Berck+Ch+3 - Chapter 3: Markets and Market Failure...

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1 Chapter 3: Markets and Market Failure OBJECTIVES OF THIS CHAPTER When markets work well, they are effective tools for producing and distributing goods, including natural resources. When markets do not work well, the results can be harmful to people and the environment. Understanding how effective markets are when they work well, and how dangerous they can be when they do not, is critical for protecting the environment. In this chapter, we will discover: ! How markets are used to protect scarce resources. ! An economic good is anything that affects someone’s well-being ! Environmental goods are economic goods. ! The advantages markets provide. ! Five reasons why some markets do not work well. PROTECTING WOLVES THROUGH MARKETS Wolves have long been an object of fear and hatred to many humans. Stories such as Little Red Riding Hood and the Three Little Pigs portray the wolf as evil incarnate, and its destruction as meritorious. Within what is now the United States, it is estimated that about 400,000 wolves roamed freely at the time of European settlement. European settlers colonizing North America viewed the wolf, like much of the natural landscape, as a symbol of the wild America that had to be subdued and conquered in the name of civilization. Movement into the American West by settlers of European origin, and
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2 settlers’ subsequent vigorous hunting of bison, deer, elk, and moose, led to a decline in wolves’ sources of food. As a consequence, wolves began to hunt homesteaders’ sheep, cattle, and other livestock. Whether caused by wolves or not, ranchers blamed most missing or killed livestock on wolf predation, and they sought revenge against the predator. In response to the perceived threat to their livestock, personal safety, and way of life, ranchers and government agencies initiated aggressive campaigns to eliminate wolf populations. Bounty programs began in the 18th century and continued until 1965, offering $20-$50 per wolf. By 1925, it appeared that wolves were virtually extinct in the lower 48 states, and that no viable wolf population remained anywhere in the greater Yellowstone National Park area. The Endangered Species Preservation Act The Endangered Species Preservation Act of 1966, later amended to the Endangered Species Act of 1973, brought protection to the gray wolf in 1967. However, because of low numbers of breeding populations, it was doubtful that wolves would successfully establish new colonies in the lower 48 states without additional changes in public policy. A combination of increased scientific research on wolf ecology and behavior, changing public perceptions of wolves, environmentalist movements, and other social, economic, and demographic factors made wolf restoration a political issue. The late 1980s saw several wolf reintroduction bills presented to Congress, but they were vehemently opposed by ranchers and state governments.
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3 In 1994, after years of study, research, and organized public input, and despite continued opposition, the Secretary of the Interior approved the Northern Rocky Mountain Wolf Recovery Plan.
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This note was uploaded on 09/11/2011 for the course EEP 145 taught by Professor Anderson during the Fall '11 term at University of California, Berkeley.

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Berck+Ch+3 - Chapter 3: Markets and Market Failure...

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