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Chapter 1

ECON 2100 Chapter Notes - Chapter 1: Carbon Sink, Precautionary Principle, Asset

Course Code
ECON 2100
Ross Mc Kitrick

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Economic Efficiency- occurs when the economy's resources are allocated to their best uses; an
equilibrium is reached in which the marginal benefits of an activity equal the marginal costs
Equity- concern about how a public policy or other economic decision affects people with
different levels of income: examining who gets the benefits and who gets pays the costs
Incentives- an incentive is something that attract or repels people and leads them to modify
their behaviour in some way. An economic incentive is something in the economic world that
leads people to channel their efforts at economic production and consumption in certain
Externality- an externality exists when markets fail to incorporate the social costs or benefits a
person or firm's actions have on others
Property Rights- a property right gives the holder the right to do certain things with a tangible
asset. In environmental economics, the asset is typically a type of natural resource, land, water
or the atmosphere
Society Efficient Level of Pollution- the level of pollution where the marginal damages from
another unit of pollution released into the environment equal the marginal costs of reducing a
unit of pollution
Private Costs- the market value of labour, raw materials, machinery, energy and so on that firms
incur in producing goods and service
Carbon Sinks- ecosystems that absorb carbon dioxide. Examples are wetlands, forests and the
Adaptation- actions taken to adjust, offset, or reduce the adverse impacts of climate change
Mitigation- policies and actions designed to reduce emissions and impact of a pollutant
Precautionary Principle- when there is a possibility that an adverse event may occur in the
future, the precautionary principle says to do the benefit-cost estimates for two options: doing
nothing today to mitigate the event versus adopting today a policy regime to attempt to
reduce the probability that event will occur
Energy Efficiency- the amount of energy used per dollar of output
Ecological Economics- the study and modelling of the linkages between economic and
ecological systems
Production Possibilities Frontier (PPF)- a production possibilities frontier is a graphical depiction
of the choice faced by a community between two desirable opportunities
Community Indifference Curve- the choice society makes on alternative bundles of goods
available in the economy
Chapter 1- What is Environmental Economics?
Friday, May 10, 2013
1:11 PM
ECON2100 Page 1
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