Free Printable Worksheets for learning Environmental Economics at the College level

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Environmental Economics

Environmental Economics is a subfield of Economics that examines the relationship between the environment and the economic activity of human beings. It explores how human activities affect the natural environment and how changes in the natural environment can affect economic outcomes.

Key Concepts

Externalities

Environmental Economics emphasizes the concept of externalities, i.e., a cost or benefit that is not reflected in the market price. Negative externalities arise when economic activity produces harmful effects on the environment, such as pollution. Positive externalities occur when economic activity produces benefits to the environment, such as carbon sequestration.

Market Failure

Market Failure occurs when the market fails to allocate resources efficiently due to externalities, unequal information, or public goods. Environmental Economics aims to fix the market failure by regulating pollutants or placing a value on public goods, such as clean air, water, and biodiversity.

Valuation Techniques

Valuation Techniques include methods such as Contingent Valuation and Hedonic Pricing, which aim to estimate the economic value of non-market goods, such as ecosystem services.

Sustainability

Sustainability is the capacity of the natural environment to provide resources and absorb waste indefinitely. Environmental Economics examines how economic activity can be made sustainable by balancing economic growth and environmental protection.

Important Information

Environmental Economics offers unique solutions to environmental problems through the lens of economic theory.
Environmental policy is a crucial tool in addressing environmental problems such as climate change, deforestation, and pollution.
Environmental Economics offers insights into how market-based instruments can be used to reduce pollution and encourage sustainable practices.
Natural resources are finite and must be managed efficiently to preserve them for the future.

Takeaways

Negative externalities are harmful effects produced by economic activity that are not reflected in the market price.
Environmental policy is necessary to protect the environment and prevent market failure.
Valuation techniques estimate the economic value of non-market goods that are valuable to society.
Sustainability is paramount for ensuring the availability of natural resources in the future.

Here's some sample Environmental Economics vocabulary lists Sign in to generate your own vocabulary list worksheet.

Word	Definition
Supply	The amount of a good or service that producers are willing and able to sell at a given price and time
Demand	The amount of a good or service that consumers are willing and able to buy at a given price and time
Externalities	The cost or benefit that affects a third party who did not choose to incur or receive that cost or benefit
Market Failure	The inefficient allocation of goods and services due to a lack of competition, information, or property rights
Natural Resource	Materials and components (something that comes from the natural environment) that can be used by humans for economic gain or enjoyment
Marginal Cost	The cost of producing an additional unit of a good or service
Marginal Benefit	The benefit of consuming an additional unit of a good or service
Sustainability	The ability to meet the needs of the present without compromising the ability of future generations to meet their own needs
Cost-Benefit Analysis	A systematic way of comparing the costs and benefits of a particular project or course of action
Renewable Resource	A natural resource that can be replenished or regenerated within a short period of time
Nonrenewable Resource	A natural resource that cannot be replenished or regenerated within a short period of time
Ecosystem	A community of living organisms and their interactions with each other and their environment
Pollution	The presence or introduction into the environment of substances or objects that cause harm or discomfort to living organisms
Tradable Permits	A system in which the government sets a limit on the amount of pollution that can be emitted and companies can buy and sell permits to emit pollution
Opportunity Cost	The cost of the next best alternative that must be forgone in order to pursue a certain action
Property Rights	The ability to own, use, and dispose of a scarce resource
Public Good	A good or service that is non-excludable and non-rivalrous, meaning that once it is provided, everyone can benefit from it
Discounting	The process of giving less weight to future costs and benefits in today's decision-making
Incentives	A reward or punishment that influences behavior or decisions
Coase Theorem	A proposition that if property rights are clearly defined and transaction costs are low, then private bargaining will lead to an efficient outcome regardless of the initial allocation of property rights

Here's some sample Environmental Economics study guides Sign in to generate your own study guide worksheet.

Environmental Economics Study Guide

Introduction to Environmental Economics

Definition of Environmental Economics
Importance of environmental economics
Relationship with other disciplines

Environmental Policy

Types of environmental policy
Necessary elements of environmental policy
The role of government in creating and implementing environmental policy

Market Failure and the Environment

Definition of market failure
Types of market failure related to the environment
Externalities and their impact on the environment

Valuation Methods

The concept of value
Types of valuation methods
The economic benefits of environmental valuation

Cost-Benefit Analysis

Definition of cost-benefit analysis
Steps involved in cost-benefit analysis
Limitations of cost-benefit analysis in environmental economics

Tradable Pollution Permits

Definition of tradable pollution permits
Advantages and disadvantages of tradable pollution permits
Comparison with other forms of pollution control

Natural Resource Economics

Definition of natural resources
Sustainable use of natural resources
Methods for managing natural resources

Biodiversity and Ecosystem Services

Definition of biodiversity
Importance of ecosystem services
Economic value of biodiversity and ecosystem services

Climate Change Economics

Definition of climate change
Causes and effects of climate change
Economic solutions to climate change

Environmental Taxes and Subsidies

Definition of environmental taxes and subsidies
Types of environmental taxes and subsidies
Benefits and drawbacks of environmental taxes and subsidies

Conclusion

Overview of essential concepts
Importance of environmental economics in society

Here's some sample Environmental Economics practice sheets Sign in to generate your own practice sheet worksheet.

