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Economics for Natural Resource Managers

by: Ms. Alene Howell

Economics for Natural Resource Managers FOR 383

Marketplace > University of Idaho > Natural Resource Ecology And Mgmt > FOR 383 > Economics for Natural Resource Managers
Ms. Alene Howell
GPA 3.99


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This 9 page Study Guide was uploaded by Ms. Alene Howell on Friday October 23, 2015. The Study Guide belongs to FOR 383 at University of Idaho taught by Staff in Fall. Since its upload, it has received 62 views. For similar materials see /class/227842/for-383-university-of-idaho in Natural Resource Ecology And Mgmt at University of Idaho.

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Date Created: 10/23/15
RRTF OR 383 Economics for Natural Resource Managers Amenity Resource Valuation for Environmental Policy Study Guide for Exam 3 Budgeting processes Field Ch 11 amp 12 101516 131819 Budgeting processes Budget as a policy amp management plan 7Budgeting as forecasting uses of budgets Types of budgets Capital budgeting Capital improvementdevelopment budgeting capital improvernentdevelopment program annual capital improvementdevelopment budget role of monitoring amp evaluation Operating budgeting 7 Cash ow budgets principal actors in budgeting amp motivationsroles Incrementalism Budgeting based on stagnant growing declining economic conditions Zerobased budgeting Developing amp prioritizing programdecision packages Lineitem budgeting Approach advantagesdisadvantages Program budgeting Approach advantagesdisadvantages Performance budgeting Approach advantagesdisadvantages Budget preparationpresentation 7 Budgeting as yearround process Budget manual calendar role amp importance of presentation and selling of budget Budget monitoring 7 Use of budget tables Monthly yeartodate Energy Types of energy products services Supplyconsumption domesticimports Political economy of energy markets Fossil fuels industries amp verticalhorizontal integration concentration of production and prices Energy adequacy and shortmediumlong run supplies amp consumption Energy selfsuf ciency Dependence on imports Import 39 Role of energy conservation OPEC amp elasticity of longrun demand Reducing energy use per income and impacts on demand increased consumption incentives for technological development Energy deregulation amp impacts Natural gas electric power production amp economies of scale new market structures amp changes in consumption Bush admininstration energy plan Increase supply 7 electric power production petroleum coal nuclear Improve distribution infrastructure Decrease pollution from emissions Increase conservation Improve vehicle consumption Hybrid engines change CAFE standards other approaches Concerns Stranded costs regional impacts of deregulation externalities negative external costs of increased consumption ratio and U 39 to 39 39 it 1 Forest Economics To cut or not to cut 7 One more time Applying biological production sigmoid growth curve maximum average growth marginal growth and nancial concepts marginal benefits and costs to decisionmaking about length of timber rotations Other factors affecting rotation decisions and economic efficiency Harvesting costs interest rates extemalities wildlife habitat and other forest values amenities 39 39 39 quot carbon 1 39 Institutional structure of forest management Industrial forests private nonindustrial forests state and national forests Topicsconcepts from the chapters on minerals water resources and agricultural economics Minerals Quantitygrade relationships 7 Cutoff grade Time pro les of extraction and price 7 intertemporal efficiency based on tradeoffs in extraction and pricing Capital values 7 Resource value insitu user costs Economics of exploration amp development Mining amp lVIinerals Policy Act 1970 1872 Mining Law Economics of mineral recycling Water Resources Contemporary water problems amp issues Water rights amp markets riparian water rights prior appropriation Water as openaccess resource amp extemalities Water pricing and efficiency of average costpricing Declining blockpricing Water markets amp transference 7 conditions for efficiency Optimum instream ow Agriculture Current amp future agricultural production and demand trends Income support policies amp distortions Production intensi cation vs acreage restrictions Wetlands conversion amp conservation 7 incentives amp penalties Pesticide application amp resistance openaccess externalities and approaches to promoting optimum applications as a public good Steadystate soil productivity logistic invertedU model of ef cient farm income amp costs of maintaining soil productivity Topicsconcepts from the chapters on wildlife management and biodiversity preservation Marine Resources Current problems in sheries Open access resources Modeling sheries and bioeconomic models Biological growth functions logistic Inverted U model of population growth Effortyield curve maximum sustained yield Fisheries as the classic openaccess resource and dissipation of rent Approaches to managing sheries Restricting access TURFs regulating shing practices catch limitsTACs marketing of quotas ITQs