AEB2451 EXAM 1 Lecture Notes
AEB2451 EXAM 1 Lecture Notes
08/25/11
I. What is Economics
A. A social science; a study of decision making by agents
B. Goal? Understand what motivates particular decisions
C. Purpose? Allows to anticipate future behavior for planning and policy
a. Use agent’s incentives to achieve social goals, which may mean implementing policies
II. What is “Natural Resource Economics”?
A. The study of agent decisions concerning natural resources
B. What are natural resources?
a. “Goods and services” from the natural environment that are available to agents (Anthropocentric)
b. Includes raw inputs used in production and “in situ” used for ecosystems services and enjoyment
III. Types of Natural Resources
A. Renewable- Resources that exhibit growth and reproduction
a. Trees, marine animals, wildlife
B. Non-Renewable- Fixed current stock but supply changes
a. Coal, natural gas, minerals, petroleum, farmland
b. Causes of supply change?
b.i. Market Price
b.ii. Technology
IV. Important Issues in NRE
A. Adequate supply
B. Socially optimal rates of use
a. Efficiency = max. All benefits – opportunity costs
b. Fairness = ensure all benefits/costs are equally shared
c. Sustainability = leave same quantity for future
d. Precautionary = avoid irreversible actions
C. Natural resource accounting
V. What is “Environmental Economics”?
A. The study of how agents decisions have environmental consequences…that affect us
B. Primarily about environment quality
a. Types of pollutants:
a.i. Uniform?
a.ii. Cumulative?
a.iii. Point Source?
a.iv. Localized?
a.v. Continuous
VI. Important Issues in EE
A. Environmental degradation
B. Socially optimal rates of generation and the method/form disposal?
a. Efficiency
b. Fairness
c. Cost effective = reach target at least cost
d. Regulatory = easily enforceable
C. Effective Institutions?
VII. Story of Stuff
A. Good Points:
a. Variety of Uses of environment
b. Circular nature of system
c. Introduced externalities
08/25/11
I. What is Economics
A. A social science; a study of decision making by agents
B. Goal? Understand what motivates particular decisions
C. Purpose? Allows to anticipate future behavior for planning and policy
a. Use agent’s incentives to achieve social goals, which may mean implementing policies
II. What is “Natural Resource Economics”?
A. The study of agent decisions concerning natural resources
B. What are natural resources?
a. “Goods and services” from the natural environment that are available to agents (Anthropocentric)
b. Includes raw inputs used in production and “in situ” used for ecosystems services and enjoyment
III. Types of Natural Resources
A. Renewable- Resources that exhibit growth and reproduction
a. Trees, marine animals, wildlife
B. Non-Renewable- Fixed current stock but supply changes
a. Coal, natural gas, minerals, petroleum, farmland
b. Causes of supply change?
b.i. Market Price
b.ii. Technology
IV. Important Issues in NRE
A. Adequate supply
B. Socially optimal rates of use
a. Efficiency = max. All benefits – opportunity costs
b. Fairness = ensure all benefits/costs are equally shared
c. Sustainability = leave same quantity for future
d. Precautionary = avoid irreversible actions
C. Natural resource accounting
V. What is “Environmental Economics”?
A. The study of how agents decisions have environmental consequences…that affect us
B. Primarily about environment quality
a. Types of pollutants:
a.i. Uniform?
a.ii. Cumulative?
a.iii. Point Source?
a.iv. Localized?
a.v. Continuous
VI. Important Issues in EE
A. Environmental degradation
B. Socially optimal rates of generation and the method/form disposal?
a. Efficiency
b. Fairness
c. Cost effective = reach target at least cost
d. Regulatory = easily enforceable
C. Effective Institutions?
VII. Story of Stuff
A. Good Points:
a. Variety of Uses of environment
b. Circular nature of system
c. Introduced externalities