04 - Lecture 4 Outline: Economics & the Environment 1. 2....

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1 Lecture 4 Outline: Economics & the Environment 1. What is economically affordable? 2. Free markets: externalities 3. The tragedy of the commons. 4. Government regulations 5. The real benefits. Costanza et al. 1997. The value of the world’s ecosystem services and natural capital. Nature 387:253-260. Ostrom et al. 1999. Revisiting the Commons: Local Lessons, Global Challenges. Science 284:278-282. DOI: 10.1126/science.284.5412.278 Definitions Economics – the study of _________ _ systems to increase efficiency of resource use _____. Economically efficient – “satisfies the greatest number of consumer demand with the least amount of resource ___” Alternate approaches 1. Free market Prices set by supply & demand. Uses individual transactions. An "ideal free market" assumes ______ _ buyers knows everything about __ __ avaliable products ___ No “ideal free market” exists. Problems: • 1. Externalities : _ _ transaction that are not reflected in ___ _ prices
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This note was uploaded on 04/06/2011 for the course FNR 103 taught by Professor Staff during the Fall '08 term at Purdue.

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04 - Lecture 4 Outline: Economics & the Environment 1. 2....

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