Assignment 5 flashcards

Assignment 5 flashcards Economics - studies how people use resources to provide goods and services in the face of demand Goods: - manufactured materials that are bought Services: - work done for others as a form of business A new sewage treatment facility reached capacity in.. - 3 years Economy: a social system that converts resources into: - Good & services Subsistence economy: - people get their daily needs directly from nature or their own production (They do not purchase or trade products) Centrally planned economy: - the government determines how to allocate resources Mixed economy: - governments intervene in the market Capitalist market economy: - buyers and sellers interact to determine prices and production of goods and services In mixed market economies, governments intervene to: - *Eliminate unfair advantages held by single buyers or sellers *Provide social services (national defense, medical care, education) *Provide safety nets for elderly, disaster victims, etc. *Manage the commons *Reduce pollution and other threats to health and quality of life Ecosystem services: essential services support the life that makes economic activities possible; such as, - Soil formation, Pollination, Water purification, Nutrient cycling, Climate regulation, and Waste recycling Capitalist market systems operate according to neoclassical economics - Enormous material wealth has been created Adam Smith: - believed that self-interested behavior could benefit society (If laws were followed and markets were competitive) Classical economics: - when people pursue economic self-interest in a competitive marketplace... The market is guided by an "invisible hand" and... Society benefits Economic activity uses natural resources (sun's energy, water, trees, rocks, fossil fuels) - As "goods" Neoclassical economics examines - the psychological factors that underlie consumer choices Market prices reflect - consumer preference (Supply vs. demand) Conflict between buyers and sellers lead to - Production of the "right" quantities of a product Cost-benefit analysis: - costs of a proposed action are compared to benefits that result from the action If benefits are greater than costs: - pursue the action Monetary benefits are overrepresented - Analysis is biased in favor of economic development, Biased against environmental protection Ecological economics - civilizations cannot overcome environmental limitations (Uses principles of ecology and systems science, Natural systems are models for sustainability, Calls for revolution) Assumptions of neoclassical economics contribute to environmental degradation: - Resources are infinite or substitutable, We should discount the future, All costs and benefits are internal, All growth is good Economic models treat resources and workers as infinite, substitutable, and interchangeable - Once used up, a replacement resource will be found Some resources can be replaced but some cannot - Nonrenewable resources (fossil fuels) can be depleted and Renewable resources (forests) can also be used up Future events are discounted: - Short-term costs and benefits are more important than long-term costs and benefits and Present conditions are more important than future ones Environmental problems unfold gradually - Discounting causes us to downplay environmental impacts of pollution and resource degradation External costs: - affect people other than buyers or sellers (Health problems, resource depletion, property damage) Affluenza: - material goods do not always bring contentment to those who can afford them Greenwashing: - consumers are misled into thinking companies are acting more sustainably than they are (Example: "Pure" bottled water may not be safer or better) Environmental economics: - unsustainable economies have high population growth and inefficient resource use Market failure occurs when markets ignore: - The environment's positive impacts on economies (ecosystem services) and The negative effects of activities on the environment or people (external costs) Nonmarket values: - values (e.g., ecological, cultural, spiritual) not included in the price of a good or service Policy: - a formal set of general plans and principles to address problems and guide decision making Public policy: - governmental laws, regulations, orders, incentives, and practices to advance societal welfare Environmental policy: - pertains to human interactions with the environment Tragedy of the commons: - commonly held resources will become overused and degraded (Best prevented by restriction of use and management) Free riders - people are tempted to cheat and not participate in sacrificing to protect the environment Regulations: - specific rules to achieve objectives of broadly written statutory laws Requires an Environmental Impact Statement (EIS) - For any federal action that might significantly impact the environment and To assess the environmental impacts of any federally-funded project What type of law results from conventions and treaties between nations? - conventional law In 1970, President Nixon's executive order created the - Environmental Protection Agency (EPA) Customary law: - international law arising from long-standing practices or customs held by most cultures Conventional law: - arises from conventions or treaties (Montreal Protocol (1987): 160 nations agreed to reduce ozone-depleting chemicals and Kyoto Protocol: reduces greenhouse gas emissions causing climate change) North American Free Trade Agreement (NAFTA): - Addresses U.S.-Mexico issues United Nations (UN): - plays an active role in policy The World Bank: - one of the largest funding sources for economic development in poor countries The European Union (EU) seeks to promote - Europe's unity and its economic and social progress Nongovernmental organizations (NGOs): - entities that influence international policy (Some do not get politically involved) Example: The Nature Conservancy Which of the following statements would be spoken by an ecological economist? - The current economic system is broken, and a new one needs to be developed Seven steps to making environmental policy - Step 1: Identify a problem - Requires scientific inquiry and data collection Step 2: Pinpoint causes of the problem - Involves scientific researchStep 3: Envision a solution - Science plays a vital role here, too; Solutions also require social or political action Step 4: Get organized - Organizations are more effective than individuals; But a motivated, informed individual can also succeed Step 5: Cultivate access and influence - People gain access to policymakers and influence them through lobbying and campaign contributions Step 6: Shepherd the solution into law Step 7: Implement, assess, and interpret policy Green taxes: - tax environmentally harmful activities and products (Businesses reimburse the public for damage they cause and The more pollution, the higher the tax payment) Environmental policy has 3 major approaches: - Lawsuits, Command-and-control, and Economic policy tools Which of the following is a reason for a government to intervene in the marketplace? - All of these are good reasons for governments to intervene in the market Polluter-pays principle: - the party that pollutes is held responsible for covering the costs of its impacts (Widely used in Europe) Subsidy: - a government giveaway of cash or resources to encourage a particular industry or activity (Tax break: helps an entity by relieving its tax burden) Permit trading: - a government-created market in permits for an environmentally harmful activity (Businesses buy, sell, or trade these permits) Ecolabeling: - tells consumers which brands use environmentally benign processes (Dolphin-safe tuna, labeling recycled paper, etc.) Cap-and-trade emissions trading system: - the government sets pollution levels ("caps") (Permits let polluters emit some amount of pollution)