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Environmental Economics and Management: Theory, Policy, and Applications 3e

The Role of Economics in Environmental Management. Chapter 1. 2004 Thomson Learning/South-Western. 3. Economics and the Environment. Economic theory explains what we observe in realityMicroeconomic analysis can also be used to analyze environmental problems. 4. Economics and the Environment. Cir

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Environmental Economics and Management: Theory, Policy, and Applications 3e

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    1. Environmental Economics and Management: Theory, Policy, and Applications 3e by Scott Callan and Janet Thomas

    2. The Role of Economics in Environmental Management Chapter 1

    3. 3 Economics and the Environment Economic theory explains what we observe in reality Microeconomic analysis can also be used to analyze environmental problems

    4. 4 Economics and the Environment Circular Flow Model – the basis for modeling the relationship between economic activity and the environment Real Flow Factor Market Output Market Money Flow Does not explicitly show the linkage between economic activity and the environment

    5. 5 Economics and the Environment Figure 1.1 Circular Flow Model of Economic Activity

    6. 6 Economics and the Environment Figure 1.2 Materials Balance Model: The Interdependence of Economic Activity and Nature

    7. 7 Economics and the Environment Materials Balance Model – illustrates the relationship between economic activity and the environment Flow of Resources Natural Resource Economics – concerned with flows of resources from nature to economic activity Flow of Residuals Residuals – by-products released back into the environment Assimilative Capacity – environmental ability to absorb residuals Recovery Recycling and Reuse – methods to delay the flow of residuals

    8. 8 Economics and the Environment Materials Balance Model Science and Materials Balance First Law of Thermodynamics – matter and energy can neither be created nor destroyed Second Law of Thermodynamics – nature’s capacity to convert matter and energy is not without bound

    9. 9 Fundamental Concepts in Environmental Economics Causes of Environmental Damage: Types of Pollutants Natural Pollutants – nonartificial Anthropogenic Pollutants – human induced and include all residuals associated with consumption and production Of greater concern to environmental economists

    10. 10 Fundamental Concepts in Environmental Economics Sources of Pollution: Classifying Polluting Sources Source Grouped by Mobility Stationary Sources – fixed site Mobile Source – any non-stationary source Sources Grouped by Identifiability Point source – single identifiable source Nonpoint Source – a source that cannot be accurately identified

    11. 11 Fundamental Concepts in Environmental Economics Identifying the Scope of Environmental Damage: Local, Regional, and Global Pollution Global Pollution – widespread environmental effects with global implications Examples: Global warming Ozone depletion

    12. 12 Identifying Environmental Objectives Environmental Quality – reduction in anthropogenic contamination to socially acceptable levels Sustainable Development – management of resources to ensure long-term quality and abundance Biodiversity – the variety of distinct species, genetic variability, and variety of inhabitable ecosystems

    13. 13 Environmental Policy Planning: An Overview Figure 1.4 Parties Involved in Environmental Policy Planning

    14. 14 Environmental Policy Planning: An Overview National Environmental Policy Act Risk Analysis Risk Assessment – qualitative and quantitative evaluation of risk posed by an environmental hazard Risk Management – decision process of choosing from alternative responses to environmental risk

    15. 15 Environmental Policy Planning: An Overview Policy Evaluation Criteria Allocative Efficiency – requires resources be appropriated such that benefits are equal to costs Cost-effectiveness – requires the least amount of resources be used to achieve an objective Environmental Quality – concerned with the fairness of the environmental risk burden across segments of society or geographic region

    16. 16 Environmental Policy Planning: An Overview Government’s Overall Policy Approach Command-and-control Approach – regulates polluters through the use of rules Market Approach – incentive policy that encourages conservation or pollution reduction “Polluter-pays Principle” – polluter pays for the damage caused Setting the Time Horizon Management Strategies – a short-term strategy intended to manage an existing problem Pollution prevention – long-term strategy aimed at reducing the amount of toxicity of residuals released to nature

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