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business
natural resource economics

Questions and Answers of Natural Resource Economics

â•‡ 6. Is the optimal level of pollution zero?Why or why not?
â•‡ 5. What is the source of energy for the building you are in or closest to?What barriers prevent more energy from being obtained from clean sources?
â•‡ 4. What are four possible standards for sustainability?
â•‡ 3. In your opinion, does society take an anthropocentric or an ecocentric view of natural resources when deciding on policies for preservation? Explain which view you think we should take
â•‡ 2. List five consumer goods that you have purchased recently. For each, note the source of a raw material that went into that good. For example, a computer mouse is made from plastic by the
â•‡ 1. What solutions to the mounting municiÂ�pal solid waste problem have been disÂ�cussed or applied in your area?Are there any solutions that you think would be more promising?
5. Devise a sustainable economic development plan for the jurisdiction that you live in or grew up in. Explain how your plan is consistent with sustainability and with improving the economic
4. Interview someone in your local jurisdiction’s planning or economic development department. Find out what strategies they employ for promoting the jurisdiction’s economic development. To what
3. Suppose that a firm proposes locating a production facility in your community that would generate $25 million in annual export sales revenue. Suppose that $10 million of that revenue initially
2. Go to the E.F. Schumacher Society’s Local Currency website (www.smallisbeautiful.org/local_currencies/currency_groups.html) and research one or more of the local currency projects described
1. Identify a local common-pool resource in the area where you live. It may be natural, like a lake or a fishery, or constructed, like a community pool. Research the property rights structure (who
4. Suppose that a hybrid automobile costs $3,000 more than a similar conventional automobile, but gets an extra 30 miles per gallon of fuel economy. Assuming that a car is driven 12,000 miles per
3. Go to your local grocery store or coffee shop and compare the price of standard and ecolabeled coffees. Is there a price premium for the ecolabeled coffees over and above what is charged for the
2. In the absence of some sort of government policy promoting clean technology, what types of environmentally friendly technologies will the market process produce and sell, and why? In the case of
1. Select a particular clean technology and find out where the technology was developed, where the products are produced (or if they are being produced), and where they are sold. What factors, if
6. Go to www.myfootprint.org and assess your own ecological footprint based on where you live and on your various life-style choices. Then consider several life-style changes and see how those would
5. Access the Millennium Development Indicators website (http://millenniumindicators.un.org/unsd/mi/mi.asp), select a country, and produce a summary report of the trends in that country’s
4. Access the Compendium of Sustainable Development Indicators on the Internet (www.iisd.org/measure/compendium). Select an indicator of sustainability that has not been discussed in the textbook and
3. Make a list and describe some examples of situations in which there appears to have been a sustainable substitution of human-made capital for natural capital. Now make another list and describe
2. Describe the conceptual differences between strong and weak sustainable development. What is the basis for disagreement over which of the two offers the better guide to sustainable development
1. Research the effects of traditional development lending and SALs in a country of your own choice and write a two-page essay describing your findings.Discuss the impacts of development debt on the
10. Access the Earth Track Internet site (http://earthtrack.net) and select a category of dysfunctional subsidy for environmentally harmful activity. Write a one-page paper that describes the
9. Use the Internet to learn about population pyramids, a way to present information on the age profile of different countries’ populations that is related to the demographic transition. Find two
8. Use the Internet to research and describe the extent to which international development programs are addressing the education and empowerment of women, and the protection of the environment. A
7. Use the Internet to research and describe an ecological tax reform policy or policy proposal. A good place to start is the Redefining Progress Internet site
6. Suppose that Clara just bought an older home. She expects that her employer will ask her to accept a new assignment and move in five years.Clara’s house needs a new natural gas furnace. Clara is
5. Access the United Nations Population Division’s Internet site(www.popin.org) and find some examples of countries that have successfully reduced high rates of population growth. What policies or
4. The bioregionalist movement argues for most goods to be produced in the same bioregion in which they are consumed, limiting the role of trade and the scale of production. Discuss the merits of
3. Explain why empowerment, education, and opportunities for women and other disadvantaged groups are positively related to a more sustainable society. Your explanation should go beyond the issue of
2. Explain the relationship between income and the quality of environmental and natural resources in a given country. In particular, explain why one might expect an inverted-U-shaped relationship (an
1. Develop an international trade policy that allows trade yet also protects those who live in countries with relatively strict labor and environmental standards. How would your trade policy be
7. Can we achieve sustainability, as that term is understood in this textbook, in the absence of democracy? How does this relate to the role of Plato’s philosopher-king, and to modern nation-states
6. Read the paper “The Value of the World’s Ecosystem Services and Natural Capital” by Robert Costanza and his colleagues at www.uvm.edu/giee/publications/Nature_Paper.pdf. Write a half-page
5. Read the paper “The Prosperous Community: Social Capital and Public Life” by Robert Putnam at www.prospect.org/print/V4/13/putnam-r.html.Write a half-page summary of what Putnam means by
