Chapter 1 Has 22 Numbered Figures, 2 Numbered Tables, 2 Do the Math Boxes

CHAPTER 20

MULTIPLE-CHOICE QUESTIONS

1. Based on the Supply and Demand curve below, which of the following can be inferred?

I A lower price results in a greater demand

II A higher price results in a greater supply.

III Price changes as supply and demand fluctuate.

(a) I only

(b) II only

(d) I and II

(e) I, II, and III

2. All of the following are examples of negative externalities except

(a) global climate change as a result of greenhouse gas emissions from the burning of coal, oil, and gasoline.

(b) increased pollination rates of surrounding crop plants as a result of local beekeeping.

(d) run-off of pesticides and fertilizers from a farm into a nearby river.

(e) acid deposition in the Adirondacks as a result of coal-burning power plants in the Midwest.

3. The genuine progress indicator is a more representative measure of the wealth and well-being of a country than the gross domestic product because the GPI

(a) measures productivity and consumption without taking externalities into account.

(b) has risen in the United States while the GDP has remained fairly constant since 1970.

(d) can be increased by higher health care costs and a greater incidence of illnesses.

(e) does not reflect personal consumption, income distribution, or levels of higher education.

4. Economic assets are the sum total of which of the following?

I Natural capital

II Human capital

III Manufactured capital

(a) II only

(b) III only

(d) I and III

(e) I, II , and III

5. Valuation, according to environmental and ecological economics, would include all of the following except

(a) the revenue generated from tourists visiting a national park.

(b) the cost of wastewater treatment provided by a natural wetlands.

(d) the profits realized from hiring more employees to increase production.

(e) the cost of converting animal wastes into reusable organic matter by detritivores.

6. Full cost pricing by the internalization of externalities could result in which of the following?

(a) Higher prices and a reduction in the consumption of items with high negative impacts

(b) Lower prices and an increase in the consumption of items with high negative impacts

(d) Lower production costs due to diminishing natural resources

(e) Reduced production of environmentally friendly goods and services

7. Cradle-to-cradle and cradle-to-grave analyses of manufactured goods can best be described as the study of the

(a) changes in the use of a product from one generation to the next.

(b) life cycle of a product from its production to use to ultimate disposal.

(d) options for the disposal of solid waste generated by the product.

(e) natural and human resources required for production.

8. Recently, the Los Angeles School District adopted a new policy on the use of pesticides in schools. This policy assumes that the use of pesticides constitutes a risk to the health of children and the environment. Pesticides will be employed only after nonchemical methods have been explored. The pest control measure that is the least harmful will be implemented. This is an example of

(a) the precautionary principle.

(b) ecosystem services.

(d) sustainable use.

(e) full-cost pricing.

9. United Nations organizations that relate to the environment include which of the following?

(a) World Resources Institute (WRI)

(b) Occupational Safety and Health Administration (OSHA)

(d) World Health Organization (WHO)

(e) Environmental Protection Agency (EPA)

10. Which of the following U.S. laws contributes to sustainability by governing the tracking and disposal of solid and hazardous waste?

(a) National Environmental Policy Act (NEPA)

(b) Resource Conservation and Recovery Act (RCRA)

(d) Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA)

(e) Occupational Safety and Health Act (OSHA)

11. Strategies to implement environmental laws and regulations include all of the following except

(a) standards for emission levels with fines when these levels are exceeded.

(b) green taxes on environmentally harmful activities or emissions.

(d) an incentive-based approach based on profits.

(e) banning the cap-and-trade practice.

12. Harmful effects of poverty include which of the following?

(a) Decrease in unsanitary conditions

(b) Greater access to clean drinking water

(d) Decreased malnutrition

(e) Lower infant mortality rates

13. The United Nations Millennium Declaration proposes to meet which of the following goals by 2015?

I Reduce environmental sustainability through economic development

II Eliminate extreme poverty and hunger and reduce child mortality

III Empower women and improve maternal health

(a) I only

(b) II only

(d) I and III

(e) II and III

14. The following is a summary report for the Distribution of Environmental Burdens for Allegheny County in Pennsylvania.

