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Chapter 5

Chapter 5- The Economics of Environmental Quality

Course Code
ECON 2100
Ross Mc Kitrick

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Normative Concepts- a statement about what "ought to be"
Positive Economics- the study of how events actually occur in the real world, how various
outcomes come to pass
Damage Function- shows the relationship between the quantity of a waster product and the
value of its damages
Emission Damage Functions- show the relationship between the wastes from a particular
source or sources and the resulting damages to the environment
Ambient Damage Functions- show how damages are related to the concentration of a waste
product contained in the ambient environment
Marginal Damage Functions- show the change in damages stemming from a unit change in
emissions or ambient concentration
Total Damages- are the total amount of damage at each possible emission
Defensive Expenditures- the amount of money people are willing to pay to protect themselves
against pollution damages
Threshold- a value of emission or ambient concentration below which marginal damages are
Abatement Costs- the costs of reducing the quality
Pollution -Control Technology- the technology used to reduce the amount of pollution being
released into the natural environment
Equimarginal Principle- shows how to minimize the total cost of producing a given quantity of
Identify the target level of environmental quality to achieve. The target level can be in
terms of either an ambient or emissions level of the pollutant
Determine how to divide the target level among the many polluters that may contribute
to the environmental problem
Determine the set of policy instruments to use that will meet the target
Address the question of how the benefits and costs of environmental programs are
distributed across society and whether this distribution is appropriate
Normative Policy Analysis
Chapter 5- The Economics of Environmental Quality
October 19, 2013
11:51 AM
ECON2100 Page 1
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