Polices I

Question 1

Public Policy (Definition)

Answer 1

Use of legal, fiscal and other govermet mechanism to cause actions by firms, households, and others levels of goverment

Question 2

Action (Definition)

Answer 2

Chnage of technology, behavior or management practice by a firm or household form what it otherwise would have been

Policy -> Action

Question 3

Climate-energy policy alternatives (Chart)

Answer 3

Question 4

Economic efficiency (Definition)

Answer 4

Policy is a low cost to society relative to other polices- equi-marginal principle

Question 5

Equi-marginal-principle (Definition)

Answer 5

Minimize total costs of achieving an objective (GHG reduction) policy design ensures every houshold and fimr face same price for its last(marginal) unit of GHG reduced

Question 6

Political acceptable(Definition)

Answer 6

Policy is perceived as justified and fair by many, and those opposed are:

1- small in number
2-Compensate
3- Counterbalanced by policy supporters

Question 7

Administrative feasibility (Definition)

Answer 7

Policy does not involve significant bureaucratic expansion or complexity.

Question 8

Proof(Definition)

Answer 8

If entity A faces costs for the last unit of GHG reduced than entity B, then if B reduces one more unit and A one les. the same total GHG reduction will be achieved at lower total cost

Similar adjustments can be made until all entities face the same marginal for GHG reduction- achieving the equi-marginal principle and thus minimizing the total societal cost pf a given outcome.

Question 9

Prescripted regulations “Command and control”

Answer 9

Goverment dictates building design, technology or energy form and applied this identically to each emitter (Household, firm)

Question 10

Technology standard (Definition)

Answer 10

Goverments sets rules on technology
Exp. Best available control technology for SO2

Question 11

Energy standard (Definition)

Answer 11

Governments set energy requirements
Exp. Fuel sulfur content regulator

Question 12

Mandate reduction (Definition)

Answer 12

Govermenst tells each firm to reduce by same amount

Question 13

Total =, Average & Marginal Cost Example

Answer 13

-We’re overbooked, and I need 5 passengers to volunteer to take a later flight.
-No one volunteers, I start offering vouchers.

Question 14

Efficiency problem : prescriptive regulators

Answer 14

Government specifies a 50 T reduction for each firm.

Marginal abatement costs rise faster for Firm B than for Firm A.

The policy violates equi- marginal principles: same reduction at lower total cost if Firm B does less and Firm A more, until their marginal abatement costs are equal.

Question 15

Emission (Crabon) pricing polices

Answer 15

Tax on technology, energy use, material use (water,plastic bags) or material waste (emissions, effluents, solid waste, toxics).

or Cap-and-trade

Question 16

Cap-and-trade

Answer 16

Cap emission with tradable permits

Question 17

Emission (carbon) pricing polices (How it works?)

Answer 17

Firm and tevhnologies can oay tax (or buy permits) or reduce use of technology, energy, material or output of waste and pay less tax.
Those who find it too expensive to reduce (high marginal abatement costs) will pay the tax (or buy permits)

Question 18

Examples of economically efficient

Answer 18

taxation and cap-trade achieve equi-marginal principles

Question 19

Tax achieves equi-marginal principles: economically efficient (Example)

Answer 19

Government sets tax rate T
Firm A abates more than frim B
Total abatement is still 100
Policy satisfies equi-marginal principle to minimize total cost.

Question 20

Cap-and-tarade achieves equi-marginal principle : economically efficient (Example)

Answer 20

Goverments sets cap and allocates permits such that Firm A and B must both reduce emissions 50T (50*2 = 100T)
Firm A incentivized to do extra abatement and sell surplus permit to B which does less. Permit trading price is P.

Policy satisfies equi-marginal primciple to minimize total cost
Tax and cap-&-trade lead to same outcome at same cost

Question 21

Tax vs cap&trade

Answer 21

From cost perspective, tax and cap&trade results in equivalent outcomes.
But one policy has price uncertantly and the other emission uncertanty.

Question 22

Goverments direct action with assets and employees it controls

Answer 22

Goverments efforts change assest and people over which it has direct influence (Building, equipment, infrstructure, employees).

Question 23

Goverment direct action with assets and emplyees it controls (Examples)

Answer 23

Goverment spending represents a large portion of the economy

Goverment procurement polices can have impact on enviroment

Goverment can also fund and research and develop (R&D)

Question 24

Polices to induce voluntary action

Answer 24

Efforst by goverment to convince firms and housholds to vonutarly act different

Exp. Voluntraily internilizing externalities
(Individuals or firms take responsibility for the societal cost of their action

Question 25

Information programs focused on private benefits of action

Answer 25

Explain private benefits of enviromentally responsible choices.

Exp. Ebergy Star / EnergUide appliance labels.

Question 26

Moral suasion programs focused on social benefits of action

Answer 26

Strategies to encouraging individuals or organizations to take action by appealing to their sense of morality and social benefit, rather than through financial incentives or strict regulations

Exp. Ocean-wise fish levels, fair trade coffee

Question 27

Compulsory Measures

Answer 27

Mandatory actions imposed by goverments that require compliance

Question 28

Regulations Type

Answer 28

Prescriptive regulations

Flexible Regulations

Question 29

Carbon Pricing

Answer 29

Economic instrument to put a price on carbon emissions.

Cap-and-trade
Carbon Tax

Question 30

Non-Compulsory Measures

Answer 30

These rely on incentives, information, and voluntary participation rather than mandates

Exp. Information Campaigns, Labels (Exp. Energy Star certification), Subsides, Government Action

Question 31

Prescribe Regulations (Definition)

Answer 31

Strict, detailed rules that specify what actions must be taken or avoid.

Exp. Mandating specific technologies or emission standards for industries

Question 32

Flexible Regulations (Definition)

Answer 32

These allows some flexibility in how targets are met, enabling innovation.

Exp. Allowing companies to choose between installing new technologies or offsetting emission by funding green projects

Question 33

Abatement (Definition)

Answer 33

Reduction or elimination of harmful emissions or pollutants

Question 34

Marginal Abatement Cost(MAC) (Definition)

Answer 34

MAC is the cost of reducing one additional unit of emission or pollution.