Midterm Exam: Environmental and Natural Resources Economics

1. We have discussed about the two opposing views of the future: optimistic- and pessimistic models. Summarize their claims briefly. Since they talk about the future, we cannot satisfactorily decide which one is right now. (The “famous bet” between Ehrlich and Simon might just be a pure coincidence – well, it was a bet!). So, what criteria do you think we might propose for evaluating the predictions of the two views?
   

2. Economists have been valuing the environment. Do you think it is ethical? Why or why not? Why do we need valuation? What are the limitations of environmental valuation methods offered by economists?
   

3. Sustainable development is a matter of sharing costs and benefits between generations. True or false? Why? We don’t know what our grandkids really want, but we sometimes assume that they would like the forests to be preserved, instead of a huge shopping mall to replace the forest. Why do we do this kind of “paternalism”?
   

4. One of the practical implementations of Coasian approach in environmental policy is marketable pollution permits. Do you believe market can take care of the environmental problems? Why? In case you do, tell me how. Another thing, is it ethical to look at the pollution as a factor of production? Give me your argument.
   

5. In discussing the issue of population bomb, we talk about the economics of population control. Now tell me what you know about the economics of childbearing. Gary Becker says, children are durable goods. Maintaining them incurs costs and benefits. So, optimize! Comments?
   

6. Read the small box in Tietenberg page 293. Yes, it’s about the “Harbor Gangs of Maine”. It seems to me that informal arrangement can be sufficient to ensure efficient harvesting. Am I right or wrong? Why?
   

7. We have talked about environmental injustice. It is the condition where those who bear the negative externalities of environmental deterioration are also those who are poor. But hey, this is like what’s happening everywhere. Can you think of a rich community that is willing to bear the negative externalities? If you can imagine one, why do you think the relatively rich people want to do that?