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environmental economics

Questions and Answers of Environmental Economics

Until recently, it was generally believed that growth and development were unquestionably good. Now, early in the twenty-first century, some are beginning to question that belief. Are those questions
What ethical obligations do you personally feel toward wolves and whales? What ethical obligations do you feel toward future generations of people? What ethical obligations do you feel toward future
Which approach to the environment—development, preservation, or conservation—do you think you adopt in your own life? Do you think it appropriate for everybody in the world to share the same
Give three different ethical justifications for protecting a forest using an anthropocentric, a biocentric, and an ecocentric viewpoint.
Look at the issue of climate change from several different disciplinary perspectives—economics, climatology, sociology, political science, agronomy. What might be some questions that each
You are the superintendent of Yellowstone National Park and want to move to an ecosystem approach to managing the park. How might an ecosystem approach change the current park? How would you present
In a discussion with a representative of China, you state that China contributes the largest amounts of greenhouse gases of any country in the world. The representative responds by stating that the
Imagine you are an environmentalist in your area who is interested in local environmental issues. What kinds of issues might these be?
How do you weigh in on the issue of jobs or the environment? What limits do you set on economic growth? Environmental protection?
Imagine you are a U.S. congressional representative from a western state and a new wilderness area is being proposed for your district.Who might contact you to influence your decision? What course of
In what parts of the world is energy use increasing?
What is the major environmental problem related to the use of fossil fuels as an energy source?
Give examples of the environmental consequences of globalization.
Why are wars fought over oil, water, or land?
Give examples of environmental conditions that lead to poor health and death for exposed people.
Describe how solving environmental problems is made more difficult by problems with governance.
Explain why the following statement is true. There is enough food in the world to feed everyone but some people do not have enough food.
Give examples that show how social and political factors influence how environmental decisions are made.
Give examples of several kinds of services provided by natural ecosystems.
Describe what is meant by an ecosystem approach to environmental problem solving.
Give examples of political, economic, and biological aspects of the reintroduction of wolves to Yellowstone National Park.
4. Nordhaus also says of Kyoto: ‘‘Economic analyses of the accord have pointed to its inefficiencies, especially the shortcomings from using pure quantity-type instruments such as emissions
3. In fact, the Kyoto treaty is moving ahead without U.S. participation. Referring to this chapter and Chapter 17, what important piece of knowledge do we hope to get from the European Trading
2. Nordhaus is generally an efficiency advocate. And yet, following the presentation of the results in Figure 22.3, he concluded: ‘‘There is little appreciation of the importance of
1. Assume that Nordhaus used a 5% discount rate for costs and benefits. Assume also that most of the benefits of reducing emissions today come in 80 to 100 years, while most of the costs will occur
In the past, the United States has imposed a ban on the export of unprocessed logs from public lands in the Pacific Northwest, with the purported intent of slowing down deforestation of the spotted
Some have argued that removing government controls that keep food prices down is a necessary step to ensure food security.29 In addition, some maintain, the subsequent increase in price will reduce
Will the Day Without a Car program necessarily cause families to reduce overall driving?
Some recent evidence shows that hazardous waste sites in the United States display an inverted U-shaped relationship with county income.26 That is, as income in a county rises, the number of
Suppose you are a farmworker, recently married, living in Pakistan. In a good year, you might make $200. Infant mortality rates are high—your children will have a one in ten chance of dying during
Suppose that you are in charge of the demand-side management program at Megabucks Power, and your state public utility commission has just decided that you can now count energy-efficiency measures as
Suppose that Octopus Power is considering providing a weatherization service to about a quarter of its customers ‘‘free of charge.’’ Why? Because, by reducing energy demand, it will be able
Governor Blabla has decided that, rather than build a new nuclear power plant to service power needs, the state should save an equivalent amount of energy. As one component of an efficiency plan, he
In an EPA-funded project, teams conducted waste minimization assessments of several medium-sized manufacturing plants. Table 18.5 provides a breakdown of the measures for two plants, the first a
In the late 1960s, after cotton pests developed pesticide resistance, cotton growers in Texas successfully made a shift to biological pest control methods.Government infrastructure support (predator
4. Which of these is the most efficient outcome? If prices fluctuate over time between $200 and the cost of the lowest-cost producer, which will be the likely long-run free-market equilibrium?
