Exam 6: The Economics of Environmental Regulation Ii: Transferable Emission Credits, and the Macroeconomic Effects of Environmental Regulation

Strictly enforced environmental policy could, in effect, force firms to adopt efficient pollution abatement technology, which will lead to a competitive advantage in the long-term.

A system of transferable credits operates on the basis that there is a legally sanctioned right to pollute.

Figure 6A -Refer to Figure 6A. Why do the two firms not pollute at points R and S respectively when pollution credits and regulations exist ?

What does the empirical evidence, on the whole, concerning the relationships between environmental protection, the economy, and jobs reveal?

In the United States, the acid rain program (ARP), was established under Title IV of the 2009 Clean Air Act Amendment which requires major emission reduction of sulfur dioxide (SO2) and nitrogen oxide (nox).

Which of the following is a (are) characteristic(s) of the US acid rain program?

There has been considerable resistance in the application of emission trading program particularly in the member states of the European Union (EU) and some Latin American countries.

Although not a human health issue, the accumulation over time of sulfur dioxide (SO2) and acid rain depositions on lakes, streams, and forests are believed to cause substantial damage to aquatic organisms and trees.

What is the basis for the Porter Hypothesis?

A bubble policy is generally used by a firm that has only one source of pollution so that it remains in compliance with a set emission standard.

Figure 6A -Refer to Figure 6A. Assume that government regulation limits sulfur dioxide emissions to 150 tons per year. Also assume that Firm 1 cannot reduce its emissions below 100 tons per year. Which of the following would apply in this situation?

In the presence of uncertainty, when control costs that are higher than expected, a regulatory scheme based on transferable pollution credits can result in a cleanup costing more than the socially optimal level.

Clearly define property rights are important because…

Which one of the following statements about a system of tradable carbon permits is false?

Underestimation of the cost of environmental regulations remains a serious concern.

The banking policy allows firms to use their initial credit allotment over time.

Hot-spots are any areas that contain high local concentration of any pollutant.

The purpose for creating a tradable emission credit system is to substitute the market for pollution rights.

Transferable credits work better when the number of parties involved in the exchange of credit are limited or capped.

Which of the following would allow a polluter to treat all its different types of sources of pollution as a single source?