Chapter 10 Review

Chapter 10 Review - Chapter 10: Natural Resources, the...

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Chapter 10: Natural Resources, the Environment, and Agriculture LEARNING OBJECTIVES Understand the major issues associated with agriculture and the environment, including water pollution, air pollution and global climate change. Understand the concepts of efficient property rights, efficiency and externalities in agriculture and cost-effective environmental policies. Understand the economics of the natural resources of agriculture, including the economics of water management and soil conservation. Understand the government policies for natural resources and the environment. CHAPTER SUMMARY The purpose of this chapter was to discuss the determination of the price and quantity experience under conditions of imperfect competition. The major points made in this chapter may be summarized as follows: 1. Agriculture is intimately related to the environment. It both affects the environment by pollution and run-off from agriculture, and is affected when pollution diminishes agricultural productivity. 2. Water pollution has fallen significantly since the implementation of the Clean Water Act in 1972, but important problems remain and agriculture is the source of many of these problems. 3. On a nationwide basis, agriculture’s contribution to air pollution is quite limited; though it can be locally important. Air pollution also affects agriculture by diminishing yields. 4. Global warming has definitely occurred and most scientists agree that human emissions of carbon dioxide and other gases are a principal cause of this problem. 5. The characteristics of efficient property rights are enforceability, transferability, and exclusivity. If these are satisfied for all goods, then the market will lead to an efficient allocation of goods and services. However, for environmental goods and services these are usually not satisfied. 6. Economically, pollution is an externality , a cost that is external to the market. When an externality is present exclusivity is not satisfied and the free market will not lead to an efficient outcome because there is a tendency to ignore costs of production or undersupply goods and services that others value. 7.
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This note was uploaded on 12/01/2010 for the course AGEC 105 taught by Professor Capps during the Fall '08 term at Texas A&M.

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Chapter 10 Review - Chapter 10: Natural Resources, the...

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