Unit 1: Intro to Environmental Economics-Ch.1 Flashcards
What major environmental issues do we face today
-nitrogen pollution of water
-exposure to toxic chemicals & hazardous waste
-ecosystem change
-water contamination
-declining groundwater supplies
-urban air pollution
-overexploitation of fisheries
-climate change
What are the main frameworks that economists use to understand these environmental issues
-Environmental Economics
-Ecological Economics
What is Environmental Economics
Mainstream economic principles to environmental and natural resource issues
What is Ecological Economics
Views economics as only 1 part of broader ecosystem
Brings in different viewpoints
Economics in the context of BIOPHYSICAL & PHYSICAL SYSTEMS
What is Market Failure of Externalities
Unregulated market fails to produce outcome that is the most beneficial to society as a whole
Principles of Environmental Economics
1) Theory of Environmental Externalities
2) Optimal Mgmt of Common Property & Public Goods
3) Optimal Mgmt of Natural Resources
4) Economic Valuation of Environmental Goods and Services
What is Market Failure of Common Property
Resources not privately owned can’t rely on markets to maintain them in adequate supply
Common Property
Nonexcludable/Rival
Public Goods
Nonexcludable/ NonRival
Economic Valuation of Environmental Goods and Services
To determine optimal degree of environmental protection based on comparison of costs and benefits
Principles of Ecological Economics
1) economic system subsystem of broader ecosystem
2)Sustainability should be defined according to ecological vs economic system
3) Rely on range of academic disciplines to provide insight
What does the Standard Circular Flow Model not address
1) Future use of natural resources
2) Effects of wastes and pollution
3) Effect of resource extraction on other systems
Implications of Expanded Circular Flow model on Economic Theory (3)
1) Alternative indicators of well-being
2) ecological system has its own circular flow-determined by physical/ biological laws
3) Economic activity limited by availability of natural resources and ability of enviro to assimilate wastes and pollution
economic system is bounded*
How does Environmental Economics look at the Circular Flow model
starts in inner circle and looks at ecological issues in ECONOMIC terms
How does ecological economics look at the Circular Flow model
greater emphasis on outer circle
bio laws and limitations
