1. Economics for Leaders Lesson 7: Property Rights Is the Environment Different?

2. Economics for Leaders

3. Commercial Salmon Fishing

4. Economics for Leaders Global Warming OR ???

5. Economics for Leaders Is environmental quality different, or is it like other goods and services? Question:

6. Economics for Leaders ERP #1: People choose, and individual choices are the source of social outcomes. Review: Is environmental quality scarce? (Does it use resources?)

7. Economics for Leaders ERP #2: Choices impose costs; people receive benefits and incur costs when they make decisions. Review: Do decisions about the environment have opportunity costs?

8. Economics for Leaders ERP #3: People respond to incentives in predictable ways. Review: Do people’s choices about environmental quality respond to incentives in predictable ways?

9. Economics for Leaders ERP #4: Institutions are the “rules of the game” that influence choices. Review: Are the incentives that influence people’s choices about environmental quality shaped by the “rules of the game?

10. Economics for Leaders ERP-5: Understanding based on knowledge and evidence imparts value to opinions. Is this true of opinions about the environment? Review:

11. Economics for Leaders Activity: The Fish Game

12. Economics for Leaders Is environmental quality different, or is it like other goods and services? YES! Question: But...

13. Economics for Leaders When Markets Work Well: There is An Exchange of Costs and Benefits But...

14. Economics for Leaders

17. Negative Externalities...... Costs... Costs that spill over onto people who don’t receive the benefits.

18. Economics for Leaders Positive Externalities... Benefits... Benefits that spill over to people who don’t bear the cost.

19. Economics for Leaders Positive ? Negative ? Might depend which way the wind blows !

20. Economics for Leaders The Tragedy of the Commons Out comes of common ownership “If everybody owns it, it’s as if nobody owns it.”

21. Economics for Leaders The options for eliminating or avoiding the externality are: Fines and laws Internalizing the cost (clean it up yourself) Moral persuasion Defining the property rights and paying the polluter not to pollute

22. Economics for Leaders How do we prevent negative externalities from occurring? Solution to externality problems lies in clearly defined property rights: Role for government: 1.Clear definition of property rights 2.Enforce property rights and secure them through the common law private tort law in which those who inflict harm on others must stop and make whole 3.Create an enabling legal framework in which property rights are marketable

23. Economics for Leaders How clean is clean enough? ???? Captain Planet Captain Planet, he's our hero Gonna take pollution down to zero He's our powers magnified And he's fighting on the planet's side Captain Planet, he's our hero Gonna take pollution down to zero Marginal analysis ? Idiot!

24. Economics for Leaders “Clean Up Your Room Before You Can Go Out!” What will you do: 15 min Etc.

25. Economics for Leaders How clean is clean enough? MC=MB

26. Economics for Leaders Marginal Analysis / Opportunity Cost “ EPA cleanups of superfund sites cost an average of $12 billion for every cancer case prevented.” “Super Fund Follies” Dec., 1999

27. Economics for Leaders