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This 3 page Class Notes was uploaded by HD on Monday October 10, 2016. The Class Notes belongs to CDAE 061 at University of Vermont taught by Joshua Farley in Fall 2016. Since its upload, it has received 4 views.
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Date Created: 10/10/16
10/4/16 Pizza example o Is the cook a fund-service or stock flow? Fund service o Is the oven a fund-service or stock flow? Fund service Not physically transformed into pizza o What happens if price of labor increases? Purchase more ovens Labor and capital are substitutes o Are the ingredients fund-service or stock flow? Stock flow Physically transformed Limited in what you can make o What happens if the price of ingredients increases? No substitute available Why does this matter? o Raw material extraction depletes ecosystem services o Waste output depletes ecosystem services o Services from nature include life support functions o We cannot treat ecosystem goods and services independently Efficient allocation must consider both o Stock flows and fund services are primarily complements, not substitutes Macro allocation o How much ecosystem structure should be allocated toward economic production and how much should be left in tact for ecosystem services? o Macro-opportunity costs definition *Iclicker* A resource is rival when: o Someone’s personal use of the resource leaves less for others Excludability o Excludable resource regime One person can prevent another from using the resource Necessary for markets to exist If things were not excludable you could just take things from stores Non-excludable o No enforceable property rights due to tech or social institution o Can’t charge for use o Examples Open ocean Math formulas o Some resources are non-excludable by nature o None are inherently excludable o Excludability is a product of institutions Rivalness o Rival goods My use leaves less for you to use Example o Cows eating grass All ecosystem goods (stock flow resources) are rival Non-rival o Non-depletable Example = knowledge o My use doesn’t leave less for you to use o Marginal cost for additional user = 0 o Efficient allocation: price = marginal cost of production o All non-rival resources are services Rival or non-rival is an innate characteristic of the good, not a result of institutions Congestible resources o When abundant, one person’s use does not affect another’s, appears non-rival o When scarce, obvious that they are rival o Empty planet vs. full planet So what? o Rival Have to ration access (do that with prices) o Non-rival Stupid to ration access o Excludable o Non-excludable Impossible to ration access Excludable AND Rival o Market goods Cars Houses Land Oil Timber Waste Absorption capacity Excludable AND Non-Rival o Tragedy of the non-commons Patented information Example = energy efficiency, pollution control technology Non-Excludable AND Rival o Open access regime (AKA tragedy of the commons) Oceanic fisheries Timber Etc. From unprotected forests Waste absorption capacity Non-Excludable AND Non-Rival o Pure public goods Information Most ecosystem services Climate stability Coastline protection Life support functions
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