Environmental Economics Question Paper

Environmental Economics

Course:Bachelor Of Environmental Studies

Institution: Kenyatta University question papers

Exam Year:2009

KENYATTA UNIVERSITY
UNIVERSITY EXAMINATIONS 2009/2010
FIRST SEMESTER EXAMINATION FOR THE DEGREE OF
ENVIROMENTAL SCIENCE

ENS 406: ENVIRONMENTAL ECONOMICS

DATE: Monday
28th December 2009
TIME: 11.00am – 1.00pm

INSTRUCTIONS
Answer question ONE and ANY other three questions.

1.
i)
What are the factors that influence the impact of residual loading in an
environmental
System? [8marks]

ii)
Using the first law of thermodynamics discuss how the environment and

economic systems may be considered as a closed system in their

relationship. Show the relevant assumptions in your discussion.

[17marks]

2.
i)
Briefly explain the axioms of arrow’s impossibility theorem as used in
welfare
economics.
[5marks]

Page 1 of 2

ii)
Show that the allocation resulting from maximization of a Bergson-

Samuelson social welfare function is Pareto efficient.

Let the welfare maximization problem be:

MaxW (V x1 , x2 ,V x1 , x2
A (
A
A ) B ( B
B )

x1
2
1
2
A , x A , x B , x B
Such
that
1
T (X , X =

[10marks]
1
2 )
0

3.
i)
What is the importance of cost-effectiveness theorem in management of
environmental
pollutants?
[10marks]

ii)
Suppose you have been hired by the Environmental Protection agency in

Kenya to assess efficiency of the existing pollution abatement

technologies. Show how you would compare the command-and-control

and economic instruments for effective environmental management.

[10marks]

4.
i)
Briefly explain the concept of market failure in allocation of

environmental
resources.
[5marks]

ii)
Consider a chemical firm in the Nairobi industrial area, which emits

pollution and does not take into account the costs that its population

imposes on others. As a result, pollution is now in excess of the ‘socially

efficient’ level. Discuss the various methods that may be adopted in
internalization
of
this
externality.
[10marks]

5.
Suppose that the Narok County Council has hired you as an environmental

economist to value the Masai Mara Game Reserve following the destruction of

Mau Forest by illegal settlers. Choose either a generally applicable technique or a

selectively applicable technique and show clearly how you would undertake the

consultancy. Identify the potential limitations of your methodology.

[15marks]

Page 2 of 2

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