StudyGuideforNREM203Test1.pdf COMM 210
Popular in Decision Making in Natural Resource Management
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This 3 page Study Guide was uploaded by Cassandra Miller on Wednesday February 3, 2016. The Study Guide belongs to COMM 210 at Ball State University taught by Denker in Winter 2016. Since its upload, it has received 60 views. For similar materials see Decision Making in Natural Resource Management in Environmental Science at Ball State University.
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Date Created: 02/03/16
Study Guide for NREM 203 Test 1 "Traditional" Economics Man as a rational being Weighs potential costs and benefits It is said that man always chooses what has the best economic outcome Methodical Reliable calculators "Behavioral" Economics Man as a "human" being Not everything that maters is dollars and cents There can be emotional and social factors Instead of weighing the costs and benefits you may consider Different priorities Distractions Impulsiveness Miscalculations Inconsistent Culture The circular flow economic model Flow of goods and services one way Flow of capital and resources in the other way Recently added Entrepreneurs Doesn't not fully account for o Resource extraction o Waste and pollution o Impacts to materials cycles o Changing ecology o Biodiversity loss o Energy flows o Additional factors of human activity The three factors of production are land, labor and capital. Ecological economics recognize sustainability as essential to economic growth. Traditional Economics Economic concepts are applied to the environment Ecological Economics Economic activity is placed within the context of biological and physical systems that support life, including all human activity The environmental system must be functioning and healthy for society and economy to be health as well Four factors for why decisions must be made Scarcity Many Goals and Opinions on who resources should be managed Self-interest Selfish or altruistic Narrowly focused Incentives Costs and benefits of a particular choice People are more likely to act when the cost to themselves is low land owner, they dropped them Information Good information is crucial to good decision making Information is valuable but costly Time consuming process Many times the decision has to be made with less than thorough information Use values Direct use values Indirect use values Nonuse values Option value Bequest value Existence value Difference between willingness to pay and willingness to accept The willingness to pay is what a person is willing to pay in order to receive the benefits of the good. Willingness to accept is the effect that you are willing to accept from a good such as pollution. Willingness to accept a decline in the quality or amount of a resource. Willingness to accept (WTA) The minimum amount of money someone is willing to accept as compensation for a reduction in the utility of a good or service or willingness to pay (WTP) Benefits of purchase must exceed price paid Maximum amount of money someone is willing to pay for an increase in the utility of a good or service Theoretically should be the same Most common techniques used to identify the monetary value of resources. Market value of the resources. Benefits Contingent valuation Value is contingent on respondents' reaction to a hypothetical scenario The choice scenario must provide an accurate and clear description of the change…photographs, videos, or other multi-media techniques Contingent ranking Respondents not asked directly about WTP Asked to rank scenarios according to preference It points to the respondents opposing the issue Protest bids: responses reflect opposition to issue, rather than actual value Strategic behavior: inaccurate statement of preference to influence outcomes or policy decisions Used to conduct cost benefit analysis Value is placed on human lives by conducting a survey to ask respondents how much they will be willing to pay to improve air quality that would reduce deaths by fifty per year. Average was $10 per year. Comprised by 100 million households. 100 million*10/year = 1 billion. 1 billion/50 = 20 million Way risk – how much individuals need to be paid to have a job that is risking their life. Compare salaries of jobs that are not dangerous to a job that is dangerous 10 million value of life. I =P x A x T is the impact of the population times the affluence and technology ENVIRONMENTAL MACROECONOMICS More appropriately applied to Broad-scale or global problems Unquantifiable ideas such as aesthetics, ethics, or biodiversity ENVIRONMENTAL MICROECONOMICS Most appropriate in addressing specific, quantifiable problems Timber license fees in one forest Emission limits in a particular factory ENERGY AND ENTROPY The first law of thermodynamics Law of conservation of energy Energy is neither created or destroyed. It changes forms and is transferred. The second law of thermodynamics Law of entropy The measure of unavailable energy is a system In all physical processes, energy is degraded form an available to an unavailable state All economic processes use energy and transform energy form a usable to unusable state The physical outputs of these processes contain embodied energy Substitutability: the ability of human-made capital compensate for the depletion of natural capital Complementarity: both human-made and natural capital are required for effective production Strong sustainability: assumes very limited substitutability Weak sustainability: assumes natural and human-made capital are generally substitutable marginal cost: cost to producer of producing one more unit of a good marginal benefit: benefit to consumer of purchasing one more unit of a good
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