Question 1

The purpose for creating a tradable emission credit system is to substitute the
 market for pollution rights.

Accepted Answer

False

Question 2

A system of transferable credits operates on the basis that there is a legally
 sanctioned right to pollute.

Accepted Answer

A system of transferable credits allows companies to buy or sell permits to pollute within a certain limit set by the government. This implies a legally sanctioned right to pollute within those limits.

Question 3

Transferable credits work better when the number of parties involved in the
 exchange of credit are limited or capped.

Accepted Answer

Transferable credits are designed to facilitate flexibility and efficiency in transactions, and limiting the number of parties could restrict these benefits, making the system less effective.

Question 4

A bubble policy is generally used by a firm that has only one source of pollution
 so that it remains in compliance with a set emission standard.

Accepted Answer

A bubble policy is generally used when a firm has multiple sources of pollution, and it allows the firm to comply with emissions standards by treating all sources as a single entity or "bubble."

Question 5

The benefit of pooling together all of a firm's emissions as one source is that the
 firm does not need to meet standards for each source.

Accepted Answer

By pooling together all emissions as one source, the firm only needs to meet the overall emissions standards rather than individual standards for each source.

Question 6

The banking policy allows firms to use their initial credit allotment over time.

Accepted Answer

The statement is true. The banking policy allows firms to use their initial credit allotment over time, often with interest being charged on the outstanding balance. This allows businesses to have access to necessary funds while managing their cash flow.

Question 7

The offset policy is used can only be used when the level of a given pollutant
 exceeds the level permitted by the federal standards.

Accepted Answer

The offset policy is a regulatory strategy used to manage air pollution by requiring new or modified industrial sources in areas that do not meet air quality standards to offset their emissions by reducing emissions from existing sources, not solely when pollution levels exceed federal standards.

Question 8

There has been considerable resistance in the application of emission trading
 program particularly in the member states of the European Union (EU) and some Latin American countries.

Accepted Answer

The answer of There has been considerable resistance in the...

Question 9

In the presence of uncertainty, when control costs that are higher than expected, a
 regulatory scheme based on transferable pollution credits can result in a cleanup
 costing more than the socially optimal level.

Accepted Answer

In a regulatory scheme based on transferable pollution credits, firms that can reduce pollution more efficiently are able to sell their credits to others who may find it more expensive to achieve the same level of pollution reduction. However, if the control costs turn out to be higher than expected, the price of these credits increases, ultimately resulting in a cleanup that costs more than the socially optimal level. This is because the market price of the credits may not reflect the true cost of pollution reduction, leading to less efficient outcomes.

Question 10

Hot-spots are any areas that contain high local concentration of any pollutant.

Accepted Answer

Hot-spots are indeed areas that have high concentrations of pollutants, making them potentially hazardous to human health and the environment.

Question 11

In the United States, the acid rain program (ARP), was established under Title IV
 of the 2009 Clean Air Act Amendment which requires major emission reduction
 of sulfur dioxide (SO2) and nitrogen oxide (nox).

Accepted Answer

The Acid Rain Program (ARP) was established under Title IV of the 1990 Clean Air Act Amendments, not the 2009 amendment, to reduce emissions of sulfur dioxide (SO2) and nitrogen oxides (NOx), the primary causes of acid rain.

Question 12

Although not a human health issue, the accumulation over time of sulfur dioxide
 (SO2) and acid rain depositions on lakes, streams, and forests are believed to
 cause substantial damage to aquatic organisms and trees.

Accepted Answer

The answer of Although not a human health issue, the...

Question 13

Most findings since the 1980s show that environmental regulations have actually
 contributed to productivity slow-downs in the US and other countries.

Accepted Answer

This statement is not accurate. While some studies have found a negative correlation between environmental regulations and productivity, there are also studies that have found positive effects or no significant effects. The impact of environmental regulations on productivity is complex and varies depending on factors such as industry and location. Therefore, it is not accurate to make a broad statement that environmental regulations have consistently led to productivity slow-downs.

Question 14

Strictly enforced environmental policy could, in effect, force firms to adopt
 efficient pollution abatement technology, which will lead to a competitive
 advantage in the long-term.

