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Unformatted text preview: 1 Section Notes Week 14 Outline Key Concepts Announcements Potential Output Water Trading Graph Economic Threshold Pest Control and Threshold Intellectual Property Rights (IPR) Biotech and Precaution Precautionary Principle Water Trading Graph Heres a graph depicting the transition from Queuing to Market: senior rights holders are given the rights to their historical usage and allowed to trade these to junior rights holders. BEFORE TRADE AFTER TRADE Rights Holder price water use profit price water use profit Senior a max I+II+III w * a * I+II+III+IV Junior n/a, w * a * I A couple assumptions to note: VMP is value of marginal product: the extra benefit of applying one more unit of water. Total water available, A, is completely used by the senior rights holders when given free access. Yet total land acres, L, is not completely used under this Queuing system, but would be under a market. All land is homogenous, thus under market every acre uses same water/acre, which must be A L . Profit areas (e.g. I+II+III) are of course neglecting other things like fixed costs that are subtracted as well to find profit. 2 Pest Control The key concept of pest control is the reduction of damage that a pest (be it weeds, insects,...
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- Spring '09