Practice Sheet for Environmental Economics

What is the difference between private goods and public goods?
Explain the concept of the tragedy of the commons.
Define the term 'externality' in the context of environmental economics.
What is a market-based policy? Give an example.
How can the Coase Theorem be used to resolve externalities? Provide an example.
Explain the concept of discounting.
How can cost-benefit analysis be used to evaluate environmental policies?
Define the term 'sustainability' in the context of environmental economics.
Why is it difficult to assign a monetary value to non-market goods and services?
How can property rights be used to address environmental problems? Provide an example.

Note: Please ensure that you answer the practice questions yourself to assess your understanding of the concepts.

Sample Problem

Suppose a company wants to build a new factory in a rural area. The factory will create jobs, but it will also create pollution. The company must decide whether to build the factory and how much to invest in pollution-control technology.

What are the possible economic impacts of the factory?
What are the possible environmental impacts of the factory?
What are the costs and benefits of investing in pollution-control technology?
What are the economic incentives for the company to invest in pollution-control technology?
What are the environmental incentives for the company to invest in pollution-control technology?

Practice Problems

Suppose a company wants to build a new power plant in a coastal area. The power plant will generate electricity, but it will also create air pollution. The company must decide whether to build the power plant and how much to invest in pollution-control technology.

a. What are the possible economic impacts of the power plant? b. What are the possible environmental impacts of the power plant? c. What are the costs and benefits of investing in pollution-control technology? d. What are the economic incentives for the company to invest in pollution-control technology? e. What are the environmental incentives for the company to invest in pollution-control technology?

Suppose a company wants to build a new mine in a mountainous area. The mine will create jobs, but it will also create water pollution. The company must decide whether to build the mine and how much to invest in pollution-control technology.

a. What are the possible economic impacts of the mine? b. What are the possible environmental impacts of the mine? c. What are the costs and benefits of investing in pollution-control technology? d. What are the economic incentives for the company to invest in pollution-control technology? e. What are the environmental incentives for the company to invest in pollution-control technology?

Suppose a company wants to build a new factory in a desert area. The factory will create jobs, but it will also create noise pollution. The company must decide whether to build the factory and how much to invest in pollution-control technology.

a. What are the possible economic impacts of the factory? b. What are the possible environmental impacts of the factory? c. What are the costs and benefits of investing in pollution-control technology? d. What are the economic incentives for the company to invest in pollution-control technology? e. What are the environmental incentives for the company to invest in pollution-control technology?

Suppose a company wants to build a new refinery in an urban area. The refinery will create jobs, but it will also create air pollution. The company must decide whether to build the refinery and how much to invest in pollution-control technology.

a. What are the possible economic impacts of the refinery? b. What are the possible environmental impacts of the refinery? c. What are the costs and benefits of investing in pollution-control technology? d. What are the economic incentives for the company to invest in pollution-control technology? e. What are the environmental incentives for the company to invest in pollution-control technology?

Suppose a company wants to build a new port in a coastal area. The port will create jobs, but it will also create water pollution. The company must decide whether to build the port and how much to invest in pollution-control technology.

a. What are the possible economic impacts of the port? b. What are the possible environmental impacts of the port? c. What are the costs and benefits of investing in pollution-control technology? d. What are the economic incentives for the company to invest in pollution-control technology? e. What are the environmental incentives for the company to invest in pollution-control technology?

Environmental Economics Practice Sheet

1. What are the two main categories of environmental economics?

Market-based instruments
Non-market-based instruments

2. What are some examples of market-based instruments in environmental economics?

Taxes
Tradable permits
Subsidies
Voluntary agreements

3. What are some examples of non-market-based instruments in environmental economics?

Command and control regulations
Public disclosure policies
Liability laws
Negotiated agreements

4. What is the difference between an externality and an external cost?

A. An externality is an unintended consequence of an economic activity that affects a third party, while an external cost is the cost of the externality imposed on the third party.

Here's some sample Environmental Economics quizzes Sign in to generate your own quiz worksheet.