4. As international statements, the Brundtland Commission report and the Earth Charter reflect the interests of both high-income industrialized countries and lower-income countries. Access the 1992
3. Access the Sustainable Development on Campus page of the International Institute for Sustainable Development website (www.iisd.org/educate)and familiarize yourself with the issues. Once you have
2. Contrast the focus of sustainability on community and intergenerational equity with the individualistic focus of contemporary Western society. Explain why the greatest challenge of sustainability
1. Go back to chapter 7 and review the concept of benefit/cost analysis and the dynamic efficiency standard that is implied by such an analysis. Can benefit/cost analysis and dynamic efficiency be
7. Visit the website of the Copenhagen Consensus (www.copenhagen consensus.com), a group that attempts to prioritize action on various global problems, including climate change. Review the article by
6. The European Union has a greenhouse gas allowance trading system in place. Go to their website (http://europa.eu.int/comm/environment/climat/emission_plans.htm) and write a brief summary that
5. President George W. Bush argued against ratifying the Kyoto Protocol because the Protocol fails to require India and China to make binding reductions in emissions of greenhouse gases, and because
4. Access the report Climate Change Impacts on the United States on the Internet (www.gcrio.org/NationalAssessment/index.htm). Summarize the forecasted environmental and social impacts of global
3. What other environmental policy dilemmas have uncertainty, irreversibility, and potentially large long-term impacts similar to the global-warming issue? Carefully explain your reasoning. How might
2. Review the concept of the prisoners’ dilemma in the Appendix to chapter 5. Is it reasonable to model the international coordination problem for control of greenhouse gases as a prisoners’
1. Write a two-page essay in which you summarize what is known about global climate change. Discuss how the complexity, the long-term nature of the problem, the diffusion of the benefits, the
6. Access the European Union report, Study on the Economic and Environmental Implications of the Use of Environmental Taxes and Charges in the European Union and Its Member States
5. Access the Resources for the Future Discussion Paper 04–24 by Joseph Kruger and William Pizer, which provides a critical analysis and discussion of the European Union Emissions Trading Directive
4. Download information on the volume of trade and allowance prices from the EPA’s Acid Rain Program web page (www.epa.gov/airmarkets/arp/overview.html). How have allowance prices and the volume of
3. Draw a diagram in which firms A–H each have upward-sloping marginal abatement cost functions, as in Figure 10.3. Draw a uniform price for allowances such that the total quantity of emissions
2. One of the criticisms of using indirect controls such as pollution taxes to limit pollution is that firms will simply view the taxes as a part of the cost of doing business and pass the cost along
1. Go back to the tables and figures in the chapter for the illustration of the cost savings from marketable allowances.a. Redo the illustrative example of the cost savings from fully marketable
4. Go to the Internet site for the Environmental and Natural Resources Division of the U.S. Department of Justice (www.usdoj.gov/enrd). Going beyond the examples given in the textbook, find an
3. Economist Gary Becker (1968) has argued that fines are a more efficient form of penalty than prison terms. While fines can be calibrated to create deterrence, prison terms create higher social
2. Suppose that a firm can increase its profits by $2 million each year by choosing not to comply with environmental regulations. The firm is a riskneutral expected profit maximizer. The firm
1. Suppose that a firm can increase its profits by $1 million each year by choosing not to comply with environmental regulations. The firm is a riskneutral expected profit maximizer. The probability
5. Go to the Opensecrets.org website (www.opensecrets.org) and research the most recent campaign finance profile of one or more members of the U.S. Senate or House of Representatives. As of 2005,
4. Alberty and VanDeveer (1996) have compared the political economics of the Montreal Protocol to that of international attempts at controlling greenhouse gas emissions. Greenhouse gases, primarily
3. Suppose that the standard industry process for transforming wood chips into pulp for paper manufacturing leads to “badstuff” being flushed into adjacent bodies of water. Badstuff is estimated
2. Suppose that “gunk” is a pollution by-product of manufacturing computer processors. Environmental activists propose regulation to limit emissions of gunk. The proposed regulation leads to
1. Consider the supply and demand model of the political market for regulation described in the chapter. How would the equilibrium level of effective support change if industry groups opposing
7. Spreadsheet simulation (more advanced): Consider the following simplified fitted TCM linear regression equation: VISITS = 50,000 + 0.5*INC +50*TCSUB – 100*TCTARGET, where VISITS is the annual
5. Access the Internet study Dying Too Soon: How Cost-Effectiveness an important management or policy change, and that contains a socioeconomic element with a benefit/cost analysis. Write a report
4. Access the Internet site for the National Center for Environmental Assessment (http://cfpub1.epa.gov/ncea /). Find a risk assessment report for a particular toxic pollutant and summarize the
3. Discuss the advantages and disadvantages of the different methods addressed in this chapter for measuring the nonmarket value of environmental amenities in the context of valuing a neighborhood
2. Do some library research and find a study that uses nonmarket valuation techniques to measure the benefits of some natural resource or environmental amenity. Likely journals include the Journal of
1. Make up a hypothetical table for the cleanup of some pollutant as in the present chapter to illustrate the use of the efficiency standard and benefit/cost analysis. Set up your table with:• the
4. Spreadsheet simulation (more advanced): Suppose that stock growth is given by F(X) = aX – bX2, where (a = r, b = r/k). Note that steady-state harvest H = E[a/b – E/b]. If for simplicity we
