Environmental Economics
Environmental
& Natural
Economics
Environmental
Resources_
& Natural
Economics
KeyResources_
Concepts
& Natural
and
KeyMarket
Resources_
Concepts
Failures
and
KeyMarket
–
Concepts
Lecture
Failures
and
Notes
Market
–_Lecture
Study
Failures
Material.pdf
Notes
–_Lecture
Study Material.pdf
Notes _ Study Material.pdf
Environmental
Economics &
Natural Resources:
Key Concepts and
Market Failures –
Lecture Notes /
Study Material
Environmental Economics
Environmental
& Natural
Economics
Environmental
Resources_
& Natural
Economics
KeyResources_
Concepts
& Natural
and
KeyMarket
Resources_
Concepts
Failures
and
KeyMarket
–
Concepts
Lecture
Failures
and
Notes
Market
–_Lecture
Study
Failures
Material.pdf
Notes
–_Lecture
Study Material.pdf
Notes _ Study Material.pdf
,Environmental Economics & Natural Resources_ Key Concepts and Market Failures.pdf Environmental Economics & Natural Resources_ Key Concepts and Market Failures.pdf Environmental Economics & Natural Resources_ Key Concepts and Market Failures.pdf
Environmental Economics The study of how society allocates scarce natural resources and manages trade-
offs between economic activity and environmental quality.
Natural Resources Materials and energy sources found in nature that humans use to produce goods
and services (e.g., water, forests, minerals, air).
Natural Resource Management The process of governing the use of natural resources to balance economic,
environmental, and social goals.
Anthropocentric A worldview that places humans at the center of value; decisions are made
based on impacts on human welfare.
Ecocentric A worldview that assigns intrinsic value to all living things and ecosystems, not
just humans.
Biodiversity The variety of species, genes, and ecosystems on Earth; valued both intrinsically
and for the services it provides to humans.
Optimal Pollution Level The quantity of pollution at which the marginal social cost equals the marginal
social benefit; NOT zero, because some pollution-generating activities have high
social value.
Environmental Economics & Natural Resources_ Key Concepts and Market Failures.pdf Environmental Economics & Natural Resources_ Key Concepts and Market Failures.pdf Environmental Economics & Natural Resources_ Key Concepts and Market Failures.pdf
,Environmental Economics & Natural Resources_ Key Concepts and Market Failures.pdf Environmental Economics & Natural Resources_ Key Concepts and Market Failures.pdf Environmental Economics & Natural Resources_ Key Concepts and Market Failures.pdf
Marginal Analysis Decision-making by comparing the additional (marginal) benefit and marginal
cost of one more unit of an activity.
Marginal Benefit (MB) The additional benefit gained from one more unit of consumption or production;
typically decreases as quantity increases (diminishing marginal utility).
Marginal Cost (MC) The additional cost of producing one more unit; typically increases as quantity
rises.
Marginal Utility The added satisfaction from consuming one more unit of a good; diminishes with
each additional unit consumed.
Market Equilibrium The price and quantity at which the quantity supplied equals the quantity
demanded; the market "clears."
Allocative Efficiency Resources are allocated so that no reallocation could make someone better off
without making someone else worse off; occurs when P = MC in competitive
markets.
Distributive Efficiency Resources are distributed among users in a way that maximizes total value; those
who value goods most receive them.
Consumer Surplus The difference between what consumers are willing to pay and what they
actually pay; the area under the demand curve above the market price.
Producer Surplus The difference between the price sellers receive and the minimum price they
would accept; area above supply curve below price.
Environmental Economics & Natural Resources_ Key Concepts and Market Failures.pdf Environmental Economics & Natural Resources_ Key Concepts and Market Failures.pdf Environmental Economics & Natural Resources_ Key Concepts and Market Failures.pdf
, Environmental Economics & Natural Resources_ Key Concepts and Market Failures.pdf Environmental Economics & Natural Resources_ Key Concepts and Market Failures.pdf Environmental Economics & Natural Resources_ Key Concepts and Market Failures.pdf
Deadweight Loss The reduction in total social welfare (consumer + producer surplus) caused by a
market inefficiency such as a tax, monopoly, or externality.
Production Possibilities Frontier (PPF) A curve showing all efficient combinations of two goods an economy can
produce given its resources; illustrates opportunity cost.
Pareto Efficiency A state where no one can be made better off without making at least one person
worse off; a standard benchmark of economic efficiency.
Social Welfare The aggregate well-being of all members of society; includes consumer surplus,
producer surplus, and external effects.
Expected Value The probability-weighted average of possible outcomes; used in environmental
risk analysis (e.g., Expected Value = Σ[probability × outcome]).
Demand Curve A graph showing the inverse relationship between price and quantity demanded;
also represents marginal willingness to pay.
Supply Curve A graph showing the positive relationship between price and quantity supplied;
also represents marginal cost of production.
Market Failure A situation in which free markets fail to allocate resources efficiently; caused by
externalities, public goods, imperfect information, or imperfect competition.
Externality A cost or benefit imposed on a third party not involved in a transaction. Negative
externalities (e.g., pollution) cause overproduction; positive externalities cause
underproduction.