3. Suppose that chemical-intensive farmers have constant average costs equal to$185 per ton and that prices in this market are driven down to the cost of the lowest cost producer. Define a long-run
2. Why do the farmer’s costs rise from the top to the bottom of the table (two reasons)? Biological pest control has high fixed costs associated with machinery and predator rearing; farmers
1. Fill in the chart below.Biological pest control has high fixed costs associated with machinery and predator rearing; farmers experience substantial ‘‘learning by doing’’; and farmers also
CAC versus Direct versus Indirect Taxes One of the main sources of water pollution is agricultural runoff. Consider three options to control this problem: (1) a command-and-control requirement
Consider these cap-and-trade programs discussed in the chapter:a. RECLAIMb. Bush cap-and-trade proposalc. Regional Greenhouse Gas Initiative (RGGI)d. Clunker Programe. National SO2 Tradingf. European
Why don’t private garbage haulers provide their customers with a unit-pricing option? Unit pricing refers to paying for garbage disposal by the bag rather than in a lump sum. The lump-sum pricing
On the banks of the Great Fish River sit an oil refinery and a paper mill.11 Both generate a water pollutant called gunk that kills fish, thus reducing the profits of local fishing boats. But it is
Two plants are emitting a uniformly mixed pollutant called gunk into the beautiful sky over Tourist-Town. The city government decides it can tolerate total emissions of no more than 100 kg of gunk
It was stated in this chapter that the EPA officially supports a policy of setting fines to eliminate all monetary gain from noncompliance with regulations. (The states have generally not adopted
Noncompliance with auto emission limits is fairly widespread; as I noted in the text, some 69% of test facilities passed cars that were designed to fail. In a review of the issues faced, Harrington
1+++ What are the two features of command-and-control regulation? Go back and reread Section 13.1, 13.2 or 13.3 and explain to what degree the national legislation covering air, water, and land, has
1+++ 1. The first civilian nuclear reactor began operation in 1957. Yet the agency in charge of overseeing the nuclear industry ‘‘had fewer than a dozen active regulations in 1970.’’11 One
2. Give some examples to show how safety-based legislation can be inefficient.Give some examples to show how efficiency-based legislation can be unsafe.Give an example in which ecological
1. Give some examples of technology-based regulation.
Head to www.epa.gov/tri, read the TRI Overview, and then find out about the toxic releases for several plants in your zip code, or one nearby. Do you find that the information is reported in an
To implement portions of the 1990 Clean Air Act, the EPA adopted a distinctly corporatist approach—negotiating the regulatory details with representatives from industry, the states, and big
Consider the following social welfare function:SW = Ua(Xnc a , Xc a,Xc∼a, Pa) + Ub(Xnc b ,Xcb,Xc∼b, Pb) + Ud(Xnc d ,Xcd,Xc∼d, Pd) + . . .where:X = consumption bundle P = pollution nc =
In the political tug-of-war over benefit-cost analysis, some economists have argued that rather than value human lives saved as a result of regulation, we should instead value‘‘life years.’’
When taken to its extreme, the logic of benefit-cost analysis can generate some strange conclusions. In one case, researchers wanted to determine the value that mothers placed on their children’s
As an aide to Governor Blabla, you are given the task of recommending whether the state should locate a low-level nuclear waste facility in a rural county. The nuclear industry provides you with a
Calculating the Total Costs of Climate Control Referring to Figure 9.1, what is the approximate total cost of achieving 38-gigaton reductions in carbon dioxide equivalents, below the 2030 baseline?
In 2009, the conservative Heritage Foundation called the global-warming cap-andtrade bill being debated in the U.S. House a ‘‘jobs destroyer’’ and published an analysis claiming that the law,
Two well-known economists, William Baumol and Alan Blinder, have stated that, in the long run, ‘‘nothing contributes more to reduction of poverty, to increases in leisure, and to the country’s
For consulting job three, suppose you are analyzing the use value of a public beach.Controlling for income, age, preferences, and everything else that might affect beach visits, you have gathered the
In your second consulting job, you have been trying to estimate the willingness to accept risk on the part of workers. You have gathered data on a variety of blue-collar occupations ranging from
Now it is time for your first consulting job as an environmental economist. The Forest Service would like to know whether it should set aside some national forestland, previously slated to be logged,
What is approximate gain in consumer surplus to the individuals in the sample if the cleanup in fact occurs and costs $4 per person?
Suppose that a bacterium lives in a test tube and the bacteria population doubles every minute, so that at the end of one minute there are two, at the end of two minutes there are four, and so on.