Population categories / Number of facilities emitting criteria air pollutants per square mile
Minorities / 11
Whites / 4.5
Low-income families / 8
High-income families / 3.9
Families below poverty / 8.9
Families above poverty / 4.1
Non–high school graduates / 6.9
High school graduates / 4.7

Source: http://www.scorecard.org/community/ej-summary.tcl?fips_county_code=42003&lang=eng#map

This is an example of

(a) an environmental justice issue.

(b) an anthropocentric worldview.

(d) an ecocentric worldview.

(e) a stewardship school issue.

Free-Response Questions

1. Use the following information to answer the questions that follow.

Gasoline consumption in the United States:

· In 2008, the United States consumed approximately 138 billion gallons of gasoline.

· The current federal tax on gasoline is 18.4 cents per gallon.

· The national average cost of a gallon of regular unleaded gasoline in June 2008 was $4.00 per gallon.

· Eighty percent of the federal gasoline tax is used to subsidize road construction.

(a) Calculate the total amount of money spent in the United States on the retail purchase of gasoline in 2008 (when gasoline was $4.00 per gallon). (2 points)

138,000,000,000 gallons of gasoline  $4.00 per gallon = $552,000,000,000

(b) i. What percent of the cost per gallon is the gasoline tax?

$0.184 tax per gallon/$4.00 cost per gallon  100 = 4.60%

ii. How much revenue was generated by the gasoline tax in 2008?

138,000,000,000 gallons of gasoline  $0.184 tax per gallon = $25,392,000,000 2008 gasoline tax revenue

0.046  $552,000,000,000 = $25,392,000,000 2008 gasoline tax revenue

iii. How much was used in 2008 to subsidize road construction? (3 points)

0.80  $25,392,000,000 = $20,313,600,000 spent to subsidize road construction

No, the federal gasoline tax does not qualify as a green tax because it is primarily used to subsidize road construction. This actually encourages more driving, which results in an increase in the generation of carbon dioxide and nitrous oxides. Additionally, the natural habitats of the land are disrupted when the roadways are constructed. A green tax by definition is an attempt to internalize these negative externalities; the gasoline tax is not channeled to pay for mitigation of land use or for the air pollution generated by driving.

(d) Advocates of raising the gasoline tax suggest that the tax be increased to 80 cents per gallon. Identify two economic effects and two environmental effects of raising this tax. (4 points)

Possible economic effects:

· With an increase in gasoline prices due to an increased tax, consumers might use less gasoline, thereby reducing the total annual revenues to the oil industry.

· Reduced use by consumers also reduces the tax revenues and subsidies for road construction, thereby reducing the number of people employed in road construction and the materials purchased.

· With an increase in gasoline prices due to an increased tax, consumers might be inclined to purchase an automobile with a higher gas mileage; this could economically increase the income of manufacturers of automobiles with higher gas mileage and reduce the income of manufacturers of automobiles with lower gas mileage.

· An increase in gasoline prices due to an increased tax might encourage consumers to use mass transit, therefore reducing the number of automobile sales and services (if such alternatives are available).

· Increased costs may encourage the development of alternative fuels, thereby reducing the profits of the oil industry and increasing the profits for alternative energy companies.

· If gasoline consumption is not reduced, then tax revenues would be increased as would the subsidies for road construction. This in turn would mean more employment and more materials used for the ensuing road construction.

· Such a tax tends to fall most heavily on individuals who are at the lowest ends of the economic scale and those who must drive long distances to get to work, shopping, etc.

Possible environmental effects:

· An increase in gasoline prices due to an increased tax might encourage consumers to drive less, resulting in a decrease in the levels of carbon dioxide and nitrous oxide emissions.

· An increase in gasoline prices due to an increased tax might result in greater use of mass transit, thereby reducing automobile sales and the mining of raw materials and the disruption of the land needed to produce them.

· With fewer automobiles there would be fewer used cars entering the solid waste stream.

