Environmental Economics Quiz CBA & Valuation

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Which of the following are characteristic of Cost Benefit Analysis?

• Quantifying the life cycle costs and benefits of competing alternative approaches.

• Comparing the benefits and costs to society of policies, programmes, projects or actions to protect or restore the environment.

• Determining the net gains or net losses from undertaking certain actions & determines the best alternative or action to be undertaken

For a project to qualify on cost-benefit grounds,

• benefits must exceed costs

• cost must exceed benefits

• benefits equal exceed costs

• costs must at least exceed benefits

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Which of the following must be done when finalizing cost-benefit estimates:

• Present value determination

• Adjustment for inflation

• Consider the political party in power

• Get more data

Why is discounting important in cost-benefit models?

• People care about the present more & prefer to receive benefits earlier.

• People care about the present more & prefer to receive benefits later.

• People care less about the present & prefer to receive benefits later.

• People care more about the future and prefer to receive later.

How much money would you be willing to pay each year to achieve a 50% reduction in the pollution level of Kingston Harbour?

The economic value of a good is measured by

• the maximum you are willing to give up to obtain a good

• the minimum you are willing to give up to obtain a good

• the amount you can get as a free rider

• its market price

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The difficulty with valuing environmental services is that

• many environmental amenities are public goods

• there is no market for them because it is impossible to exclude people from consuming

• there is no price for them

• they are highly valued services

The Great Morass Wetland in St. Thomas has suddenly disappeared. As a result, the National Environmental Planning Agency has decided to put in place a wastewater treatment plant. Which of the following valuation methods applies to this scenario?

• Replacement cost method

• Damage cost avoided method

• Mitigation cost method

• Travel cost method

A revealed preference approach focuses on preferences through choices made by economic agents. The valuation techniques associated with this approach are the:

• travel cost and hedonic pricing methods

• preference replacement and damage assessment methods

• restoration and travel cost methods

• hedonic pricing and preference replacement methods

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Limitations of the direct market valuation approach include the fact that:

• markets do not really exist for ecosystem services.

• inferred ecosystem values may understate the true value to society.

• lack of data is not a problem.

• interactions across ecosystem services increases likelihood of double counting.