Econ 2100 Second Test

Front 1

risk assessment

Back 1

identifies risk with qualitative and quantitative evaluations. method of assessing the environmental problem and the risk it poses to society

1)hazard identification
2)Dose-response analysis
3)exposure analysis
4)risk characterization
5)risk management

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risk management

Back 2

responds to risk. deciding the appropriate courses of action or policy responses.

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risk

Back 3

the chance of something bad happening

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voluntary risk

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risk that is deliberately assumed at an individual level

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involuntary risk

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risk beyond one's control and not the result of a willful decision

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environmental risk

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involuntary risk of exposure to an environmental hazard

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hazard

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source of the environmental damage

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exposure

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pathways between the source of the damage and the affected population or resource

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hazard identification

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scientific analysis to determine whether a casual relationship exists between a pollutant and any adverse effects

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case clusters

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study based on the observation of an abnormal pattern of health effects within some population group

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animal bioassay

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study based on the comparative results of laboratory experiments on living organisms both before and after exposure to a given hazard

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epidemiology

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the study of the causes and distribution of disease in human populations based on characteristics such as age, gender, occupation,and economic status

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dose-response relationship

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a quantitative relationship between doses of a contaminant and the corresponding reactions

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threshold

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the level of exposure to a hazard up to which no response exists

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integrated risk information system

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database designed to improve risk assessment by lending consistency to what is a difficult and time-intensive process. established by the EPA.

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exposure analysis

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characterizes the sources of an environmental hazard, concentration levels at that point, pathways and an sensitives

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risk characterization

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description of risk based upon an assessment of a hazard and exposure to that hazard

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reference dose

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how environmental risks are quantified as the exposure level to a hazard that can be tolerated over a lifetime without harm

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qualitative element of risk characterization

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gives context to the numerical risk value.

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'acceptable' risk

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amount of risk determine to be tolerable for society

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de minimis risk

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a negligible level of risk such that reducing it further would not justify the associated costs

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comparative risk analysis

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an evaluation of a relative risk

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relative risk reduction

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the agency should order its policy decisions to reduce the most severe environmental risks first

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risk-benefit analysis

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an assessment of risks of a hazard along with the benefits to society of not regulating that hazard

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benefit-cost analysis

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a strategy that compares the MSB of a risk redcution policy to the MSC

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incremental benefit

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the reduction in health, ecological and property damages associated with an environmental policy initiaitive

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incremental benefits

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the reduction in health, ecological, and property damages associated with an environmental policy initiative

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user value

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benefit derived from physical use of or access to an environmental good

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existence value

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benefit received from the continuance of an environmental good

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direct user value

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benefit derived from directly consuming services provided by an environmental good

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indirect user value

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benefit derived from indirect consumption of an environmental good

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vicarious consumption

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utility associated with knowing that others derive benefits from an environmental good

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stewardship

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sense of obligation to preserve the environment for future generations

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physical linkage approach

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estimates benefits based on a technical relationship between an environmental resource and the user of that resource

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behavioral linkage approach

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estimates benefits using observations of behavior in actual markets or survey responses about hypothetical markets

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damage function method

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models the relationship between a contaminant and its observed effects to estimate damage reductions arising from policy

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contingent valuation method (CVM)

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uses surveys to elicit responses about WTP for environmental quality based on hypothetical market conditions

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averting expenditure method (AEM)

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estimates benefits as the change in spending on goods that are substitutes for a cleaner environment

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direct methods

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under behavioral linkage approach, estimates environmental benefits according to responses or observed behaviors directly tied to environmental quality

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indirect methods

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under behavioral linkage approach, makes inferences about markets or conditions that are linked to the environmental good under investigation

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travel cost method

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values benefits by using the complementary relationship between the quality of a natural resource and its recreational use value

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hedonic price method

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uses the estimated hedonic price of an environmental attribute to value a policy-driven improvement

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present value determination

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a procedure that discounts a future value into its present value by accounting for the opportunity cost of money

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discount factor

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the term, 1/(1+r)t where r is the discount rate and t is the number of period

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discount rate

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r in the equation 1/(1+r)

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social discount rate

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discount rate used for public policy initiatives based on the social opportunity cost of funds

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inflation correction

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adjusts for movements in the general price level over time

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nominal value

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a magnitude stated in terms of the current period

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real value

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a magnitude adjusted for the effects of inflation

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deflating

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converts a nominal value into its real value

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present value of benefits (pvb)

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the time-adjusted magnitude of incremental benefits associated with an environmental policy change

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present value of costs (pvc)

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the time-adjusted magnitude of incremental costs associated with an environmental policy change

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benefit-cost ratio

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the ratio of PVB to PVC used to determine the feasibility of a policy option if its magnitude exceeds unity

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present value of net benefits (pvnb)

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the differential of (PVB-PVC) used to determine the feasibility of a policy option if its magnitude exceeds zero.

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maximize the PVNB

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a decision rule to achieve allocative efficinecy by selecting the policy option that yields greatest excess benefits after adjusting for time effects

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minimize the PVC

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a decision rule to achieve cost-effectiveness by selecting the least-cost policy option that achieves a preestablished objective

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Regulatory Impact Analysis

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a requirement under executive order 12291 that called for information about the potential benefits and costs of a major federal regulation

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economic analysis (EA)

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a requirement under executive order 12866 and executive order 13258 that calls for information on the benefits and costs of a significant regulatory action

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environmental costs

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costs of environmental improvement

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incremental costs

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appropriate level of analysis for evaluating the cost of an environmental initiative

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explicit costs

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administrative, monitoring, enforcement expenses paid by the public sector plus compliance costs incurred by all sectors

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capital costs (aka fixed)

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fixed expenditures for plant, equipment, construction in progress, and production process changes associated with abatement

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operating costs (aka variable)

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variable expenditures incurred in the operation and maintenance of abatement processes

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implicit costs

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the value of any nonmonetary effects that negatively influence society's well-being

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social costs

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expenditures needed to compensate society for resources used so that its utility level is maintained

5 components:
1)real-resource compliance costs
2) government regulatory costs
3)social welfare losses
4)transitional costs
5)indirect costs

(p.154)

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engineering approach

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estimates abatement expenditures based on least-cost available technology

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survey approach

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polls a sample of firms and public facilities to obtain estimated abatement expenditures