Cracking the AP Environmental Science Exam, 2018 Edition by Princeton Review

Author:Princeton Review
Language: eng
Format: epub
Publisher: Random House Children's Books
Published: 2017-10-03T04:00:00+00:00

ECONOMICS AND RESOURCE UTILIZATION

The study of how people use limited resources to satisfy their wants and needs is called economics. As you can imagine, some of those needs are tangible (food and shelter are two examples), while others are intangible (the beauty of a forest and clean air are two examples). A resource can have both tangible and intangible properties.

A forest has value for supplying jobs and wood (tangible), as well as for its beauty and ability to remove CO2 from the air (intangible). When private citizens, governments, and corporations make a decision on how to use the forest, they must weigh the benefits (more jobs or lumber) against the cost of cutting down the trees (less recreation space, the loss of biodiversity, or decrease in CO2 removal). This process is called cost-benefit analysis. It may be easy to assign a monetary value to the tangible properties (like the amount of lumber in the forest), but how do you assign a monetary value to the intangible properties (like the beauty of a forest)? While cost-benefit analysis helps make decisions on how to use resources, you can see that the process is very difficult, and it can lead to different estimates by different groups.

Economists also want to figure out the cost of each step in a process. From our forest example, what is the cost to the economy of removing one more acre from the forest; or what is the benefit to us if we add one more acre to the forest? The additional costs are termed marginal costs; the added benefits are called marginal benefits. It is important to remember that resources are not free and unlimited. Some resources must be expended in order for us to use them. While we may benefit from more acres to hike in, the lumber company will suffer from not having as many trees to cut. In other words, marginal benefits and costs help us understand tradeoffs. By preserving a forest, we trade more hiking space with less profit for local economies.

As we use resources, there are often unwanted or unanticipated consequences of our using those resources, or externalities. These can be positive, when the result is good, and negative, when the result is bad for the environment. Consider buying an air conditioner, for example. When you buy the A.C. there are costs—you pay for the labor, raw materials and electricity to run it. After you buy the A.C., the dealer uses some of that money to pay employees to clean up litter on a highway. That cleanup benefits everyone (positive externalities), even those who do not buy the air conditioner. On the other hand, there are also negative externalities. If you run the A.C. a lot (perhaps during the day), you use a lot of electricity (and you can see just how much more when your electric bill spikes in the summertime). That electricity is generated by burning coal, and that causes acid rain. The damage done by the acid rain harms everyone—a negative externality.

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