UNIVERSITY OF GHANA

DEPARTMENT OF AGRICULTURAL ECONOMICS AND

AGRIBUSINESS

MPHIL AGRICULTURE ECONOMICS SECOND SEMESTER

ACADEMIC YEAR 2019/2020

AGEC 618: ENVIRONMENTAL ECONOMICS

Assignment two

ID: 10805295
 Question one
a. Factors that influence trade-offs between goods and environmental quality

A production possibility frontier is used to represent some choices the society have to make amongst two
desirable outcomes, here, the goods produced and environmental quality. Increasing the production of goods
means the society is giving up more environmental quality in order to maintain the increased production
and vice versa. Whatever choice is made depends on the relative value which is placed on either one of the
desired outcomes.

At a choice like A, society is choosing a high level of goods but low level of environmental quality whiles
at choice E, we are choosing a high level of environmental quality and a low level of goods. All the choices
on the PPF are efficient and a choice such as F is not efficient and should be avoided by all means necessary.
The society could either choose to achieve a greater amount of goods with the same environmental quality
at C or choose to achieve a great level of environmental quality with a fair amount of goods at D.

C
Economic goods

F D

Environmental quality

Figure I: PPF show the various combinations of economic goods and environmental quality

An inefficient choice such as F is more like happened when some methods used in improving environmental
quality such as say, emission licenses, causes us to operate at that point F. Market-based instruments such
as taxes offer makes sure choices stay on the frontier because it can relates production quantity to emission
levels. In comparing developing countries with developed countries, developing countries if they wish to
increase their GDP, they have to trade-off some amount of environmental quality for the level of goods they
intent to achieve. Developed countries have used most of their resource base for improved technologies that
increases environmental quality at the same level of good produced as that of developing countries.
One of the factors that may influence environmental quality is the income levels of the society. When
people’s income increases, they may require a cleaner environment and will therefore, be willing to pay for
such a clean environment. Economic goods and environment quality move together as the income levels of
people in the society increases.

Another factor that influences the trade-offs between economic goods and environmental quality is
technological development. In figure II, societies that are still growing (economically) and using
rudimentary tools in production will be producing P1 quantities of goods, at an environmental quality at Eq1.
Their technologies do not help in maintaining environmental quality at lowers costs whiles increasing
production. Consider a society where highly advanced technologies are used in production, they are able to
produce same amount of goods (at P1) but the level of environmental quality increases to Eq1 and so we can
see technology developments influences these trade-offs.
Economic goods

Developing Developed
P1 society society

Eq1 Eq1

Environmental quality

Figure II: Production of goods against Environmental quality

b. Environmental policy can be used to commit firms and parties contributing to pollution by using
different mix of instruments. Such instruments can be market-based such as taxes, emission permits
etc., or command and control instruments. Whichever is used depends on the type of pollution and
also efficiency of it. These instruments ensure that the trade-offs between goods and environmental
quality are appropriately accounted and the desired outcome is achieved by ensuring payments are
done by polluting party.
 Question two
Types of pollutants

i. Accumulative and non-accumulative pollutants.

Accumulative pollutants are pollutants that when emitted, does not disintegrate easily and their
levels increase overtime as more and more are added. They stay longer in the environment and
overtime, their levels are almost the same as when they were emitted. An example is
accumulation of greenhouse gases such as CO2, methane, nitrous oxid etc. and also, plastics are
another example.
Non-accumulative pollutants are those pollutants that disintegrate almost as soon as they are
emitted. An example is noise.

ii. Local/Reginal/ Global Pollutants

For local pollutants, their impacts are circumscribed to only small groups of people and an
example is flatulence. Regional pollutants on the other hand have a much wider impacts over
large regions than the local pollutant and an example is acid rain.
However, global pollutants have a global impact and no matter where they are emitted, their
impacts are felt everywhere. An example is greenhouse gases such as carbon dioxide and
methane.

iii. Point Source/ Non-point Source Pollutants.

For a point source pollutant, we can identify the actual point they were emitted and an example
is Sulphur dioxide emitted from a power plant.
Non-point source pollutants on the other hand, do not have clear points of emission and an
example is farm chemicals used by farmers.

Knowledge about these pollutants is need to identify emitters and to design effective environmental policy
tools using the appropriate instruments.
 Question three
i. One way is to reduce unnecessary consumption. Consumption of goods that produce a lot of
waste means that, the more we consume, more residuals are produced. Unnecessary consumption
happens a lot in homes and this produces a lot of residuals. People buy too much of what they
don’t need and end up disposing of it. More emphasis should be placed on reducing unnecessary
consumption by households in order to reduce the amount of waste that are produced by
households. An example is a consumption of say watermelon by households. Households may
hoard watermelons simply because they can afford it or maybe they had it for free. Keeping too
much of this watermelon than they need is an unnecessary consumption and reducing this by
giving out the excess will reduce the residual generated by the watermelon. In the long-run,
residuals will be reduced and also less pressure will be on the environment to process residuals
from humans.

ii. Another way of reducing the amount of residuals from humans is by putting ban on single use
plastics by using more sustainable ones. One example is the use of paper bags instead of plastic
bags. Plastics in general take extremely long time to disintegrate and this makes it difficult for
the environment to process it. Papers on the other hand are able to disintegrate easily and using
more of paper bags and less of plastics will enhance the environment. Countries have tried this
and it works. In the city of Kigali in Rwanda, this switch from plastics to paper bags has
contributed a lot to their environmental quality. This is sustainable because paper bags can be
produced easily and to solve the possible problem of deforestation, reforestation policies should
also be established.

iii. Also putting subsidies on renewable energy can help reduce the fossil fuels used by households.
An example is promoting the use of petroleum gas by households. Giving subsidies to
households will increase the member of people using a more renewable energy source. The
sustainability implication is that, this can help reduce the amount of greenhouse gases in the
atmosphere which leads to climate change. There, in future, the severity of climate change can
be reduced.

iv. Moving from consumption to production, one way to reduce these residuals generated from
production activities can be achieved through the use of more improved technologies that help
 reduce wasteful residuals. An example is the use of cleaner technologies to reduce emission of
Sulphur dioxide from powerplants.

Question four
Economic growth is a gradual process by which the productive dimensions of a country’s economy is
increased overtime to bring about increased levels of national income. Economic growth phenomenon is
observed in emerging and developed economies. Economics growth does not lead to unavoidable
environmental degradation but can lead to increases in environmental degradation which depends on
policies and their enforceability in protecting the environment. thus, exploitation of the environment which
leads to high negative externalities are what may lead to the degradation of the environment.

Environmental Kuznets curve was used to show that, a country tries to grow economically, it may initially
forgo some amount of environmental quality. However, when economic growth is reached, the country will
be able to use more efficient technologies that enhance environmental quality. From figure III,
environmental degradation increases initially from D to the point E and with increased per capita GDP,
environmental degradation begins to decline. This is because, economic developments start in the country
after the point E which not only increases per capita GDP but also economic status of the people in the
country. This leads to more focus being placed on environmental quality, reducing environmental
degradation.

E
Environmental Degradation

0 Per capita GDP

Figure III: Environmental Degradation and Per Capita GDP