Chapter 6, Frameworks of Analysis Video Solutions, Environmental economics : an introduction

Problem 1

Air-pollution-control authorities in southern California propose to control mobile-source emissions by requiring that a certain percentage of all new cars sold in the region be electric. Contrast the different perspectives that would be involved in analyzing this proposal with (a) economic impact analysis, (b) cost-effectiveness analysis, and $(c)$ benefit-cost analysis.

Ayush Kumar

Numerade Educator

02:58

Problem 2

Suppose we are comparing two ways of protecting ourselves against mobilesource air pollution: putting additional controls on the internal combustion engine or developing an entirely different type of engine that is cleaner. How would changes in the discount rate be likely to affect the comparison among these two options?

Nick Johnson

Numerade Educator

Problem 3

Following are some illustrative numbers for benefits and costs arising from a program to restrict emissions of a pollutant. Current emissions are 10 tons per month. Identify the emission level at which net benefits would be maximized. Show that this is not the same as the emission level that gives the highest benefit-cost ratio. Explain the discrepancy.
$$
\begin{array}{lccccccccccc}
\hline \text { Emissions (tons/month) } & \mathbf{1 0} & \mathbf{9} & \mathbf{8} & \mathbf{7} & \mathbf{6} & \mathbf{5} & \mathbf{4} & \mathbf{3} & \mathbf{2} & \mathbf{1} & \mathbf{0} \\
\hline \text { Benefits (\$ mil) } & 0 & 4 & 8 & 18 & 32 & 44 & 54 & 62 & 68 & 72 & 74 \\
\text { Costs (\$ mil) } & 0 & 2 & 4 & 6 & 9 & 14 & 21 & 36 & 48 & 64 & 86 \\
\hline
\end{array}
$$

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01:15

Problem 4

Suppose the costs of an environmental pollution-control program are expected to be equal to $$\$ 80$$ per year, and that benefits will be $$\$ 50$$ per year for 50 years, then $$\$ 150$$ per year thereafter. At a discount rate of 4 percent, what are the net benefits of this program? What would the net benefits be at a discount rate of 2 percent? Comment on the difference.

Amy Lynn

Numerade Educator

Problem 5

When setting public policy on environmental risks, should we base it on the levels of risk to which people think they are exposed or on the risk levels as scientists have determined them to be in fact?

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