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Unformatted text preview: EXAM REVIEW BASD505 ENVIRONMENTAL ECONOMICS HG APRIL 2010 Types of pollution: 1. Pollution flows- damage occurs concurrent with the discharge of pollutants (ie. Noise pollution) 2. Pollution stocks- damage depends on the accumulation of pollutants in the environment for those pollutants that are long lived; damage continues even after the emission flow ceases Environments assimilative capacity is its ability to absorb pollutants over time and convert the pollutants into harmless form Bioaccumulation- increase in concentration of a substance in an individuals tissues d ue to ambient exposure to the substance; within trophic (food chain) level Biomagnification- increase in concentration of a substance when the substance moves from one trophic level to the next; across trophic levels Classification of Pollutants 1. Accumulative or non-accumulative - Most fall between extremes - Degree to which is accumulative depends on rate at which the environment can assimilate it - Complicated to analyze as current emissions can cause damage today as well as in future 2. Uniformly and non-uniformly mixed - Uniformly mixed: damage does not depend on where it is released (CFCs and ozone depletion, CO 2 and climate change) - Non-uniformly mixed: dependent on pollution source (SO 2 , particulate matter) 3. Local, regional or global 4. Point source or non-point source - Whether the source of the discharge can be determined 5. Continuous or episodic Social Efficiency $/Unit Q Demand= MWTP= PMB MEC Supply= PMC SMC= PMC+MEC P* P m Q* Q m Assimilative capacity of environment EXAM REVIEW BASD505 ENVIRONMENTAL ECONOMICS HG APRIL 2010 Open Access Resources - A resource that is open to uncontrolled access by individuals, firms etc. o Some are un-owned while others are owned by owner cannot restrict exploitation - In OAR conditions, firms generally operate or produce where MR>0 resulting in $0 profits in a perfectively competitive market, however the socially optimal level should be where MR=MC and there is a net positive social benefit. - Over production results in deadweight (DWL) to society; forgone benefit from improper production Public Good 1. Non-rivalness- when it is consumed/enjoyed by one person it does not preclude another person to also consume the same good (ie. Turning on a light) 2. Non-excludability- when provided to one person it is automatically made available to all Excludable Non-excludable Rivalrous Private Goods (clothes, food, cars) OAR (fish, water, air) Non-rivalrous Club Goods (satellite radio, software) Public Goods (national defence, environmental quality) - Free rider problem; non-excludability prevents people from showing their true willingness to pay, thus private markets wont provide the service/product therefore theres an inefficiency and a market failure - Socially optimal level is unlikely to be realized, therefore require government regulation - Firms trying to provide public good have difficulty covering their costs, so they under-supply or not...
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This note was uploaded on 04/21/2010 for the course BUSINESS basd505 taught by Professor Clive during the Spring '10 term at The University of British Columbia.

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