Environmental economics and policy

University of Padova – Bachelor’s in Economics

ENVIRONMENTAL ECONOMICS AND POLICY

Final assessment: September 1 , 2023 SOLUZIONI

st

 Duration of the exam: 50 minutes

 16 multiple-choice questions (correct answer 2 points; incorrect answer -0.25, no answer 0).

 Minimum total score (S) to get the credits: 18

Minimum total score to give the (optional) oral exam 2

 5

 Score/Grade/Rounding: examples: if S= 23.25, grade 23; if 23.5, grade 24; if S= 24.5, grade 25, but

you will not be admitted to the oral exam; if S=32, grade (without oral exam) 30. Cum laude granted only

to students getting a total (written + oral) score of 33

Name: _____________________________________

Surname: _____________________________________

ID UNIPD: _____________________________________

TIK YOUR ANSWER

1. The hedonic price method

a. Consists of directly asking individuals (through questionnaires) the value they attach to

preserve/improve a natural resource/environmental quality.

b. Exploits the market value of an environmental resource to assess its economic value.

c. Tries to measure the value of non-marketable environmental goods (e.g., visual amenities) as a

measurable component (characteristic) of marketed goods.

d. None of the previous statements is true.

e. I wish not to answer this question

2. Municipal infrastructures (e.g. dams) designed to protect urban areas from floods due to sea-level

rise and/or to the increased frequency of extreme weather events can be classified as

a. a common-property good

b. a local public good

c. a mitigation measure towards climate change

d. None of the previous statements is true

e. I wish not to answer this question 1

3. In 2022, a total amount of carbon dioxide (CO ) emissions equal to 100 tons was produced in country ALFA.

2

In 2023 the Government intends to reduce the total amount of emissions by X%. Emissions are generated

only by two firms (A and B) which, in 2022, emitted an identical volume of C0 . Total abatement cost

2 Q

functions (known by the Government) are: TC (Q )= 2Q ; TC (Q )= Q where are tons of CO

A2 B2 , ,,

A A B B 2

i

abated by firm i (i=A,B). Given the total abatement objective, the Government finds that it would be cost-

effective to push A to reduce emissions by 10 tons and to push B to reduce emissions by 20 tons. The

Government decides to rely on a cost-effective emission tax.

a. The tax rate (euro amount per ton emitted) should be set equal to 30 euro.

b. The tax (cost-effective tax rate) will generate a total revenue to the Government of 2,800 euro.

c. The tax (cost-effective tax rate) will generate a total revenue to the Government of 1,200 euro.

d. None of the previous statements is true.

e. I wish not to answer this question.

4. Consider the same situation described in the previous question (same total abatement goal; same

individual abatement cost functions)). Suppose the Government is considering the following alternative

policy instruments: (i) command-and-control regulation, through uniform performance standards; (ii) taxation

(by using a cost-effective tax rate); (iii) emissions trading (cap-and-trade, where allowances are initially

grandfathered free of charge)

a. Under cap-and-trade, each firm will initially receive allowances corresponding to 50 tons

b. Both firms would prefer to be taxed rather than being regulated through uniform performance standards

or cap-and-trade

c. Both firms would prefer to be taxed rather than being regulated through uniform performance standards

d. None of the previous statements is true.

e. I wish not to answer this question

5. A river is polluted by one or more agents; pollution does not negatively affect the polluter (s). Consider three

alternative situations: (A) there are several victims of pollution and is just one polluter, (B) there are several

polluters and one victim of pollution, (C) there are several polluters and several victims of pollution. A

“private solution” to the externality problem (i.e., through parties’ bargaining, without government

intervention) is more likely to occur …

a. In case (A) than in case (B) and (C)

b. In case (B) than in case (A) and (C)

c. In case (C) than in case (A) and (B)

d. I wish not to answer this question.

6. In studying individual attitudes towards environmental issues, the literature has identified several cognitive

biases, including so-called “confirmation bias” (CB)

a. CB describes the ability to efficiently exploit available scientific evidence

b. CB describes the tendency to give more weight to the event-specific information than we should, and

ignore general prevalence

c. CB describes the tendency to interpret and recall information that support one’s prior beliefs

d. None of the previous statements is correct

e. I wish not to answer this question 2

7.The Social Cost of Carbon (SCC) measures

a. The monetary present value of the net damages imposed by rich countries on poor countries by the use

of an additional unit of energy.

b. The monetary present value imposed to poor countries by the release, in developed economies, of one

additional ton of carbon-dioxide

c. The monetary present value of the net damage on the society (developed and developing economies)

imposed by the increase of 1 º Celsius in average global temperature.

d. None of the previous statements is correct

e. I wish not to answer this question

8. According to recent cross-country evidence on climate concern and support for action (e.g.,

Dechelezprêtre et al. (2022)):

a. High-income countries have lower shares of concern but higher share of support for action.

b. Low-income countries have higher shares of concern but lower share of support for action.

c. Both high- and middle-income countries have a higher share of individual concern than support for

action.

d. None of the previous statements is correct.

e. I wish not to answer this question.

9. During the last decades (1990-2019)

a. The carbon intensity of GDP has fallen in the European Union but has slightly increased in emerging

countries like China and India

b. In China the increase of carbon emissions is mostly explained by the increase of the energy intensity of

GDP

c. Thanks to the decline of both the energy intensity of GDP and the carbon intensity of energy, China,

despite strong economic growth, has attained an absolute decoupling between carbon emissions and

GDP.

d. None of the previous statements is true.

e. I wish not to answer this question.

10. A cost-effective command-and-control regulation based on performance standards requires

a. imposing more stringent abatement requirements on polluters with high abatement costs

b. equalising polluters’ marginal abatement costs

c. equalizing polluters’ abatement levels

d. None of the previous statement is true

e. I wish not to answer this question

11. Forestlands provide several benefits, including recreation opportunities. Suppose recreation activities (e.g.,

hiking, camping) do not harm other (potential) visitors. These opportunities can be regarded as a source of:

a. functional values

b. non-values

c. existence values

d. None o