1. Feedback Loop, negative and positive feedback loops
2. Environment as an Asset
3. Closed and Open Systems
4. First Law of Thermodynamics
5. Entropy Law (2^nd law)
6. Static Efficiency
7. Dynamic Efficiency
8. Consumer and Producer Surplus
9. Pareto Optimality
10. Pareto Superiority
11. Present Value
12. Expected Value
13. Social Rate of Time Preference (Social Discount Rate)
14. Social Opportunity Cost of Capital
15. Marginal Private Costs
16. Marginal Private Benefits
17. Marginal Social Costs
18. Marginal Social Benefits
19. Marginal External Costs
20. Marginal External Benefits
21. Property Rights
22. Universality
23. Exclusivity
24. Transferability
25. Enforceability
26. Scarcity Rent
27. Externalities, positive and negative, pecuniary and non-pecuniary, marginal and inframarginal
28. Common Property
29. Res nullius property rights regimes
30. Public Goods
31. Nonexcludability
32. Free-Rider Problem
33. Indivisible Consumption (same as Collective Consumption)
34. Rent Seeking
35. Rational Abstention
36. Rational Ignorance
37. Liability Rules
38. Coase Theorem
39. Transactions Costs
40. Benefit-Cost Analysis
41. Maximum Net-Present Value Criterion
42. Benefit-Cost Ratio Criterion
43. Positive Net-Present Value Criterion
44. Contingent Valuation
45. Measuring Recreation Demand
46. Strategic Bias, Information Bias, Hypothetical Bias
47. Housing Market Studies of Pollution Damage
48. Labor Market Studies of Pollution Damage
49. Nonuse value
50. Survey Method of Cost Estimation
51. Engineering Method of Cost Estimation
52. Cost-Effectiveness Analysis
53. Impact Analysis
54. All-or-Nothing Demand Curve
55. Welfare Loss Triangle

1. Contrast the basic Pessimist model (Forrester and Meadows, Limits to Growth) with that of the basic Optimist model of Julian Simon (The Ultimate Resource). What are the main feedback mechanisms in each that "drive" the different conclusions? That is, what are the differences in the fundamental assumptions that lead to different conclusions? What are the strengths and weaknesses in each side?

2. Even though the law of conservation of matter and energy suggest that mineral and energy are not lost, the entropy law is less comforting. Explain. Does it equally apply to matter as it does to energy?

3. Why does equality of demand and marginal cost imply static efficiency?

4. How is dynamic efficiency related to sustainability?

5. What are the elements of an efficient property rights structure? Why is each element important for efficiency?

6. Consider Coase's point that if transaction costs are zero, it does not matter if:

a. the polluter has the right to pollute and the "pollutee" must compensate the polluter to get him to reduce emissions

b. the potential "pollutee" has the right to clean air and water and the polluter must compensate the "pollutee" for any violation of those rights.

7. With significant transaction costs, it does matter. Under high transaction costs liability rules apply instead of property rules. Why?

8. Market failure is largely a matter of inefficient property rights. How does an inefficient property rights structure lead to government failure? Why is government production by public agency a source of government failure?

9. Why is environmental clean-up a public good?

10. What is the purpose behind cost-benefit analysis? How is policy fine-tuned with respect to the maximum net-present- value criterion?

11. What are some of the difficulties in measuring benefits? What are the problems in using the contingent-valuation method? Why might housing studies and labor market studies provide a better way of measuring benefits than the contingent-valuation method? What is the difficulty in measuring the benefits of non-use?

12. What are some of the difficulties in measuring costs? Why are the results of pure survey methods of cost estimation suspect? Pure engineering methods? How does a combined approach help clear up these difficulties?

13. Why does the choice of the discount rate matter so much?

14. What are some reasons to be suspicious about making environmental policy solely on the outcome of cost-benefit analysis? Why might cost-effectiveness analysis provide a suitable alternative to cost-benefit analysis to gain efficiency in environmental policy in light of the difficulties of cost-benefit analysis?