EC238 Chapter 5: Chapter 5
Chapter 5 – The Economics of Environmental Quality
Pollution damage – refers to all of the negative impacts that users of the environment experience as a
result of the degradation of that environment
Damage Function – shows the relationship between the quantity of a waste product and the value of its
damages
Emission damage functions – relationship between the wastes from a particular source and the
resulting damages to the environment
Ambient damage functions – shows how damages are related to the concentration of a waste
product contained in the ambient environment
Marginal damage functions – show the change in damages stemming from a unit change in
emissions or ambient concentration
Total damages – the total amount o damage at each possible emission level
Defensive expenditures – to protect themselves against pollution, e.g. heavier insulation to protect
against noise
Abatement Costs – the costs of reducing the quantity of residuals being emitted into the environment or
of lowering ambient concentrations
Equimarginal Principle – MAC = MD
NOTES
Marginal Damage Cost = Whole area under curve, up to the quantity you want
Marginal Abatement Cost = Area on the right of the quantity line, is the cost
Total Social Cost = Total Damage Cost + Total Abatement Cost
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Document Summary
Chapter 5 the economics of environmental quality. Pollution damage refers to all of the negative impacts that users of the environment experience as a result of the degradation of that environment. Damage function shows the relationship between the quantity of a waste product and the value of its damages. Emission damage functions relationship between the wastes from a particular source and the resulting damages to the environment. Ambient damage functions shows how damages are related to the concentration of a waste product contained in the ambient environment. Marginal damage functions show the change in damages stemming from a unit change in emissions or ambient concentration. Total damages the total amount o damage at each possible emission level. Defensive expenditures to protect themselves against pollution, e. g. heavier insulation to protect against noise. Abatement costs the costs of reducing the quantity of residuals being emitted into the environment or of lowering ambient concentrations.