Wildlife Management Carrying capacity amp logistic invertedU model of growth in wildlife species populations Maximum sustained yield for a 1 l 39 quot amp 39 39 and 39 39 values of wildlife Wildlife as open access resources and public ownership of wildlife Effortsbene ts and effortsrevenue curves and sport hunting 7 bag limits closed seasons Wildlife restoration 7 distribution of bene ts amp costs predator control Noncommercial markets and economics of protecting increas ingly scarce species such as rhinos and elephants Bio Diversity Preservation Charismatic megafauna Endangered Species Act recovery plans amp the God Squad Habitat conservation plans Noah problem amp survival probabilities withwithout conservation programs Bene ts and costs of species survivaldiversity protection Diamondwater paradox Costeffective biodiversity preservation species hot spots species abundance Gap Analysis and mechanisms for habitat protection RRTFOR 383 Economics for Natural Resource Managers Amenity Resource Valuation for Environmental Policy Fall 2002 Study Guide 1 10302 Opportunity costs 7 scarcity amp next best alternative foregone Models in resource management 7 eg models of future pessimistic limits to growth V optimistic human factors of production amp human capital intellectual capital human innovation Anthropocentric V biocentric Views amp beliefs Integrated NWEnVir management amp ecosystem management What is management Components of management planning process see the Tree of NR Mgt Role of management philosophies What is planning 7 de nition key components Appropriate roles of multiresource analysis in resolving landuse con icts 7 and when is it ineffective Positivedescriptive V normative statements amp judgments 7 role of science as systematic amp veri able process for accumulating knowledge Role of personal values beliefs 7 as managers producers as consumers willingness to pay amp assigned values Propertyrights system amp legal institutions Ef ciency V equity Basic principles of human economic behaVior Role and components of policy formulation and implementation process Three types ofpolicies Issue expansion 7 process characteristics of good issue for expansion useful techniques for issue expansion Adoption amp diffusion model applied to policy issue expansion Role of economics as a science assumptions terminology methods tools etc Principles of human economic behaVior The economic system 7 role of inputs what are key factors of production throughputs management process amp production outputs products 7 commodity goods and natural serVices consumption amp bene tscosts Nature of NEUEnVir costs amp bene ts 7 how concentrated or diffused shortterm immediate or longterm how large a group is affected what is their level of concern or awareness Production possibilities frontier 7 what is it relation to ef ciency socially optimal production amp utilization implications for joint production of several NR goods commodities public goods amenities Taxonomy of natural resources 7 rival V nonrival exclusive V nonexclusive renewable V nonrenewable ow uid changing V stock stationary xed private sector V public sector goods amp serVices as de ned by their technical characteristics necessity V luxury Private land market land rent rent gradient due to different kinds of rent residential commercial amp agricultural rents amp certaintyprobability of realizing rent A government body s police powers 7 zoning landuse controls building codes environmental regulation as government regulation eminent domain and taking requiring just compensation The Lucas decision on the takings issue applied to public regulation of private property Three roles of government in an economy Rationale for government ownership of landresources 7 public sector amp marketfailuregovernment x to ensure ef ciency Internalizing externalities and ensuring optimal amounts of nonrival nonexclusive public goods are provided Reasons for governmentfailure amp rationale for market x 7 How can we improve public land management Production as function of inputs 7 total amp average per units of input Marginality as a basic principle of economics 7 marginal productionbene tscosts Willingness to pay amp relation to ability to pay 7 Consumer surplus amp shadow prices Time as factor 7 temporal dimension as in intertemporal aggregation Discounting future bene ts or costs 7 present values of future bene tscosts High V low discount rates weight placed on current V future generations Supply and demand curvesfunctions 7 aggregate curvesfunctions in uencesfactors affecting these functions Complementary V substitute goods Price elasticity and relation to revenues 7 necessities V luxuries Economic development amp sustainability sustainable resource management 7 de nitions is sustainability practical what should guide us as we try to manage for it See Solow Static ef ciency V dynamic intertemporal ef ciency 7 comparison of marginal costs amp marginal bene ts at one point in time V series of quantities amp bene tscosts over several time periods eg weeks years relation to net social bene ts MNB MB 7 MCC UC Breakeven and net revenue pro t analysis 7 static analysis Ef ciency and intergenerational equity Market