QUESTION THREE
a. Compare and contrast the command-and-control
environmental management.
and market approach to
[MARKS]
(6)
b. Suppose the City of Windhoek is attempting to set a water quality standard, where
water quality is measured in percent of heavy metals abated (A), and the marginal
social benefit (MSB) and marginal social cost (MSC) of abatement have been estimated
as follows:
(6)
= MSB 40 - 0.2A
MSC= 0.9A
The Department of Environment Affairs sets the standard at 10 percent. Is this
standard set efficiently, too stringently, or too leniently? Explain your answer.
c. Suppose there are two power plants that are releasing sulphur dioxide into the air that
exceeds the emission standard. To meet the standard, 60 units of sulphur dioxide must
be abated in total. The two plants face the following abatement costs:
= MAC2 0.9A 2
Where costs are measured in thousands of Namibian dollars.
i. Prove that a uniform standard will not meet the cost-effectiveness criterion.
Explain your answer.
(6)
ii. Determine how the abatement levels should be reallocated across the two
plants to minimize costs.
(7)
TOTAL MARKS
[25]
Second Oppo11unityExamination
Page 4 of 5
January 2023