Fracking shooting high pressure fluid into rocks to crack them; environmental issues water and
o used price at cost of production
o Natural k cant be substituted for financial k
Sustainability (broadly defined) futu
Midterm Exam_KEY A
Survey of Natural Resource Economics
Please write your name & student # on this examination
booklet as well as your test scoring answer sheet. You do
not need to input your email id or section #.
Overview of Unit 2 & 3:
Thinking About Future and an Economic Approach
The purpose of this unit is to begin a discussion about the future of natural resource use and
develop the economic approach.
Required readings from text:
Chapter 1, 2, 3
Global freshwater supply is currently about 10X more than consumption
o 90% GW 2.5% renewable the rest is a finite depletable resource; Ag largest consumer
Mexico city has sunk 30 feet over the last century because of land subsidence due
Static efficiency time is not of concern; resource flow in future is independent of this years choices
Dynamic efficiency time us crucial; supply used now affects future choices
Fairness or justice concerns should accompany efficiency consider
Property Rights bundles of entitlements defining the owners rights, privileges, and limitations for use
of the resource. (can be individually)
The pursuit of profits is often the cause of environmental problems.
Characteristics of efficient p
Chapter 13: Forests
Delicate balance between forest users, compare values
Timber is unique because it is an output 8 a capital good up growth
When to harvest?
o Time between initial investment and recovery very long. Unusual large amount of
Overview of Unit 4
In this unit we begin to develop our thinking about situations that lead to departures from
efficiency. We will examine a number of issues including: property rights, consumer and
producer surplus, externalities, and the econo
Woodpecker on endangered species act reduced timber harvesting.
Amount I can catch dependent on underlying fishery population. Easier to catch when there are
lots of fish, less effort. More people fishing require more effort to catch a fish.
Closed system there are no inputs or outputs received by the outside system. Not even energy.
eg. Relationship between environment and economics
Open system the system imports and exports matter.
eg. Earth gets heat from the sun and sets rocke
90% of sewage and 70% of industrial wastes in developing countries is discharged without
Positive feedback loops: secondary effects tend to reinforce the basic trend
o Eg. New investment greater output higher profit new investment