Chapter 20: Sustainable Development
Chapter Learning Objectives
After reading the chapter, you ought to understand and be able to explain:
- The problems caused by open access to common resources.
- How external diseconomies distort market outcomes.
- The concept of resource rent.
- The implications of the rule for optimizing the harvest of a renewable resource and the rule for optimal depletion of a nonrenewable resource.
- How secure, long-term, transferable property rights can reduce the market failures that cause overexploitation of natural resources.
- The information requirements for regulating externalities efficiently.
- How taxes or marketable permits (rights to pollute) can internalize external costs and lead to an efficient market outcome for natural resources.
- How government interventions and policy failures have contributed to the wasteful use of resources.
- How national accounts can be adjusted to incorporate the depletion of natural capital.
- The neoclassical analysis of how markets respond to scarcity, and its implications for global sustainability of development.
- Why widespread poverty is a threat to the global environment, and economic development is part of the solution. 12. How rich nations and poor nations differ with regard to global resource management, so room exists for a bargain that can benefit all nations.
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NOTE TO INSTRUCTORS: the answers to the Exercises are found on the Norton Resource Library, not the Gradebook. To access that go to www.wwnorton.com/nrl.