Problem	Answer
What is the difference between marginal cost and marginal abatement cost?	Marginal cost is the cost of one additional unit of a good/service, while marginal abatement cost is the cost of reducing one unit of pollution.
What are the market-based policies for addressing pollution problems?	Market-based policies include taxes, subsidies, and permits or cap-and-trade systems.
What is the difference between private cost and social cost?	Private cost is the cost paid by a producer for producing a good/service while social cost is the entire cost of producing that good/service, including externalities.
What is the Coase Theorem?	The Coase Theorem states that if transactions costs are low and property rights are clearly defined, private bargaining can lead to an efficient allocation of resources in the presence of externalities.
Which market-based policy is considered most cost-effective for reducing pollution?	Cap-and-trade systems are considered the most cost-effective for reducing pollution.
How does the Environmental Kuznets Curve relate to economic growth and environmental degradation?	The Environmental Kuznets Curve suggests that environmental degradation may initially increase with economic growth, but after a certain point, continued economic growth leads to a decrease in pollution levels.
What is the difference between a command-and-control policy and a market-based policy?	Command-and-control policies use government regulations to directly limit emissions, while market-based policies rely on economic incentives to encourage polluters to reduce emissions.
What is the difference between a public good and a private good?	A public good is non-excludable and non-rivalrous, meaning that it is difficult to prevent people from using it and that one person's use does not diminish the ability for others to use it. A private good is the opposite.
What is the tragedy of the commons?	The tragedy of the commons is a situation where multiple individuals, acting independently and solely in their own self-interest, end up depleting a shared limited resource even when it is not in anyone's best interest.
What is green accounting and how is it useful in Environmental Economics?	Green accounting is a method of attributing value to natural resources and ecosystems that are typically not included in traditional measures of economic activity. It can help in formulating policies and evaluating trade-offs.

Problem	Answer
What is the definition of environmental economics?	Environmental economics is the study of how economic activity affects the environment, and how environmental factors affect economic activity. It is an interdisciplinary field that combines economics, ecology, and other social sciences.
What are the three main goals of environmental economics?	The three main goals of environmental economics are to: (1) identify and quantify the impacts of economic activities on the environment; (2) develop policies and strategies to reduce these impacts; and (3) create incentives for sustainable development.
What is the difference between positive and normative environmental economics?	Positive environmental economics is a branch of economics that focuses on the empirical analysis of environmental issues. It seeks to identify the economic impacts of environmental policies and to quantify the benefits and costs of those policies. Normative environmental economics is a branch of economics that focuses on the ethical and philosophical aspects of environmental policy. It seeks to identify the ethical and moral implications of environmental policies and to determine the optimal policy choices.
What is the Coase Theorem?	The Coase Theorem is an economic theory developed by Nobel Prize-winning economist Ronald Coase. It states that when there are no transaction costs, the initial allocation of resources is irrelevant; it is the bargaining process that determines the ultimate allocation of resources. The theorem is used as a basis for understanding the economic implications of environmental policies.
What is the concept of externalities?	An externality is an economic cost or benefit that is not reflected in the price of a good or service. Externalities can be either positive or negative. Positive externalities are benefits that accrue to third parties as a result of economic activity. Negative externalities are costs that are imposed on third parties as a result of economic activity.
What is the concept of the tragedy of the commons?	The tragedy of the commons is an economic concept that states that when resources are shared among a group of people, each person has an incentive to exploit the resource for their own benefit, leading to over-exploitation and depletion of the resource.
What is the concept of sustainability?	Sustainability is the concept of meeting the needs of the present without compromising the ability of future generations to meet their own needs. It is a concept that emphasizes the importance of balancing economic, social, and environmental objectives.
What is the concept of green growth?	Green growth is an economic development strategy that seeks to promote economic growth while reducing the environmental impact of economic activities. It seeks to promote economic development in a way that is sustainable and environmentally friendly.
What is the concept of environmental justice?	Environmental justice is the idea that all people should have equal access to environmental resources and services, regardless of their race, ethnicity, gender, or economic status. It is a concept that seeks to ensure that environmental policies and regulations are fair and equitable.

Question	Answer
What is environmental economics?	Environmental economics is the study of how economic systems interact with the environment, and how environmental issues are addressed through policy and regulation.
What are the main goals of environmental economics?	The main goals of environmental economics are to identify and estimate the costs of environmental degradation, to determine the most efficient ways to reduce or prevent environmental damage, and to develop policies and regulations to protect the environment.
What are the main tools used in environmental economics?	The main tools used in environmental economics include cost-benefit analysis, economic modeling, and game theory.
What is cost-benefit analysis?	Cost-benefit analysis is a method of assessing the economic benefit of a policy, project, or action by comparing the costs and benefits associated with it.
What is economic modeling?	Economic modeling is a tool used to analyze the economic impacts of a policy or action. It typically involves using mathematical models to simulate the effects of a policy or action on economic variables such as prices, wages, and employment.
What is game theory?	Game theory is a tool used to analyze the strategic behavior of people or organizations in situations where the outcome depends on the actions of multiple actors.
What is the Coase theorem?	The Coase theorem is an economic theory that states that when property rights are clearly defined, an efficient allocation of resources can be achieved, regardless of who has the legal right to the resources.
What is the tragedy of the commons?	The tragedy of the commons is an economic concept that states that when a resource is shared by multiple people, it is often overused, leading to its eventual depletion.
What is the difference between positive and negative externalities?	Positive externalities are benefits that are not captured by the market and are experienced by third parties, while negative externalities are costs that are not captured by the market and are experienced by third parties.
What is the difference between a public good and a private good?	A public good is a good that is non-excludable and non-rivalrous, meaning that it is available to everyone and one person’s consumption does not reduce the amount available for others. A private good is a good that is excludable and rivalrous, meaning that it must be purchased and one person’s consumption reduces the amount available for others.