Deck 20: The Global Environment

Question 1

Using an example,discuss why economists are leery of using a fuel content rule that mandates using a certain percentage of renewable fuel content to try and achieve greenhouse gas emission reductions.

Answer 1

Although this policy sounds like it will help reduce GHG emissions,it is possible it will cause emissions to rise.One has to look at the life cycle of production of the renewable fuels to estimate net impact on GHGs.For example,comparing ethanol to biofuels produced from waste grease it has been shown that ethanol production increases GHG emissions while biofuels successfully reduce them.The reason ethanol is unsuccessful is the fact that it is derived from corn which requires a lot of fertilizer to grow.Fertilizer requires a lot of energy from fossil fuels in its production and if this energy comes from the burning of coal,it will generate a lot of GHG emissions.

Question 2

Biological diversity is a high priority for people who are struggling to get enough resources to achieve some degree of economic security.

Answer 2

False

Question 3

List the six desirable design features for creating an economically efficient carbon pricing scheme.

Answer 3

From the perspective of economic efficiency,desirable design features for carbon pricing schemes include:1)comprehensive coverage of emissions;2)a uniform price applied to all emissions;3)stable and predictable emission prices;4)emission prices that are aligned with environmental damages or climate stabilization goals;5)maximizing the impact of the fiscal dividend;and 6)using carefully targeted compensation schemes for vulnerable households and firms.

Question 4

When allowances are distributed to firms for free according to some allocation rule determined by the regulator this is known as ________.

A)auctioning
B)trading
C)grandfathering
D)offsetting

Question 5

If permits are distributed through an auction,governments can recycle the revenue in the form of tax cuts to offset some losses experienced by firms.

Question 6

The revenue from
B.C.'s carbon tax flows back to households and industry in the form of cuts to personal and corporate income tax rates,tax credits for low income and rural households,and some property tax relief for industry.

Question 7

International embarrassment is enough of a deterrent to prevent the development of a black market in CFCs.

Question 8

Environment Canada's quota system to phase out ozone depleting chemicals did not restrict the supply of specific CFCs or halons;rather it was set in term of ________ allowing for flexibility in meeting the target.

A)marginal damage cost
B)ozone-depleting potential
C)marginal abatement cost
D)total allowable ozone

Question 9

It is important to preserve biodiversity because genetic diversity from wild species can add value to agricultural breeding programs.

Question 10

Habitat maintenance is not essential for preserving biodiversity because breeding programs at zoos and agricultural research stations are adequate for this purpose.

Question 11

List four design principles that economists recommend for setting up a cap-and-trade system.

Question 12

A transferable emission permit scheme will always be superior to an emission tax when it comes to developing an economically efficient carbon pricing scheme.

Question 13

Canada's implicit carbon tax rates that are below those of the United States but higher than those in Europe.

Question 14

The Canadian province with the highest greenhouse gas emissions is ________.

A)Ontario
B)British Columbia
C)Alberta
D)Quebec

Question 15

List and briefly explain the five criteria that should be satisfied to establish an effective offset system that leads to real emission reductions.

Question 16

Developing a carbon pricing scheme with stable and predictable emission prices is an important design goal for policymakers to keep in mind.

Question 17

Large multinational firms saw the potential for profits by developing substitutes for CFCs which helped with phasing out its use.

Question 18

Employing a global CO₂ price to contain mean projected warming to a specific target at least cost is an example of ________.

A)a fiscal dividend
B)a climate stabilization goal
C)a cap and trade system
D)an emission trading system

Question 19

Carbon offsets result in either the same level of emission reduction at lower cost than in a system without them,or greater emissions reduction at the same cost because the offset works like a withdrawal of allowances from the market.

Question 20

________ is a particular problem in ________ which contain a disproportionately large share of the world's wild species,but which are also under great pressure to pursue modern economic development.

A)Habitat destruction;developed countries
B)Habitat destruction;developing countries
C)Biological uniformity;developed countries
D)Biological uniformity;developing countries

Question 21

Discuss the factors that helped make the Montreal Protocol a successful international treaty.