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Questions and Answers
What do Bequest values measure?
What do Bequest values measure?
Which of the following is NOT a category of the total economic value of a tropical forest?
Which of the following is NOT a category of the total economic value of a tropical forest?
What is the Contingent Valuation Method (CVM) used for?
What is the Contingent Valuation Method (CVM) used for?
In what way does the Contingent Valuation Method (CVM) gather data?
In what way does the Contingent Valuation Method (CVM) gather data?
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What does the Travel Cost Method (TCM) estimate?
What does the Travel Cost Method (TCM) estimate?
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What distinguishes Bequest values from Existence values in the context of resource valuation?
What distinguishes Bequest values from Existence values in the context of resource valuation?
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What is a major consequence of environmental degradation and depletion?
What is a major consequence of environmental degradation and depletion?
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What is the term used for pricing environmental goods?
What is the term used for pricing environmental goods?
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What is the formula for calculating Total Economic Value (TEV)?
What is the formula for calculating Total Economic Value (TEV)?
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What type of value is derived from the actual use of an environmental asset?
What type of value is derived from the actual use of an environmental asset?
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What is an example of a non-use value?
What is an example of a non-use value?
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What type of value represents the willingness to pay for the option to use an asset in the future?
What type of value represents the willingness to pay for the option to use an asset in the future?
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What does the company save an amount equal to when reducing emissions?
What does the company save an amount equal to when reducing emissions?
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What does the emission reduction cost equal to?
What does the emission reduction cost equal to?
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What is the company's decision based on when the tax policy is implemented?
What is the company's decision based on when the tax policy is implemented?
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What does the company not want to do regarding emission reduction?
What does the company not want to do regarding emission reduction?
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What is the amount of C tax payment equal to?
What is the amount of C tax payment equal to?
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What is the primary reason why traditional price information cannot be used to value the forest's function of providing habitat for an endangered animal?
What is the primary reason why traditional price information cannot be used to value the forest's function of providing habitat for an endangered animal?
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In the case of valuing the forest's function in providing habitat for an endangered animal, which method can be used to determine its monetary value?
In the case of valuing the forest's function in providing habitat for an endangered animal, which method can be used to determine its monetary value?
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What does MAC stand for in the context of economic policy for environmental management?
What does MAC stand for in the context of economic policy for environmental management?
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What happens to MAC as the reduction amount/unit increases?
What happens to MAC as the reduction amount/unit increases?
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Suppose a company has to pay T amount of BDT per unit of emission. How does the company respond to the introduction of an emission tax?
Suppose a company has to pay T amount of BDT per unit of emission. How does the company respond to the introduction of an emission tax?
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What area represents the amount of tax payment for a company that continues to emit at the same level (𝐸0) after a tax policy is introduced?
What area represents the amount of tax payment for a company that continues to emit at the same level (𝐸0) after a tax policy is introduced?
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Which valuation method is best suited for estimating economic benefits associated with environmental amenities such as aesthetic views or proximity to recreational sites?
Which valuation method is best suited for estimating economic benefits associated with environmental amenities such as aesthetic views or proximity to recreational sites?
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What type of scenario is presented in the Contingent Valuation Method (CVM) to assess willingness to pay for environmental services?
What type of scenario is presented in the Contingent Valuation Method (CVM) to assess willingness to pay for environmental services?
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Which method is based on the consumer demand theory to estimate the value attached to a location of environmental significance?
Which method is based on the consumer demand theory to estimate the value attached to a location of environmental significance?
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Which method analyzes the relationship between damage caused and the responsible factors in environmental problems?
Which method analyzes the relationship between damage caused and the responsible factors in environmental problems?
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Which method would be most effective for evaluating economic costs associated with noise pollution caused by traffic near a residential area?
Which method would be most effective for evaluating economic costs associated with noise pollution caused by traffic near a residential area?
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What is the main focus of the economist's view regarding conflicts of opinion on environmental protection and economic growth?
What is the main focus of the economist's view regarding conflicts of opinion on environmental protection and economic growth?
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Study Notes
Total Economic Value (TEV) of a Tropical Forest
- Direct values: timber, recreation, medicine, non-wood forest products
- Indirect values: nutrient cycling, wind protection, air pollution control, watershed protection, carbon fixation
- Option values: future direct and indirect use (future drugs, potential gene pool, recreation option)
- Existence values: satisfaction from knowledge of continuous existence
- Bequest values: passing benefits for future generations
Valuation Techniques
- Contingent Valuation Method (CVM): estimates economic values for ecosystem and environmental services
- involves directly asking people how much they would be willing to pay for specific environmental services
- can be used to estimate both use and non-use values
- Hedonic Price Method: estimates economic values for ecosystem or environmental services that directly affect market prices
- used to estimate economic benefits or costs associated with environmental quality, environmental amenities, and proximity to recreational sites
- Dose-response Functions (DRF): estimates economic values by analyzing the relationship between a cause and its effect
- example: the effect of air pollution on health, crop losses due to soil erosion
- Travel Cost Method (TCM): estimates economic values by analyzing the cost people incur to travel to a location of environmental significance
Economy vs Environment
- Conflicts arise between environmental protection and economic growth
- Different perspectives on the cost and benefit of environmental protection
- The concept of Total Economic Value (TEV) is used to price environmental goods
Economic Policy for Environmental Management
- Marginal Abatement Cost (MAC): the cost of reducing an additional unit of emission or discharge
- MAC increases as the reduction amount/unit increases
- Example: a company's response to the introduction of emission tax
- Case 1: no policy, no reduction, no tax payment
- Case 2: tax policy, emitting at E0, paying tax
- Case 3: reducing emissions to minimize tax payment
- Case 4: reducing emissions to minimize tax payment and reduction cost
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Description
Explore the concept of Total Economic Value (TEV) in environmental economics and how it relates to pricing environmental goods. Learn about use values, including direct and indirect use values, as well as non-use values in environmental economics.
