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Environmental studies - Assignment Example

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The laissez-faire economic model is a belief that only the market forces control the market. There is no interference from the government. In the same manner, the environment has a self-control mechanism and can control itself without interference from mankind. Bio-economic modelling seeks to find solutions to environmental problems with this in light…
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Download file to see previous pages There is no interference from the government. In the same manner, the environment has a self-control mechanism and can control itself without interference from mankind. Bio-economic modelling seeks to find solutions to environmental problems with this in light. 2. Explain why the Threshold Value Analysis might facilitate rent-seeking behaviour. (LECTURE 11) Threshold Value Analysis might facilitate rent-seeking behaviour because the decision rule for Threshold Value Analysis is that the model should be developed if the benefits exceed the decision-makers analysis of the costs. The decision-maker may be biased in analysing the costs hence leading to rent-seeking behaviour. 3. Contrast the TVA to environmental decision making with the application of a safe minimum standard approach. (LECTURE 11) The decision rule for Threshold Value Analysis is that the model should be developed if the benefits exceed the decision-makers analysis of the costs i.e. if the benefits are above the threshold. Safe minimum approach standard is used when the benefits are below the threshold. A second threshold is developed below the initial threshold. 4. What is the difference between risk and uncertainty? How does the difference affect the way you would analyse issues of environmental management? (Lecture 12) In risk, one knows the possible outcomes and their corresponding probabilities. Such probabilities are known either from experience or carrying out experiments. In uncertainty, the likely outcomes are known, but their probabilities of occurrence are not known. In analysing issues of environmental management using decision trees, payoff tables or conditional value tables, the probabilities are needed (risk). In case of uncertainty, one has to come up with best guess probabilities. Part B (about 300 words each question) 1. Markets provide a useful source of information regarding people’s preferences. Explain how you would use market data to estimate the costs of protecting a forest from logging. Market data is very essential in estimating the cost of protecting forests. Market data like the economic uses of the forest, the value of products that are produced from the forest resources and the general value of the forest to the community and country at large should be considered. In estimating the cost of protecting a forest from logging, I would first determine all the market data that would be relevant to the particular tree. This includes the cost of using wood to make furniture and as a source of fuel, the cost of paper, the cost of pulp and any other resources that are found in forests. After determining all these costs, the benefits should also be analysed. Benefits like better weather, increased animal life and protection of endangered species should be quantified. These benefits and costs should then be compared using the Threshold Value Approach. A threshold value of benefits should be set e.g. a value of benefits that equals the total cost of benefits. If the benefits exceed the threshold value, the forest should be protected from logging. If, however, the value of benefits is below the threshold value, another measure should be taken other than banning logging. For example, environmental managers can consider controlling logging. Other methods of economic decision making can also be used. The cost benefit analysis will include comparing the costs associated with the ...Download file to see next pagesRead More
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