Botkin: Chapter #27: Dollars and Environmental Sense: Economics of Environmental Issues Guided Viewing Worksheet Name: ___________________Chau

Vu____________________________________ 1: What does it mean that a factor is tangible? Intangible? -> Tangible Measurable, Intangible Cant measure 2: What is tragedy of the commons? -> When a resource is shared, an individuals personal share of profit from exploitation of the resource is usually greater than that individuals share of the resulting loss. 3: What is a commons? -> A commons is any resource owned publicly with public access for private uses. Each user tries to maximize personal gain and must periodically consider whether to add more cattle to the herd on the commons.

4: Explain how cow herding is an example of tragedy of the commons. -> From selling a cow, people get the profit. If cow grazes on commons land then people get more profit. But grass in the commons land run out. 5: What are some examples of the commons? -> US forests, ocean fisheries, deep-ocean seabeds, Antarctica and the atmosphere. 6: How does low growth rate of a resource contribute to its overexploitation? -> The second reason individuals tend to overexploit natural resources held in common is the low growth rate of the resource. 7: What is an externality? Give an example. -> Indirect cost. In economics, an effect not normally accounted for in the cost-revenue analysis. 8: What are public services of nature (ecosystem services)? How much are they worth? -> Only when our environment loses a public service function do we usually begin to recognize its economic benefits. What had been accepted as an economic externality (indirect cost) suddenly may become a direct cost. Public service functions have been estimated to provide between $3 trillion and $33 trillion per year.

9: Why is it hard to value nature? -> Because everyone has their own personal preference on nature. 10: How do we evaluate the acceptability of risk? -> In terms of the number of people affected, novel risks that appear to be less acceptable than natural risks and peoples willingness to pay for reducing a risk. 11: What is the U.S. Toxic Substances Control Act? -> No one may manufacture a new chemical substance w/o obtaining a clearance from the EPA. Act establishes procedures to estimate the hazard to the environment and to human health. 12: How do we achieve environmental policy? -> Means to implement a societys policies are known among economists as policy instruments. Moral suasion - i.e., persuading people by talk, publicity, and social pressure) Direct controls, which include regulations Market processes, which affect the price of goods and include taxation of various kinds, subsidies, licenses, and deposits Government investments, which include research and education. 13: What are the 3 common methods of control of pollution? -> (1) setting maximum levels of pollution emission (2) Requiring specific procedures and processes that reduce pollution (3) Charging fees for pollution emission