· An increase in gasoline prices due to an increased tax might encourage the development of alternative fuels that would decrease greenhouse gas emissions and reduce global warming. It might also increase the development of renewable energy sources and means of transportation.

· An increase in gasoline prices due to an increased tax might encourage consumers to drive less, decreasing the amount of gasoline used. This in turn might reduce the amount of oil drilling (offshore and otherwise) and the resulting disruption of the land and sea.

· The demand for gasoline at present is inelastic, so demand for more fuel-efficient cars, hybrid-electric cars, and possibly electric cars may increase, but these have environmental impacts as well.

2. In 1997, economist Robert Costanza and his associates published a report titled The Value of the World’s Ecosystem Services and Natural Capital. They estimated that if all the ecosystem services provided worldwide had to be paid for, it would average $33 trillion per year with a range from $16 trillion to $54 trillion. In that same year, the global Gross National Product (GNP) was $18 trillion.

(a) What is meant by ecosystem or ecological services? Give three specific examples and identify which United Nations organization might oversee these services. (4 points)

Ecological services are those services provided by ecosystems throughout the world that benefit human beings either directly or indirectly.

(i) Pollination by bees

(ii) Soil adsorption and filtration of chemicals

(iii) Detritivores turn animal waste into organic material used by primary producers

*Ecological Service / **United Nations Organization
Soil formation / UNEP, UNDP
Recreation / WB
Nutrient cycling / UNEP, UNDP
Water regulation and supply / UNEP, WB, WHO (clean drinking water), UNDP
Climate regulation
(temperature and precipitation) / UNEP
Habitat / UNEP, WB
Flood and storm protection / UNEP, WB, UNDP
Food and raw materials / WB, WHO (malnutrition), UNDP
Genetic resources / WB, WHO (food production), UNDP
Atmospheric gas balance / UNEP
Pollination / WHO (food production), UNDP

*http://earthtrends.wri.org/features/view_feature.php?fid=15&theme=5

**United Nations Environment Program (UNEP)

World Bank (WB)

World Health Organization (WHO)

United Nations Development Program (UNDP)

(b) Define the term valuation. What would the worldwide consequences be if the world actually had to pay for ecosystem services and natural capital? (2 points)

Valuation is a method by which a monetary value is placed on intangible benefits and natural capital and physical entities provided by nature.

Based on the above figures, the world could not afford these services; at the low end of the cost range ($16 trillion), the world could afford them, but nothing else. Using the average figure of $33 trillion, the world would amass a debt of $15 trillion ($33 trillion - $18 trillion) per year for these services alone.

A sustainable economic system would rely more on ecosystem services and less on resource extraction; it would also use more renewable energy sources, lessen negative externalities, and reuse more of the products destined to enter the solid waste stream. The details of this report would assist planners in identifying ecosystem services and natural capital to achieve a sustainable economic system.

(d) Which Environmental Worldview is most consistent with environmental economics? Explain. (2 points)

Environmental Economics addresses the failure of free market systems to allocate resources efficiently to generate the welfare of the greatest number of people.

The Anthropocentric Worldview is most consistent with environmental economics because it considers that human beings have intrinsic value and that nature has an instrumental value to provide for our needs. It also recognizes that resource depletion issues can be managed through technology and that at times nature requires protection that can be provided through the government.

Measuring Your Impact

GDP and Footprints. The World Wide Fund for Nature (WWF) released the Report on Ecological Footprint in China in June 2008. Answer the following questions using the data below, which is based on this report.

Ecological footprint (global hectares/person) / GDP per capita
(in thousands U.S. dollars)
1970 / 2000 / % change / 1970 / 2000 / % change
China / 0.7 / 1.5 / +114% / 0.1 / 1.2 / + 1,100%
India / 0.7 / 0.7 / 0% / 0.22 / 0.48 / +118%
Japan / 2.5 / 4.3 / +72% / 15 / 37 / +147%
United States / 6.1 / 9.3 / +52.5% / 18 / 34 / +89%

(a) Calculate the percentage change in ecological footprint and GDP for each country listed and complete the table.