Chapter 10 Economics and 三 nvironment
Chapter 10 Economics and Environment
101 ENVIRONMENTAL PROBLEMS Reasons for Reluctance because of benefit. it is difficult to demand that people in developing countries should give up economic opportunities for the sake of the environment because of individual freedom, governments are reluctant to tell consumers what to buy and producers how to produce disagreement about the level of environmental damage and disagreement about the best way to limit or prevent it
10.1 ENVIRONMENTAL PROBLEMS ▪ Reasons for Reluctance ▪ because of benefit, it is difficult to demand that people in developing countries should give up economic opportunities for the sake of the environment. ▪ because of individual freedom, governments are reluctant to tell consumers what to buy and producers how to produce. ▪ disagreement about the level of environmental damage and disagreement about the best way to limit or prevent it
Environmental Debates Views about environmental lssues Intergenerational equity the goal of trying to make sure that future generations have access to resources and the natural would to at least an equal extent to that of current generations environmental capital sustainable development
Environmental Debates ▪ Views about Environmental Issues ▪ Intergenerational equity ▪ the goal of trying to make sure that future generations have access to resources and the natural would to at least an equal extent to that of current generations. ▪ environmental capital ▪ sustainable development
102 MARKET FAILURE AND EXTERNALITIES Market failure he situation that arises when the actions of some people adversely and significantly affect others in one or more ways The inability of some unregulated markets to allocate resources efficiently
10.2 MARKET FAILURE AND EXTERNALITIES ▪ Market failure ▪ the situation that arises when the actions of some people adversely and significantly affect others in one or more ways. ▪ The inability of some unregulated markets to allocate resources efficiently
三 externalities Externality something that result from the actions of a person or persons that affect others who are not parties to the original action one party undertaking an action to gain a benefit, while another party has to bear some cost associated with that action Negative externality the cost that the other people have to carry Positive externality without some form of intervention or market adjustment, the producers in each cases do not pay that cost Summarize the government can internalize the externality by taxing goods that have negative externalities and subsidizing goods that have positive externalities
Externalities ▪ Externality ▪ something that result from the actions of a person or persons, that affect others who are not parties to the original action. ▪ one party undertaking an action to gain a benefit, while another party has to bear some cost associated with that action. ▪ Negative externality ▪ the cost that the other people have to carry. ▪ Positive externality ▪ without some form of intervention or market adjustment, the producers in each cases do not pay that cost. ▪ Summarize: ▪ the government can internalize the externality by taxing goods that have negative externalities and subsidizing goods that have positive externalities