Accepted Answer

Strict environmental policies can incentivize firms to invest in more efficient and effective pollution control technologies in order to comply, leading to a potential competitive advantage over other firms that may not have adopted these technologies.

Question 15

Underestimation of the cost of environmental regulations remains a serious
 concern.

Accepted Answer

The concern is typically about overestimation, not underestimation, of the costs of environmental regulations.

Question 16

Which one of the following statements about a system of tradable carbon permits is false?

Accepted Answer

A carbon permit system would not necessarily require each country to meet their emissions targets, but it would create a financial incentive for countries to do so. If a country is unable to meet its target, it could purchase permits from other countries, allowing it to emit more than its target. However, there may be penalties or consequences for failing to meet emissions targets in some systems.

Question 17

Which of the following is true about the first large-scale use of tradable pollution credits in the United States?

Accepted Answer

The first large-scale use of tradable pollution credits in the United States was introduced with the passage of the 1990 Clean Air Act Amendments, which made use of market-based approaches. The credits were not primarily designed to reduce CO2 or CH4 emissions from power plants.

Question 18

Which of the following is a (are) characteristic(s) of the US acid rain program?

Accepted Answer

The US acid rain program has a total annual emissions goal set for the nation and limits individual electric utility plants by issuing a fixed number of tradable allowances on the basis of historical emissions.

Question 19

What does the empirical evidence, on the whole, concerning the relationships between environmental protection, the economy, and jobs reveal?

Accepted Answer

Empirical evidence shows that environmental regulations and protection can actually create jobs and stimulate economic growth, contrary to the common belief that they are detrimental to the economy. This is especially evident in sectors such as renewable energy, green technologies, and sustainable agriculture. Studies have also shown that environmental regulations have a relatively small impact on overall employment levels and that any potential job losses are offset by gains in other industries.

Question 20

What is the basis for the Porter Hypothesis?

Accepted Answer

The answer of What is the basis for the Porter...

Quiz 6: The Economics of Environmental Regulation Ii: Transferable Emission Credits, and the Macroeconomic Effects of Environmental Regulation

The purpose for creating a tradable emission credit system is to substitute the market for pollution rights.

A system of transferable credits operates on the basis that there is a legally sanctioned right to pollute.

Transferable credits work better when the number of parties involved in the exchange of credit are limited or capped.

A bubble policy is generally used by a firm that has only one source of pollution so that it remains in compliance with a set emission standard.

The benefit of pooling together all of a firm's emissions as one source is that the firm does not need to meet standards for each source.

The banking policy allows firms to use their initial credit allotment over time.

The offset policy is used can only be used when the level of a given pollutant exceeds the level permitted by the federal standards.

There has been considerable resistance in the application of emission trading program particularly in the member states of the European Union (EU) and some Latin American countries.

In the presence of uncertainty, when control costs that are higher than expected, a regulatory scheme based on transferable pollution credits can result in a cleanup costing more than the socially optimal level.

Hot-spots are any areas that contain high local concentration of any pollutant.

In the United States, the acid rain program (ARP), was established under Title IV of the 2009 Clean Air Act Amendment which requires major emission reduction of sulfur dioxide (SO2) and nitrogen oxide (nox).

Although not a human health issue, the accumulation over time of sulfur dioxide (SO2) and acid rain depositions on lakes, streams, and forests are believed to cause substantial damage to aquatic organisms and trees.

Most findings since the 1980s show that environmental regulations have actually contributed to productivity slow-downs in the US and other countries.

Strictly enforced environmental policy could, in effect, force firms to adopt efficient pollution abatement technology, which will lead to a competitive advantage in the long-term.

Underestimation of the cost of environmental regulations remains a serious concern.

Which one of the following statements about a system of tradable carbon permits is false?

Which of the following is true about the first large-scale use of tradable pollution credits in the United States?

Which of the following is a (are) characteristic(s) of the US acid rain program?

What does the empirical evidence, on the whole, concerning the relationships between environmental protection, the economy, and jobs reveal?

What is the basis for the Porter Hypothesis?