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Environmental Quality Is A Choice

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Economic Concepts Environmental Context
Opportunity Cost
Scarcity
Choice
Cost
Cost/Benefit Analysis
Trade-Off

National Content Standards Addressed:

Standard 1: Productive resources are limited. Therefore, people cannot have all the goods and services they want. As a result, they must choose some things and give up others.

Standard 3: Different methods can be used to allocate goods and services. People acting individually or collectively through government must choose which methods to use to allocate different kids of goods and services.

Key Points

  1. Economic analysis of issues begins with the acknowledgement of scarcity.
    • Human wants and needs are unlimited and the resources to satisfy those wants and needs are limited and have alternative uses.
      • The relative scarcity of any resource is a reflection of the demand and availability of the resource in a given time and place, not of its absolute (known or estimated) quantity.
      • Anything with more than one valuable use is considered scarce.
    • Scarcity forces people to choose.
      • Economics assumes that humans make rational choices. They will select the alternative that they perceive to have the greatest excess of benefits over costs.
      • People’s choices about the environment are rational choices, based on their perceptions of the costs and benefits of the alternatives they face.
      • Organizations, governments, and societies don’t choose. People choose.
    • Environmental context example
      • The relative scarcity of any resource is a reflection of the demand and availability of the resource in a given time and place, not of its absolute (known or estimated) quantity.
  2. There are no costless choices.
    • All choices, including those dealing with the environment, bear opportunity costs.
    • Choosing to use resources in a particular way means accepting the opportunity cost – the benefits associated with the “next-best” alternative use that was not selected.
  3. Resource management decisions are made by people, acting individually or in groups.
    • People value things, including environmental amenities, differently.
    • People’s values influence their willingness to accept opportunity costs, and therefore, influence their choices about resource use.
    • Environmental context example
  4. Conclusion: The environment is an economic good.
    • It is scarce.
    • People’s choices about the environment impose opportunity costs.
    • People’s choices about the environment are rational.
    • (Bridge to next lesson) People respond to incentives in making choices about the environment.

Activity: “Site Selection – A Land-Use Simulation” (Will be conducted Day 2, morning session.)