Economics 3220 Lecture Notes - Asthma, Risk Premium, Human Capital
Document Summary
Recall example from chapter 6: at unregulated market emissions em. Tdc (area under md curve) is max. Tac is zero as there is no abatement: by reducing emissions (by moving from em to e" ) we avoid some damage or generate benefits by the area (c+d) This is where the benefits come from: if we had md curve for human health, etc. the area under those curves for reducing emission would be the avoided damage or benefit estimates. Notice that these are upward sloping curves. General form = y=bx+a where: y= dependent variable (health effect, x= independent variable (tonnes of emissions per year, a= vertical intercept, b= slope of marginal impact. Multivariate form is: y= a +b1x1+b2x2+bx3 Where x1= age x2=gender x3 = working conditions, etc. Regression analysis is conducted to estimate them. There are three types of values o benefits we derive from environmental resources: use value.
