1.  What is economics? The study of scarcity, incentives, and choices.  Economics Models Simplified characterizations of reality that help to highlight and understand the main concepts Examples  Market Equilibrium  Marginal Cost/Marginal Benefit Analysis  Optimization (Profit Max., Utility Max.)

2. Price of Good Y Quantity of Good Y Shut Down Price Average Cost Marginal Cost P* Q*

3. Price of Good Y Quantity of Good Y Shut Down Price Average Cost Marginal Cost/Supply

4. Price of Good Quantity of Good

5. Quantity of Good Y Quantity of Good X Budget Constraint Equilibrium Quantity of Good X Equilibrium Quantity of Good Y Indifference Curves

6. Price of Good Quantity of Good

7. Price of Good Quantity of Good Supply Demand Equilibrium Price Equilibrium Quantity

8. Marginal Cost/ Marginal Benefit Time spent studying Marginal Cost Marginal Benefit Equilibrium Time spent studying 1 hr 2 hr

9.  Other fields of economics Health economics Financial economics International trade Industrial organization Behavioral economics  What is environmental and natural resource economics? The study of scarcity, incentives, and choices as it relates to the environment and natural resources.

10.  When do markets “fail”?  Why do markets “fail”?  How can efficiency in markets be improved?

11.  Negative Externalities - is an action of a product on consumers that imposes a negative side effect on a third party.  Examples,  What can the government do about market failure?  How can government policy “fail”?

12.  What is the optimal use of a resource? Applications  Fisheries (optimal catch-rate)  Forests (optimal harvest)  Renewable vs. Depletable (defining)  Depletable Resources (optimal extraction)  When to transition from depletable to renewable  Recycling vs. Waste Disposal (optimal waste)  Water (optimal use)

13.  How to we value the environment?  What is “value”?  How we measure our value of the environment?

14.  Why study natural resource economics? The Self-Extinction Premise  A society can germinate the seeds to it’s own destruction. Examples  Easter Island – Reliance and overuse of trees led to downfall  Mayan civilization – Pop. Growth > Food Supply

15.  Malthusian view – Pop. Growth can’t keep up with our use of… Oil, fish, forests, fresh water, clean air  Resources are scarce, but we will find substitutes or innovation will lead to more efficient use of the resource – “necessity is the mother of invention

16.  Ways to address this premise Use economic models to understand  scarcity of natural resources,  the incentives of the people using and needing that resource,  the choices individuals. The models can inform public policies regarding the environment.  Supply, Demand, and the Market (Price Controls, Quotas)  Cost/Benefit Analysis (social vs. private)  Dynamic Optimization (Optimal Allocation of Resource use over time: Dams, Fisheries, Forests)

17.  Common Goods – rivalrous, non- excludable  Public Goods – non-rivalrous, non- excludable

18.  Natural Resource – resources that occur in a natural state and are valuable for economic activity Exhaustible, depletable, non-renewable resources  Resources that are fixed in amount of the resource which may be used up over time.  Examples, Renewable resources  Resources that can be regenerated over time.  Examples,

19.  Resource Stock Resources that are fixed in amount  Resource Flows Resources that do not exist as a stock, are not regenerative, provide a never ending flow of services. Examples,