Uniformly Mixed Pollutant
When different pollutant sources have equal effects to the receptor sight
Non-Uniformly Mixed Pollutant
When different pollutant sources have different impacts on the receptor cite
Transfer Coefficient
the percent of pollutant that is concentrated at the receptor site
Total Undiscounted Benefit
Add up the benefits for the year
Total Undiscounted cost
add all cost for the year
Net Benefit
total benefit-total cost
Discount rate
(1+r)^# of years
NPV Formula
summation of net benefits over the discount rate
Economic Efficient Policy
When the cost and benefits are equal (MCC=MD)
Cost effective policy
When you want the smallest cost of cleanup vs. benefits (MCC=MCC2)
Marginal Cost Curve (MCC)
a line on a graph that shows the additional cost of cleanup of a pollutant-shows the cost for every additional pollutant put into the enviroment
Marginal Damage Cost (MDC)
shows how much damage is created when an additional pollutant is added to the enviroment
Socially Efficent Emission Level(industry)
where MCC=MDC
Total Environmental Damage(Industry)
The area under MDC and to the left of equilibrium
Total Control Cost(Industry)
the area under MCC and to the right of equilibrium
Total Social Cost(Industry)
total environmental damage + total control cost
For a firm, where is the most cost effective emission level
Where MCC crosses the tax cost, anything above this line and it would be cheaper to pay the tax=
Total tax payment(firm)
the area underneath the tax line and to the left of equilibrium
Total control cost(Industry)
the area underneath MCC and to the right of equilibrium
Total policy cost(firm)
total control cost + total tax payment
Bequest value
Passive-a resource that is preserved for future generations(marsh lands)
Consumptive use value
active- a resource that is harvested/consumed and removed from the environment(oil)
Option Value
Potential active-an active value that is used for stated preference(survey about air quality)
Existence value
passive- a resource that has an inherent value(deep ecology)
Non-Consumptive use value
active-a resource that is observed but not harvested from the environment(bald eagle)
Indirect use value
active-value that individuals receives from the services than an ecosystem provides(someone drinking water that was purified as it passed through an ecosystem)
Revealed preference
something that is actually observed(yellowstone admissions)
Stated Preference
a survey is used because it is something that cannot be observed(favorite brand of hot sauce)
Can passive values be observed?
no
Averting expenditures
the cost of decreasing the quality of a resource(coal or electricity vs acid rain)
Why do averting expenditures provide a lower bound estimate?
because there is no way to tell the actual impacts of lowering the quality of a resource
Travel Cost method
used to construct a demand curve for the location that will be used to estimate consumer surplus(NPV the site provides). People closer to a resource are more likely to use it than those far away because of travel cost
Why is an adjustment for distance made
it is made to not over estimate site value
What is the purpose of an adjustment for distance
to see without distance as a factor, how many people would actually use the resource
Why is there a change in consumer surplus when the quality of the resource changes
because it will effect the amount of people that are going to visit the resource
A change in the interest rate will cause the NPV....
the interest rate is positively related to inflation, if there is an increase, the NPV will decrease because your money is worth less, if there is a decrease, the NPV will increase
Decision rule for NPV
NPV>0=Good
NPV<0=Bad
Decision rule for BCR
BCR>1=Good
BCR<1=Bad
BCR Formula
benefits/
discount rate/
Cost/
discount rate
(Benefits divided by the discount rate, over cost divided by the discount rate)
If there is a change in marginal cost cost due to new pollution control technology the tax payment will.....
change positively according to the change in MC, if there is a decrease in MC then the tax payment will decrease