Environmental Economics & Natural Resources_ Key Concepts and Market Failures.pdf Environmental Economics & Natural Resources_ Key Concepts and Market Failures.pdf Environmental Economics & Natural Resources_ Key Concepts and Market Failures.pdf
Environmental
& Natural
Economics
Environmental
Resources_
& Natural
Economics
KeyResources_
Concepts
& Natural
and
KeyMarket
Resources_
Concepts
Failures
and
KeyMarket
–
Concepts
Lecture
Failures
and
Notes
Market
–_Lecture
Study
Failures
Material.pdf
Notes
–_Lecture
Study Material.pdf
Notes _ Study Material.pdf
Environmental
Economics &
Natural Resources:
Key Concepts and
Market Failures –
Lecture Notes /
Study Material
Environmental Economics
Environmental
& Natural
Economics
Environmental
Resources_
& Natural
Economics
KeyResources_
Concepts
& Natural
and
KeyMarket
Resources_
Concepts
Failures
and
KeyMarket
–
Concepts
Lecture
Failures
and
Notes
Market
–_Lecture
Study
Failures
Material.pdf
Notes
–_Lecture
Study Material.pdf
Notes _ Study Material.pdf
,Environmental Economics & Natural Resources_ Key Concepts and Market Failures.pdf Environmental Economics & Natural Resources_ Key Concepts and Market Failures.pdf Environmental Economics & Natural Resources_ Key Concepts and Market Failures.pdf
Environmental Economics The study of how society allocates scarce natural resources and manages trade-
offs between economic activity and environmental quality.
Natural Resources Materials and energy sources found in nature that humans use to produce goods
and services (e.g., water, forests, minerals, air).
Natural Resource Management The process of governing the use of natural resources to balance economic,
environmental, and social goals.
Anthropocentric A worldview that places humans at the center of value; decisions are made
based on impacts on human welfare.
Ecocentric A worldview that assigns intrinsic value to all living things and ecosystems, not
just humans.
Biodiversity The variety of species, genes, and ecosystems on Earth; valued both intrinsically
and for the services it provides to humans.
Optimal Pollution Level The quantity of pollution at which the marginal social cost equals the marginal
social benefit; NOT zero, because some pollution-generating activities have high
social value.
Environmental Economics & Natural Resources_ Key Concepts and Market Failures.pdf Environmental Economics & Natural Resources_ Key Concepts and Market Failures.pdf Environmental Economics & Natural Resources_ Key Concepts and Market Failures.pdf
,Environmental Economics & Natural Resources_ Key Concepts and Market Failures.pdf Environmental Economics & Natural Resources_ Key Concepts and Market Failures.pdf Environmental Economics & Natural Resources_ Key Concepts and Market Failures.pdf
Marginal Analysis Decision-making by comparing the additional (marginal) benefit and marginal
cost of one more unit of an activity.
Marginal Benefit (MB) The additional benefit gained from one more unit of consumption or production;
typically decreases as quantity increases (diminishing marginal utility).
Marginal Cost (MC) The additional cost of producing one more unit; typically increases as quantity
rises.
Marginal Utility The added satisfaction from consuming one more unit of a good; diminishes with
each additional unit consumed.
Market Equilibrium The price and quantity at which the quantity supplied equals the quantity
demanded; the market "clears."
Allocative Efficiency Resources are allocated so that no reallocation could make someone better off
without making someone else worse off; occurs when P = MC in competitive
markets.
Distributive Efficiency Resources are distributed among users in a way that maximizes total value; those
who value goods most receive them.
Consumer Surplus The difference between what consumers are willing to pay and what they
actually pay; the area under the demand curve above the market price.
Producer Surplus The difference between the price sellers receive and the minimum price they
would accept; area above supply curve below price.
Environmental Economics & Natural Resources_ Key Concepts and Market Failures.pdf Environmental Economics & Natural Resources_ Key Concepts and Market Failures.pdf Environmental Economics & Natural Resources_ Key Concepts and Market Failures.pdf
, Environmental Economics & Natural Resources_ Key Concepts and Market Failures.pdf Environmental Economics & Natural Resources_ Key Concepts and Market Failures.pdf Environmental Economics & Natural Resources_ Key Concepts and Market Failures.pdf
Deadweight Loss The reduction in total social welfare (consumer + producer surplus) caused by a
market inefficiency such as a tax, monopoly, or externality.
Production Possibilities Frontier (PPF) A curve showing all efficient combinations of two goods an economy can
produce given its resources; illustrates opportunity cost.
Pareto Efficiency A state where no one can be made better off without making at least one person
worse off; a standard benchmark of economic efficiency.
Social Welfare The aggregate well-being of all members of society; includes consumer surplus,
producer surplus, and external effects.
Expected Value The probability-weighted average of possible outcomes; used in environmental
risk analysis (e.g., Expected Value = Σ[probability × outcome]).
Demand Curve A graph showing the inverse relationship between price and quantity demanded;
also represents marginal willingness to pay.
Supply Curve A graph showing the positive relationship between price and quantity supplied;
also represents marginal cost of production.
Market Failure A situation in which free markets fail to allocate resources efficiently; caused by
externalities, public goods, imperfect information, or imperfect competition.
Externality A cost or benefit imposed on a third party not involved in a transaction. Negative
externalities (e.g., pollution) cause overproduction; positive externalities cause
underproduction.
Environmental Economics & Natural Resources_ Key Concepts and Market Failures.pdf Environmental Economics & Natural Resources_ Key Concepts and Market Failures.pdf Environmental Economics & Natural Resources_ Key Concepts and Market Failures.pdf
