Environmental and Resource Economics Flashcards
6 cards from real CEA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Environmental and Resource Economics flashcards as text
What is 'green GDP' as an alternative national accounting measure?
Answer: GDP adjusted for the depletion of natural capital and environmental degradation costs
Green GDP (or adjusted net savings) subtracts the value of natural resource depletion and environmental damage from standard GDP, providing a more accurate measure of sustainable economic welfare.
In the US, which regulatory framework requires federal agencies to conduct benefit-cost analyses of major regulations, including environmental rules?
Answer: Executive Order 12866, requiring OMB/OIRA review of major rules with costs over $100 million
Executive Order 12866 (and its successors) requires federal agencies to prepare regulatory impact analyses and submit major rules to OIRA for cost-benefit review before publication.
What does 'discount rate' choice imply for long-run environmental cost-benefit analysis?
Answer: Higher discount rates reduce the present value of future environmental damages, making long-run investments appear less worthwhile
A higher discount rate shrinks the present value of future climate harms (which occur decades hence), making mitigation investments appear less justified—a central debate in climate economics.
What is the 'Porter Hypothesis' in environmental economics?
Answer: Stringent environmental regulations can spur innovation and improve firm competitiveness
The Porter Hypothesis, proposed by Michael Porter, argues that well-designed environmental regulation stimulates innovation that can more than offset compliance costs, improving international competitiveness.
What is 'resource curse' in the context of natural resource economics?
Answer: Countries with abundant natural resources tend to have slower economic growth than resource-poor countries
The resource curse (or paradox of plenty) describes the counterintuitive finding that countries rich in natural resources often experience less economic growth, weaker institutions, and more conflict than resource-poor peers.
Which approach to environmental valuation estimates the value of a non-market good by analyzing how much people pay to travel to access it?
Answer: Travel cost method
The travel cost method infers the value of a recreational site or natural resource by observing and modeling the travel expenditures and time costs that visitors incur to access it.