Economic Analysis of an Environmental Pollution Term Paper

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Economic Analysis of an Environmental Pollution Issue in the World Today

Cap & Trade, and Carbon Dioxide

What is cap and trade?

Why is it supposed to work

Speaker's notes: 'Cap and trade' is a technique to reduce emissions by 'capping' the amount of a pollutant that can be released into the atmosphere. These limits are then divided up amongst the polluters by the government. However, the polluters can 'trade' these limits amongst themselves. For example, a very clean company can sell its carbon credits to a dirty company (Chapter 7: 3). Unlike a carbon tax, this discourages producers from simply continuing to use fossil fuels, raising their prices, and passing on the additional expenses to the consumer (Chapter 7:3-4).

Slide 2: The downside to cap & trade

Heavy polluters may not reform their ways and may merely buy additional credits from companies that are already clean

The 'cap' system effectively functions as a tax

Speaker's notes: However, 'cap and trade' is not without its critics. Wealthy companies that benefit from polluting may simply trade their credits to companies that are already clean, resulting in no net benefit to the environment. If companies' costs go up due to having to buy credits, just as with a carbon tax they will likely increase prices rather than substantively decrease their use of fossil fuels. This is why economic analysis is so important -- whether cap and trade works in terms of how much it 'costs' businesses to be sustainable or continue to pollute the environment must be established and the costs of not being green must outweigh the financial benefits of simply acquiring more leeway to pollute.

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Q1. Compare and contrast primary and secondary succession. Support your reasoning with examples

Human beings are constantly changing the environment, and the environment is also constantly changing (Chapter 1: 34). For example, primary succession occurs after a major disaster or event completely wipes out an ecosystem. For example, after the eruption of the volcano at Pompeii, the existing vegetation and plant life was eradicated. Gradually, new life began to develop, but because of the major changes to the ecosystem, the new forms of life were profoundly different entities than what had existed before. A similar eradication can occur after a man-made event, such as a bombing of an area that razes it completely. In contrast, secondary succession occurs when smaller alterations to the ecosystem have occurred that are not nearly as catastrophic. After Hurricane Sandy hit the Jersey Shore, there was massive damage, but the flooding of the sea water did not cause a complete and total change of the fundamental nature of the seafront. There was still fundamentally a link between before and after, in terms of the life in the area, even though like a primary event, a secondary event is still disruptive.

Q2. Compare and contrast advantages and disadvantages….....

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