Exam 8: Frameworks for Assessing the Worthiness of Environmental Projects

Figure 8B -Refer to Figure 8B. Suppose point N on the production possibility frontier represents the status quo. Recently, a relaxation of environmental standards allows a country to move to point K. Which of the following best described the results from this move?

The use of a very high positive discount rate indicates that the project under consideration is very important.

If a CBA has a cost-to-benefit ratio of 1.5, then…

The advantage of a CBA is that it carries no subjectivity.

A new pollution regulation allows for an interest subsidy to firms that borrow funds to Install pollution control devices. Thus, borrowing costs are zero for the firms. In addition, the new regulation also allows for a waiver in the sales tax to firms that purchase Pollution control devices. In his calculation, should an economist include sales tax and interest cost in the cost of the regulation?

Despite scientific uncertainty about the outcomes of future damages, the precautionary principles can and should be the optimal course of action.

Any Pareto improvement implies that no one is made worse off.

The rate at which future money is discounted in a cost-benefit analysis is referred to as The…

The procedure of converting future benefits to their present values is called…

Waste facilities are often located in communities that have high percentages of poor, elderly, young and minority residents.

Which best describes the decision criterion for implementing either a private or public Project?

Given that cost-effectiveness analysis (CEA) deals with least-cost method of achieving a stated environmental goal, it is assumed that the benefits are not important.

When the time horizon of a project under consideration is fairly long, the difference between private and social discount rates that are within the range of 3 to 5 percent makes an important different.

If a decrease in the price of natural gas leads to a decline in coal use for electricity generation, one would refer to this as secondary effect.

Figure 8A -Refer to Figure 8A. In a CBA, the objective is to move from state B to state C implies which of the following?

There seems to be a reverse in the trend of companies from developed nations preferring to locate parts of their industrial operations in pollution havens.

As part of a CBA, risk should…

In general, the social discount rate is lower than the private discount rate.

When noting the location of waste sites and other noxious facilities, one can clearly see that they are randomly located.

The fundamental welfare criterion of CBA is based on "potential" Pareto improvement.