Environmental Economics
All 9 Environmental Economics terms in the AP Economics glossary — each with a clear, exam-accurate definition. Tap any term for the full explanation, formula, and related interactive graph.
Cap and trade is a system that limits total pollution and lets firms buy and sell permits to emit within that cap.
A carbon tax is a fee on the carbon content of fuels, designed to make polluters pay for the external cost of emissions.
A common-pool resource is rival but non-excludable — one person's use reduces what's left, but it's hard to stop anyone from using it.
Sustainable development is economic growth that meets present needs without compromising the ability of future generations to meet theirs.
A renewable resource is one that replenishes naturally over time, like solar energy, wind, timber, or fish stocks.
An ecological footprint measures the demand human activity places on nature, in terms of the land and resources needed to support it.
Marginal abatement cost is the cost of reducing pollution by one additional unit, and it typically rises as more pollution is cut.
Hotelling's rule states that, for efficient extraction of a nonrenewable resource, its net price (price minus marginal extraction cost) should rise over time at the rate of interest.
The environmental Kuznets curve hypothesizes an inverted-U relationship in which pollution rises with income at low levels of development, then falls once income passes a threshold.