Chapter14: Environmental Economics
Section: Chapter Questions
Problem 1SQP
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Question
How have subsidies contributed to non-sustainable forestry in US and Canada?
Expert Solution
Step 1
The subsidies contribute to non-sustainable forestry in the US and Canada due to the direct link of subsidies and harmful effects on the environment. The subsidies cause an increase in the production of both inputs and output, and this production has a harmful effect on the environment. The subsidies provide price support to businesses which encourage more production. The subsidies which foster deforestation cause a decrease in the forest area.
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