3. In what way is a company town, where workers can be employed only by a single firm, similar to the case of a monopsony processor that buys all the fish from commercial fishermen in a coastal
2. California’s Dungeness crab fishery includes relatively small vessels that each fish an average of approximately 150 traps, medium-sized vessels that each fish an average of 250 traps, and large
1. Research project: Identify an interesting fishery not covered in this chapter and write a three-page essay that describes (i) trends in landings, (ii) key fishery management milestones, and (iii)
6. Spreadsheet simulation (more advanced): Suppose that demand is given by the equation P = 200 – Q, and supply is given by the equation P = 10.Suppose that the total resource stock Qtot = 100, and
5. Suppose there is a groundwater basin that is being drawn from faster than it is being recharged from its aquifer, resulting in dropping water tables in the area. Explain the different ways that
4. Explain why the pure Malthusian outcome has not occurred, despite rapid population growth since Malthus’s time (1798). Carefully list the factors that would explain why some resources have not
3. Carefully define a common-pool natural resource relative to both private goods and pure public goods. Provide an example. Use this example to explain the tragedy of the commons. If resource users
2. Suppose that in the oil example given in the chapter for dynamic efficiency, all else remains the same except that now there are 60 barrels of oil rather than only 40. Using the technique shown in
1. Suppose that in the oil example given in the chapter for dynamic efficiency, all else remains the same except that the discount rate r rises from 15 percent to 30 percent. Using the technique
6. Spreadsheet simulation (more advanced): Suppose that demand is given by P = a – bQ, private-cost supply is given by P = c + dQ, and marginal external cost equals “e.”a. Solve for the
5. Classroom debate activity: Debate consists of reasoned arguments for or against a given proposition. Form two groups in your class (affirmative and negative) for the purpose of debating the
4. Describe the various reasons why it might be difficult for government interventions to perfectly resolve positive and negative externalities.Address the problem of measurement as well as the
3. Write a one-page essay in which you explain why, in the absence of government environmental regulation, competitive markets overproduce goods whose production involves the creation of negative
2. Write a one-page essay in which you explain why, in the absence of government subsidies, competitive markets underproduce goods that feature positive externalities. Be sure to provide an example
5. Spreadsheet simulation: Suppose that supply is given by the equation P = c + dQ, and demand is given by the P = a – bQ.a. Create a spreadsheet file with these supply and demand equations. Let a=
4. Classroom role-play activity: Before class, the instructor makes ten seller cards (3x5 note cards), with opportunity cost values written on them.The lowest opportunity cost card should be $1, and
3. Classroom debate activity: Debate consists of reasoned arguments for or against a given proposition. Form two groups in your class (affirmative and negative) for the purpose of debating the
2. Starting with a supply and demand diagram as in Figure 3.1, identify producer and consumer surplus in the competitive equilibrium. Now suppose that sellers form a cartel and wish to increase
1. Consider the demand and supply for used science textbooks. Suppose that the used-textbook market is competitive, with supply given by P = 10 + .1Q and demand given by P = 100 – .08Q. Solve for
4. In his book Moral Sentiments, Adam Smith (1759; p. 25) says: “And hence it is, that to feel much for others and little for ourselves, that to restrain our selfish, and to indulge our benevolent
3. Classroom debate activity: Debate consists of reasoned arguments for or against a given proposition. Form two groups in your class (affirmative and negative) for the purpose of debating the
2. How do you think the three economic questions would be answered in a pure market system of allocation? Be precise. How do you think the three economic questions would be answered in a commune?
1. The Endangered Species Act calls for the protection and recovery of listed species independent of cost. It has been argued that the act needs to be modified to incorporate benefit/cost analysis.a.
3. Classroom debate activity: Debate consists of reasoned arguments for or against a given proposition. Form two groups in your class (affirmative and negative) for the purpose of debating the
2. Price is a simple indicator of value for things traded in markets. Yet if the economic problem also applies to something like a wilderness area, which has no price to indicate value, then how are
1. You are an investigative reporter covering the issue of a trade-off between jobs and the environment.Your assignment is to write a 500-word column that provides:a. a brief overview and description
2. In thinking about the appropriate balance between the market and the government in achieving sustainability, do you think the government needs to take a stronger role or would you favor reducing
1. Why has sustainable development become such an important topic? What are the global implications of government-support to it?
3. Define an ecological footprint. What is it used for? Explain its characteristics with examples.
2. If a natural disaster, such as the 2010 drought in Russia, hits food production, use supply and demand analysis to figure out how this affects consumers and producers. Does everyone lose or are
1. Because export taxes on are frequently seen as falling on foreign consumers, they tend to be favored as revenue sources by many countries. What assumptions are necessary for export taxes to be
4. What is the Gross National Happiness index? Why is it considered an alternative to more conventional measures guiding a development strategy, like GDP?
3. “Future generations can cast neither votes in current elections nor dollars in current market decisions. Therefore, it should not come as a surprise to anyone that the interests in future

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