Externalities and Efficient
These are costs or benefits imposed on others that are not reflected in normal market prices.
What are externalities?
Researchers often use surveys to estimate this non-market environmental quantity.
What is willingness to pay?
This term describes the environment’s ability to absorb pollutants without permanent damage.
What is absorptive capacity?
This term describes the opportunity cost of using a depletable resource today instead of saving it for the future.
What is marginal user cost?
Essential household water demand tends to have very low values for this economic measure.
What is price elasticity of demand?
This concept describes a situation where at least one person becomes better off without making anyone else worse off.
What is Pareto efficiency?
This method estimates environmental value using differences in related market prices, such as housing values.
What is the hedonic pricing method?
Unlike stock pollutants, this type of pollutant is absorbed at the same rate it is emitted.
What is a fund pollutant?
This principle states that future generations should be left no worse off than current generations.
What is the sustainability criterion?
This pricing system charges higher marginal prices as water consumption rises.
What is inclining block rate pricing?
This states that if property rights are clearly defined and transaction costs are low, bargaining can solve externality problems efficiently.
What is the Coase theorem?
This framework captures all ways humans value the environment, from direct use to existence value.
What is Total Economic Value (TEV)?
The efficient level of pollution occurs at the intersection of these two curves.
What are Marginal Damage Cost and Marginal Control Cost curves?
Replacing depleted natural capital with roads or factories is associated with this form of sustainability.
What is weak sustainability?
This type of pollution comes from many diffuse sources rather than a single discharge point.
What is nonpoint source pollution?
This type of analysis compares all expected costs and benefits of a project or policy in monetary terms.
What is cost-benefit analysis?
The Travel Cost Method and Hedonic Pricing Method are both examples of this valuation approach.
What are revealed preference methods?
When set equal to marginal external cost, this tax internalizes pollution costs.
What is a Pigouvian tax?
In a two-period resource model, increasing this factor shifts more resource use toward the present.
What is the discount rate?
This bias occurs when survey respondents intentionally misrepresent their willingness to pay.
What is strategic bias?
This term describes environmental resources shared by many users that are vulnerable to overuse.
What are common-pool resources?
Existence value and bequest value are examples of this type of environmental value.
What is non-use value?
This policy tool creates a market for pollution rights through tradable permits.
What is cap-and-trade?
The belief that ecosystems cannot truly be replaced by human-made capital reflects this form of sustainability.
What is strong sustainability?
This tax level is considered efficient because it equalizes marginal abatement costs across firms.
What is the Pigouvian tax?