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Chapter 2 Economics and Environmental Policy
How can we best balance our own interests and needs with the health of the
Lesson 1: Economics (pages 35- 41)
Guiding Question: How is sustainability affected by economics?
Vocabulary: Know the definitions of each term.
 Economics – the study of how resources are converted into products&
services & how those products & services are distributed and used.
 Supply – the amount of a product or service offered for sale at a given
 Demand – the amount of a product or service people will buy at a given
price if free to do so.
 Cost-benefit analysis – a method in which decision-makers compare
what will be sacrificed and gained by taking a specific action.
 Ecological economics – the field of economics that recognizes the
relationships between ecosystems and economic systems.
 Environmental economics – the field of economics that links
environmental and economic costs.
 Non-market value – the value that is not included in the price of a
product or service
 Market failure – a situation in which a free economy, operating on its
own, does not distribute resources fairly
 Ecolabeling – a labeling system that tells consumers which brands are
made with processes that do not harm the environment.
A. What is Economics? (p.36) Guided Reading:
1. What does economics have a lot to do with? Has a lot to do with human
behavior and how people interact with nature.
2. What are goods? services? Goods – manufactured materials
Services – work done for others as a form of business.
3. List and briefly describe three types of economies.
a. centrally planned – government decides what is made, how, & who.
b. free market – individuals decide
c. mixed economy – both government & individuals decide
4. What is the expected outcome of the relationship between supply and
demand? Equilibrium is reached when the amount produced = the demand.
5. What is the goal of a cost-benefit analysis? Compares what is sacrificed
& gained by a specific action.
B. Economics and the Environment (p. 37) Guided reading:
6. What are natural resources? Give examples cited. Substances & forces
people need to survive. Ex: sun, H2O, trees, rocks and fossil fuels
7. What happens to a vacation destination when a local sewage
treatment facility can’t keep up with the waste generated? Waste pollutes
H2O, swimming is closed, no tourists, businesses suffer.
8. Describe four assumptions traditionally made in economics that can
negatively effect the environment.
a. Internal costs & benefits – consider external
b. Short-term effects – watch environment
c. Endless resources – do not run out, need to replant
d. Growth – needs to be sustainable
C. Economics and Sustainability (p. 39) Need to consider conserving
resources & reducing harm to the environment.
9. What is the new trend in economics regarding the environment? Need to
consider conserving resources and reducing harm to the environment.
10. What do many ecological economists advocate? Economies that don’t grow
or shrink but are stable and sustainable.
11. Name three non-market values. Aesthetic, cultural, scientific
12. When smokestacks from factories emit harmful chemicals that harm trees
and pollute water sources what has occurred? Market failure
13. What are two benefits achieved by operating a business in an
environmentally sustainable way? Make money and improve your image
Lesson 2: United States Environmental Policy (pages 42-47)
Guiding Question: How do environmental policies protect the environment?
Vocabulary: Know the definitions of each term.
 Policy – a formal set of general plans & principles that guides problem
solving & decision making in specific instances.
 Environmental policy – a general plan & principle related to the
interactions between humans and the environment.
 Environmental Impact Statement (EIS) – a description of the effects a
proposed project will have on the environment, such as a new dam or
A. What is Environmental Policy? (p.42) Guided Reading:
14. What is the aim of modern day environmental policy? Protect
environment, our natural resources
15. The three branches of our government are listed below. Include what
each is made up of.
Legislative Branch
Executive Branch
A law is proposed to
Congress – House of
Representatives & Senate).
If both Houses pass, it goes
on to the President.
If President approves it
becomes enacted. If vetoed,
it is rejected. Enacted
legislation becomes law.
Judicial Branch
Supreme Court and lower
courts interpret laws
B. History of U.S. Environmental Policy (p. 44) Guided Reading:
16. Laws making up U.S. environmental policy can be divided into three
periods. List them and give a brief description.
 1st – 1780’s – 1800’s laws to manage public lands
 2nd – late 1800’s – mid 1900’s laws to reduce environmental problems
 3rd – mid to late 1900’s technology era EPA
17. Who is Rachel Carson and what was her contribution to environmental
science? Wrote Silent Spring – brought attention to DDT, pesticides and
health effects
C. Modern U.S. Environmental Policy (p. 46) Guided reading:
18. What improvements have occurred due to environmental policies
enacted in the late twentieth century? 1977 – Clean H2O Act, Environmental
Impact Statement
19. When was the first Earth Day? What do you think is its intent? April 22,
20. What is the EPA and its responsibilities? Regulating H2O, air and solid
wastes, conduct and evaluate research, monitor the environment, and enforce
quality standards.
21. What is the purpose of the Clean Water Act? Clean H2O Act 1972 –
regulate the discharge of wastes especially from industry into rivers. It
protects wildlife and grants permits to discharge pollutants on a limited basis.
22. Why did so many major environmental advances occur in the ‘60’s and
70’s? Public opinion – evidence of environmental problems. Political climate
was supportive.
23. When did the backlash against these environmental policies occur and
why? 1980’s – many felt laws put too much of an economic burden on
24. What problems are now leading the U.S. and other nations to a new era of
environmental policy? Global warming and climate change
25. What is the new focus of our government in relation to environmental
issues? Cleaning up toxic chemicals, achieving sustainability, conserve energy,
develop renewable energy, and reduce carbon emissions
Lesson 3: International Environmental Policy and Approaches (p. 48-55)
Guiding Question: How can governments work with each other and citizens
to form sound environmental policy?
Vocabulary: Know the definitions of each term.
 Command-and-control approach – government sets rules and threatens
punishment for violations
 Subsidy – governments give cash or public resources to encourage
something or lower the price. May be a tax break for environmentally
friendly practices.
 Green tax – taxes imposed on companies that harm the environment
 Cap-and-trade – A government decides on an acceptable amount of
pollution a factory can emit. If a factory is efficient and pollutes less it
can trade (sell) some of its permits to another factory that pollutes more.
 Lobbying – trying to influence an elected official to support your
A. International Environmental Policy? (p.48) Guided Reading:
26. What is meant by the statement “environmental problems are not
restricted to the national borders drawn on maps”? Cite examples from the
reading. Laws of one nation have no weight in another. Ex: Tijuana River, air
pollution carried by winds, migrating animals.
27. What is the purpose of the United Nations? Helps to shape
international environmental policy, promote peace, and solve economic, social,
cultural & humanitarian problems.
28. What is the main objective of the European Union? Promote Europe’s
economic & social progress. Produce current environmental data & analyze to
guide policy.
29. What does the World Trade Organization promote? Promotes free
trade, can impose monetary penalties on nations not complying. Ex: cleaner
burning gasoline in US cities required by EPA. Brazil & Venezuela said rules
discriminated against their petroleum products so EPA caved.
B. Approaches to Environmental Policy? (p.50) Guided Reading:
29. Why might a business or individual be given a tax break by the
government? If they participate in ecofriendly actions by reducing emissions.
30. List some examples of local incentives. Financial, may charge residents
for waste disposal, give rebates for water efficient toilets & other appliances.
C. The Environmental Policy Process (p.53) Guided Reading:
31. Outline the six steps of the process given.
 Identify the problem
 Identify causes of the problem
 Generate a solution
 Get organized
 Gain access to influential people – lobby
32. Is there anything you can do to contribute?