equilibrium and market ef ciency 7 in the case of static social ef ciency EXtemalities as eXtemal costs amp bene ts 7 public goods part II Market performance in the case of eXtemal costs A public beach example of an openaccess resource having openaccess eXtemalities Dissipation of NR rent Intertemporal ef ciency MSB D or else MSB MTC MCC UC RRTFOR 383 Economics for Natural Resource Managers Amenity Resource Valuation for Environmental Policy Study Guide Sect V Field Ch 11 Energy 11702 Energy Use in the United States Supply Types of energy products amp services Domestic About threequarters of total supply Fossil fuels 85 of energy resources consumed in the US Coal 38 of domestic supply Natural gas 28 Crude oil 18 Nuclear 10 Renewable 10 Imports onequarter of total supply Crude oil and products other Consumption Over onethird of all consumption is for residential and commercial use well over onethird for industrial use 37 and over a quarter for transportation use In general there has been a downward trend in energy prices since the 19805 The Political Economy of Energy Markets Domestic producers of fossil fuels This industry tends to consist of small numbers of relatively large firms that are very highly integrated production transportation refining distribution and marketing 0 Low prices have encouraged further concentration of the petroleum refining and distribution industry 0 Natural gas is produced by petroleum companies but transported by pipeline companies with distribution by gas utilities and 0 Coal industry is less concentrated with more small companies though owned by large corporations Relatively low energy prices have resulted in a situation where revenues are not high enough to stimulate energy production or to cover external costs in terms of environmental damage in particular the costs of pollution Energy Adequacy o In the short run 1020 years switch to natural gas and hybrid engines could reduce petroleum dependence39 increase in renewable energy sources likely o In midterm 20 50 years a growing scarcity in world petroleum supplies could occur39 0 In longterm 50100 years vast supplies of coal eXist but have high environmental costs39 nuclear power which was once the wave of the future has declined in recent decades but it is now being promoted by the Bush administration energy plan Economics of SelfSuf ciency Imports of petroleum products amount to twothirds of total US consumption Three alternatives for decreasing dependence on imports p A Increase the world price but the long run demand for energy has turned out to be less inelastic than OPEC thought tempering its pricing policies39 Increase the domestic supply39 or Shift demand back by pursuing strategy of energy conservation WN Energy Conservation Need for conservation to focus on reducing energy use per dollar of income given that total energy uses are tied to total population and wealthier countries with higher incomes consume more energy Environmental groups assert that major energy conservation and savings would result from higher CAFE corporate average fuel economy standards that is increased standards for manufacturers of cars and light trucks to produce vehicles that achieve some minimum mileage target Economic Issues in Energy Deregulation Because the energy sector is so important it has been subjected to political oversight and public regulationbut the current move is toward deregulation Regulation of the natural gas industry which was long tightly regulated has been abandoned Electric power industry traditionally has been highly integrated vertically electricity generation transmission distribution and marketing it has consisted of large companies that are given monopoly rights to supply power to all consumers in a region and that can thereby take advantage of large economies of scale in the industry This industry has also been tightly regulated by public utility commissions PUCs but recent trends have been toward deregulation Recently because of other sources of power and smaller power producers using renewable energy sources technological developments have helped push the system toward greater competition having several positive economic effects 0 Competing firms produce at lower cost and sell at the lowest possible price39 0 Competing firms have the incentive to search for new improved and cost reducing technologies39 0 Consumers have wider choices deregulation opens up a larger and more competitive system of wholesale and retail companies for generation transmission distribution etc BUT SEVERAL CONCERNS Stranded costs Large utilities are burdened with payment for systems built up under preViously regulated system and if electricity prices fall they can t make those payments Regional di erences in deregulation impacts PNW residents and businesses would face higher energy costs given they pay lowerthanaverage government subsidized rates now and Implications for external environmental costs Increases in quantity of power consumed are likely to occur under deregulation potentially increasing emissions and pollution if shifts are not adequately made toward natural gas and hydropower generation


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