EC238 Chapter 1: What is Environmental Economics
Document Summary
Economic efficiency: achieved when society is getting the most it can from its scarce resources. Outcome: economically efficient if all resources are put to their highest value. Ex) natural environment used as an input to produce a good or service a, b, c. Value of b = value of c= . Equity: is a criterion when evaluating diff. economic outcomes: horizontal equity: treats similarly situated people the same. People pollute because it is the cheapest way they have of solving a certain very practical problem. Profit motive is not the main cause of environmental destruction. Open access: describes the lack of ownership of the natural environment: results in a failure to achieve a level of pollution that is socially efficient, open access resource: anyone can use without paying for it (ocean, Private property rights: give the owner the right to exclude others from using or consuming their resource (private forest woodlot).