The authors of the previous quote are applying the IPAT equation and assuming that the combined effect of increasing population and consumption will lead to a doubling of the human appropriation of
2. If the Onceler does replant, then the Brown Barbaloots, Swamee Swans, and Humming Fish will come back due to the improved habitat. Beginning in 40 years, their populations will recover
The Onceler has clear-cut a forest of Truffula trees and is considering replanting. If he replants, in 40 years he will have another stand of trees to harvest, and he will earn an (inflation
One economic development paradox receiving recent research attention has been the‘‘dismal’’ economic performance of many mineral-dependent countries in the Third World. On average, they have
Would you prefer to have $100 in real purchasing power this year or next year, or are you indifferent? By ‘‘real purchasing power,’’ I mean that if you opt to take the money next year, you
Suppose thatMr. Bill has an oil field containing 100 barrels of oil on his property.He can hire a firm from a neighboring town to pump his oil at a total economic cost of $1 per barrel—but because
Consider the following statement published on the website of the AEI-Brookings Joint Center for Regulatory Studies:EPA’s analysis of its new arsenic rule estimates annual costs of $210 million and
As noted in this chapter, one of the Clean Air Act Amendments passed by the U.S.government in 1990 was designed to control the emission of hazardous air pollutants.The EPA released a publication that
The marginal cost of reduction curve illustrated in Figure 4.5 assumes a particular approach to reducing pollution, often called end-of-the-pipe control. In other words, when we draw that
Rancher Roy has his ranch next to the farm of farmer Fern. Cattle tend to roam and sometimes stray onto Fern’s land and damage her crops. Roy can choose the size of his herd. His revenues are $6
These smoking problems are a little silly but are good at illustrating some basic lessons about efficiency. So, this time, Groucho and Harpo work together in the same office.Groucho smokes; Harpo
The graph below illustrates the marginal costs and benefits of reducing emissions of benzene from year 2005 levels in a chemical factory. Currently, the firm is not reducing any emissions at all.a.
The living room floor at Ronald Coase’s house is common property. His daughter, Joan, really likes to drop clothing items on the living room floor; Ronald hates this form of littering. If Joan is
Tyler, who loves to smoke, would puff his way through five cigarettes a day if he were in the office by himself. Tyler is a selfish individual, and he has the right to smoke as much as he wants.Would
Adam and Eve live on two sides of the Garden of Eden, a small suburban development.After they move in, an old PCB dump is discovered between their houses. If X total tons of PCBs are removed from the
The following data refers to the number of logging operations working in a stretch of tropical rain forest. Excluding externalities, the private cost of a logging operation is$25 thousand per week.
Will the Nature Conservancy get enough in contributions to buy the land?
Suppose that 100 people live around a hazardous waste dump. If the people continue to live there for 20 years, one of them will likely contract a painful, nonfatal cancer that will lead to $1 million
The U.S. Environmental Protection Agency (EPA) issues regulations covering the design and construction of landfills for municipal solid waste. Landfills can represent a threat to environmental health
Estimating the economic costs of global warming is quite a difficult process. In a book examining the issue, Nordhaus and Boyer (2000) provided this disclaimer: ‘‘Attempts to estimate the impacts
The Kyoto Protocol requires that greenhouse gases be stabilized at a level that prevents‘‘dangerous anthropogenic interference’’ with the climate system. In an effort to help define what this
How would your answer to Problem 3 change if the discount rate were 5 percent? What is the most that society would spend to avoid the \($1\) million loss in 20 years with a 5 percent discount
This problem requires the use of algebra. Consider the scenario given in the previous problem with a total quantity of 60 barrels of oil. Note that in each period, MB = 100-2Q. What is the
Indicate whether the following statement is true, false, or uncertain, and illustrate your answer using a set of graphs similar to those in Figure 14.6: If the marginal cost of extraction increases
Similar to the previous exercise, consider a pollution accumulation problem with two pollutants. But now the damage functions are additively separable such that D i(S i) =d i, S i 2 while abatement
Consider again the case of one firm as in exercise 9.5 , but now assume that the firm can observe its parameter ν.(a) Determine the firm’s efficient choice of l for each value νL and νH.(b)
Identify the four components of an ecosystem. After you do this try to visualize the interactions of these four components of an ecosystem as illustrated by Figure 2. 2 in the textbook. Does this
The table below shows the use of labor and capital in the caviar industry of Beluga for two particular years. Also shown is the output of caviar and water pollution. Caviar output is shown in
How does Figure 20.2 support the following statement: "Looking at how countries of different income at any point in time supply environmental quality (the environmental Kuznets curve) does not
Some policy makers argue that it would be desirable to reward generators of hazardous wastes for appropriately disposing of their wastes. Describe a possible reward scheme. Why is it a good idea?
Describe how a tax scheme could be used to regulate automobile pollution in an urban area.
Identify whether each of the following is an example of adverse selection or moral hazard and why:a. A sawmill threatens to close down because of tight new environmental regulations.b. Smog checks
Contrast emission fees (fee per unit emissions) and marketable permits (permit to emit one unit in perpetuity) from the point of view of commitment in a society with well-defined private property
Consider the problem of automobile pollution in a large city in Central Asia. There are a million cars in the city, each emitting 10 grams of carbon monoxide (CO) per kilometer \((\mathrm{km})\)
Imagine that you are a manufacturer of inflatable rubber ducks. Unfortunately, the manufacture of ducks involves damaging water pollution. You have computed that your marginal savings in millions of
You are a polluter who is faced with the question of whether to comply with the regulations on emissions or to violate them. If you comply with the regulations, your costs are \(k\). If you do not

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