February 17, 2014 18:54 by Alice
The University of Kentucky's Center for Applied Energy Research has published another podcast for individuals interested in energy issues. It explored the topic of Sustainable Energy Development: An economic perspective by Dr. Wesley Burnett from the University of West Virginia, USA.
- Podcast and PPT File
Economics is a social science concerned with the allocation of scarce resources for satisfying unlimited wants. Given the exhaustibility of fossil fuels and concerns over global climate change, economic science provides an approach to better understand energy markets. The burning of fossil fuels result in economic and environmental consequences that are not always reflected in the prices of the resources. These “hidden costs” or externalities result in market failure, as the market fails to generate the efficient level of pollution control. In the case of stock pollutants, externalities can be particularly severe, arguably resulting in costs to future generations. Government intervention is often necessary in the presence of market failure.
Cost-benefit analysis (CBA) is an economic tool used to evaluate the equivalent value of benefits and costs of a particular project for a community. CBA is useful to establish whether such a project is worthwhile.
In this discussion, I shall address basic economic concepts including energy economics as a science, externalities, market failure, property rights, and cost-benefit analysis. The purpose of the discussion is to educate non-economist about these basic economic principles in attempt to bridge the gap between science and engineering.