Follow the files to finish the guide questions, make sure some questions have *, you do not need to do it.and your answer needs to follow your questions.

EC230: Topics in Environmental Economics

Department of Economics, University of Vermont

Donna Ramirez Harrington

(djramire@uvm.edu)

GUIDE QUESTIONS

KOTCHEN

 https://www.gazettenet.com/UMass-researchers-list-country-s-top-water-air-greenhouse-gas-polluters-
27421770

 https://www.nytimes.com/2020/02/24/podcasts/the-daily/climate-
change.html?action=click&module=audio-series-bar&region=header&pgtype=Article

 https://podcasts.apple.com/us/podcast/money-talks-from-economist-radio/id420929545?i=1000451057926

From Alex:

This Changes Everything by Naomi Klein: it challenges the idea that the free market is the way to solve the negative

externalities of pollution. https://thischangeseverything.org/book/

To help you appreciate VIBAs, as weird and new as they sound, please read the short article and listen to the

podcasts to give you a flavor if how common the principles of VIBAs are. While the Kotchen paper teaches you

about broad topic of VIBAs, I will point out a wide array of potential term paper topics as we go along. You may be

able to think of several topics yourself as you read. (You may skip “Consequences of Green Goods, bottom of page

283 to top of 285)

Please submit typewritten answers to the questions below. Ignore those with *

1. Define the acronym VIBAs. What two (2) types of market failures are addressed by VIBAs? In your own
words, how exactly are VIBAs “market based” approaches? How do VIBAs affect decisions of producers and

consumers?

2. What are impure public goods and how is VIBA an impure public good? Make sure your answer touches on
the concepts of joint provision and bundling and characteristics approach

a. *Consumer side vs producer side
b. *Valuation: revealed preference approach

i. *Hedonic price approach
ii. *Travel cost approach

c. *Valuation: stated preference approach
3. How are VIBAs like “clubs”? In your answer make sure you define what are clubs in terms of rivalry and

excludability (as opposed to pure public goods and private goods). How are VIBAs different from clubs in the

public economics literature in terms of who provides the public good?

a. Use an example to describe private benefits to club members versus public benefits also to non-members.
b. In your own words, describe the tradeoff between: standard of membership (level of environmental quality

provision), reputation of clubs versus participation rate and congestion.

c. * Club sponsors define different types of VIBAs
4. How is the notion of transaction costs relevant to VIBAs? (as opposed to how transaction costs are relevant to

a well-designed permit system)

5. Comment on political acceptability of VIBAs (and note the political acceptability properties of a well-
designed tax system and well-designed permit system)

https://www.gazettenet.com/UMass-researchers-list-country-s-top-water-air-greenhouse-gas-polluters-27421770

https://www.gazettenet.com/UMass-researchers-list-country-s-top-water-air-greenhouse-gas-polluters-27421770

https://podcasts.apple.com/us/podcast/money-talks-from-economist-radio/id420929545?i=1000451057926

This Changes Everything – The Book