Extraction and CO2 Emissions 1. Economic Dependence on Fossil Fuels 2. Extraction Process 3. Combustion and Emissions 4. CO2 Accumulation and the Greenhouse Effect

Answer 28

1. The current economic system heavily relies on fossil fuels for energy. Common fossil fuels include coal, petroleum, and natural gas. 2. Firms extract these resources from the environment, utilizing the environment’s resource service. 3. Fossil fuel consumption leads to the release of CO2, a major greenhouse gas (GHG). CO2 emissions are released into the atmosphere, using the environment’s waste sink service. 4. CO2 accumulates in the atmosphere, leading to the greenhouse effect. The greenhouse effect results in the trapping of heat, contributing to climate change.

Question 29

Global Warming vs Climate Change

Answer 29

The terms “global warming” and “climate change” are sometimes used interchangeably, but "global warming" is only one aspect of climate change. “Climate change” encompasses global warming, but refers to the broader range of changes that are happening to our planet.

Question 30

Impacts on Resource Services

Answer 30

Extreme Weather Events: Climate change increases the frequency of severe droughts and storms. These events can reduce the availability of healthy soils, impacting agriculture.

Question 31

Impacts on Life Support Services

Answer 31

Temperature and Precipitation Changes: Alterations in temperature and rainfall can lead to loss of biodiversity. These changes can destabilize ecosystems and threaten species' survival.

Question 32

Impacts on Amenity Services

Answer 32

Changes in Natural Landscapes: Melting glaciers and shorter ski seasons affect recreational activities. Unusual heat waves reduce the comfort and appeal of summer activities.

Question 33

Impacts on Waste Sink Services

Answer 33

Rivers' Assimilative Capacity: Rising temperatures can decrease the ability of rivers to break down and assimilate waste. This affects the quality of freshwater resources.

Question 34

Economic Implications of Climate Change

Answer 34

RLTDC 1. Reduced Economic Growth 2. Lower Agricultural Productivity 3. Tourism Decline 4. Decreased Food Security 5. Challenges in Poverty Reduction Climate impacts can slow down overall economic growth due to disruptions in various sectors. Changes in soil health, water availability, and weather patterns can reduce crop yields. Negative impacts on amenity services like shorter ski seasons or damaged coastal areas can reduce tourism Lower productivity in agriculture leads to challenges in maintaining food supply. Economic disruptions and food security issues make it harder to lift populations out of poverty.

Question 35

Fossil fuel extraction and combustion directly connect the environment’s resource service and waste sink service.

Answer 35

True

Question 36

The release of CO2 leads to climate change through the greenhouse effect.

Answer 36

True

Question 37

Climate change affects all four environmental services: NLAW (natural) resource availability, life support conditions, amenity experiences, and waste assimilation.

Answer 37

True

Question 38

These environmental changes also have ripple effects on economic activities, posing challenges to growth, productivity, and social stability.

Answer 38

True