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Flashcards in Quiz 2 Deck (22):

Characteristics of private and public goods

Private Goods: Characterized by Excludability: other people can be excluded from using or
benefiting from private goods.
Societies provide for the protection of private property rights.
Public Good
Characterized by:
Non-rivalry of consumption: consumption of the good does generally not affect its
Basic problem: Uncontrolled use of the public good for private gain will eventually
lead to overuse and degradation of the public good.


policy implications of the free rider problem

Free riders profit from improvements in the public good without contributing to it.
This has the following basic effect:
- Voluntarism to provide a public good has its limits!
- Public policy must address the free rider problem!


value/belief systems

Ideology, culture, nationalism, religion, identity are powerful
social constructs through which individuals and societies perceive
reality and determine what is in their interest.
American core values:
Personal freedom, free markets, democracy,
human rights, individualism, economic growth


how are value or belief systems formed and changed?

-Upbringing and culture
-Changing existing believes and value systems: Comm,framing,
-Learning task place through info processing


how we process information

We use established routines to:
- Reduce complexity
- Interpret information


what do we do when information is inconsistent with our beliefs

-adjust believes to incorporate new info
-discard info


role of science

Two arguments are often advanced to undermine scientific claims making:
Uncertainty about cause-effect relationships
Motivation of scientists


Role of the Media

Media news coverage tends to be event-driven and problem-specific, and tends
to de-contextualize events. Little room for presenting complex and long-term
Objectivity and balance: the need to appear objective and balanced often leads
to presenting two view points, even if one of them is held only be a small
Entertainment oriented: conflict and controversy gets ratings and
subscriptions. Celebrities are used as figure heads. “Human-interest” stories
News cycle: public becomes disinterested, even if the problem remains the same.


basic understanding of the advantages/disadvantages of a regulatory policy approach

The government sets specific binding standards and enforces compliance
by law.
- Clear benchmarks create level playing field for private sector
- Compliance costs can be calculated
- Regulation often creates side-benefits
- Inflexible: incentive structure is to avoid compliance
- No incentive to go beyond standards
- No effect on demand for polluting activity
- Expensive to monitor and enforce
- Special interest bargaining leads to second-best solutions


basic understanding of the advantages/disadvantages of a market-based policy approach

Basic idea: integrate environmental costs into the price of goods and services
and than let market forces play. This requires the use of taxes, fees and similar
- Flexible, does not require regulatory framework
- Allows firms to use most cost-effective approaches to reduce exposure to tax
- Can be phased in slowly, shadow of the future creates market signals.
- Can directly target demand for polluting activity.
- Can generate revenues that can be used for offsetting other taxes
(eco-tax reform, revenue neutrality) or
- provide resources for subsidizing environmental technology and conservation.
- Political acceptability low in the U.S. (no interest-group politics)
- Regressive: without countervailing measures, lower income groups may pay
higher share
- Consumers may have no alternatives but to pay higher price.
- Response to price signal may only set in at prohibitively high price levels
(price elasticity)


value judgements that go into risk assessment and management

Risk assessment in practice requires many judgment calls
Three key problems:
- what substances to assess (toxic waste rather than newly released
- what effects to assess (focus on cancer and less on other health effects)
- what are acceptable risks (how much should risks be reduced at what costs)
What a society sees as an “acceptable risk” is a social construction.


EPA’s track record in monitoring and regulating chemicals

In July 2005 the Government Accountability Office (GAO) – an independent
government agency – charged that the U.S. Environmental Protection Agency is failing
to protect the public from tens of thousands of toxic compounds because it has
not gathered data on the health risks of most industrial chemicals. The report found that
chemical companies had provided health data to the EPA for only about 15% of some
80,000 chemicals that had been introduced over the past 30 years.


cost-benefit analysis (why does it bias against regulation?)

Value costs and benefits of using natural resources or the environment in
different ways.
Compare short-term benefits/costs with long-term benefits/costs.
President Ronald Reagan in 1981 issues an Executive Order to subject all
government regulations to cost-benefit analysis (except military


How useful is cost-benefit analysis?

Benefit-cost analysis can help
- set priorities
- increases transparency
- Makes cost-effectiveness an issue


identify at least three criteria air pollutants (regulated under the clean air act)

-Carbon dioxide
-Nitrogen Dioxide


their sources and health impacts

-Power plants
-coal powered plants
efficiency standards
-Fine particles go into lungs causing asthma attacks for children and can also raise the risk of chronic bronchitis in adults


what is “new source review”

regulation that allowed companies to operate old factories as long as it was modified substantially. Eventually the company would have to update its equipement and the new source rules made the company to install pollution-control technology. SO they would have years to make the factories cleaner rather than doing it all at once.


political controversies on new source review

electric industry complained that the n.s.r rules were too confusing that it was impossible for utilities to determine the difference between routine maintence which didnt require an upgrade and a physical change which would.
-argued that rules were bad for clean air because power companies would be discouraged from updating their plants with cleaner efficient technology.
-many like Bush believed that environmentalists were restricting the efficiency of the American domestic energy production


What is the temperature that we need to be in order to prevent the world from becoming too warm

2 degrees Celsius, we are currently half way there with .8


What does 565 gigatons mean?

thats the number of how many more carbon dioxide we can pour into the atmosphere without going over 2 degrees Celsius


whats the number 2,795?

the number of fossil fuels we are planning on burning. which is five times greater than what we should be bunring in order to keep the earth from warming to 2 degrees C


What is the difference between American and European risk regulations?

-due to actual risks their citizens may face. ex mad cow disease had an impact on European citizens so there was no point in the US to make a regulation
-dynamics of global business competition
-differences in the role of the state and the legitimacy of government regulation also in transatlantic political systems
-Europeans show their concern for environment by being voters, consumers, and policy makers, while Americans are more concerned about their lifestyles