Sustainability lecture 2

Question 1

What are the 3 ways the environment is affected by poverty. Explain in your own words (explanations not included)

Answer 1

Pollution: Uneducation leads to improper waste disposal methods such as burning.

• Population: Lack of education leads to an increase in population as people are not knowledgeable about contraceptives and lack the resources to use these birth control methods.
• Deforestation: The forest acts as a source of raw materials and a sink for waste disposal, e.g., livestock in Brazil and logging in Indonesia. The impoverished, unaware of their impact, continue to contribute to this destructive cycle for short-term gain.

Question 2

What are the 6 causes of poverty?

Answer 2

*Unemployment/temporary employment
*Education
*Health
*Inflation
*Uneven income distribution
*Large number of dependents

Question 3

What are the two types of poverty? With explanations

Answer 3

Absolute Poverty: Measures the actual number of people who cannot afford their basic needs (food, water, shelter). Their income is below the poverty threshold or poverty line.

Relative Poverty: Measure the number of people whose income is below the average income level of the economy. Relative poverty does not always equal absolute poverty, as people who are relatively poor can still afford basic necessities.

Question 4

Definition of Poverty

Answer 4

Poverty refers to a state of deprivation by individuals

Question 5

What are the key factors governing sustainable development? 6 items (*They all start with ‘P’)

Answer 5

*Poverty
*Population
*Pollution
*Participation
*Policy and Market Failure
*Prevention and Mgmt of Disasters

Question 6

What are these 3 dimensions (economic, social and environmental) referred to as

Answer 6

The Triple Bottom Line

Question 7

What are the 3 dimensions of sustainable development

Answer 7

*Economic
*Social
*Environmental

Question 8

Who coined the phrase “Pollution of Poverty” to refer to when the poor degrades the environment to reduce poverty which only increases poverty

Answer 8

Indira Gandhi

Question 9

Why is an expanding population a problem?

Answer 9

The competition for land, water and other resources (necessities) increases resulting in increased social tensions

Question 10

Why is population growth not a significant factor in environmental degradation? (3 reasons)

Answer 10

• Increase population industrialization and affluence
  *Increased population equals more development (increased technology)
• Increasing economic activities have a much greater impact on environmental degradation

Question 11

What are the effects of policy and market failure

Answer 11

Overproduction of goods that are unnecessary or detrimental and underproduction of goods and services that are necessary and beneficial

Question 12

When does market failure occur?

Answer 12

Market failure occurs when freely functioning markets (D=S) produce prices that do not reflect the social, environmental and economic value of an action and its impact on third parties

Question 13

When is the allocation of any scarce resource socially optimal?

Answer 13

When the marginal social cost (MSC) is equal to the Marginal Social Benefit (MSB)

Question 14

How to calculate MSC? (Marginal Social Cost)

Answer 14

MSC- Marginal Private Cost + External Cost

Question 15

How to calculate MSB (Marginal Social Benefit)?

Answer 15

MSB= Marginal Private Benefits+ External Benefits

Question 16

What is an externality?
What are externalities

Answer 16

Externalities are defined as conditions arising when one’s actions have a direct (negative or positive) impact on the welfare of an unrelated third party who has no direct control over said action.

Question 17

What are the economic consequences of externalities? (benefits)

Answer 17

MSB>Marginal Private Benefits

Reasoning:
Positive externalities results in external benefits being more than 0

Question 18

What are the economic consequences of externalities? (costs)

Answer 18

MSC>Marginal Private Costs

Reasoning:
Neg externalities results in external costs being more than 0

Question 19

Why would resources allocated based on market mechanisms be inefficient?

Answer 19

It would be inefficient as it would not take social benefits and costs into account only private benefits and costs

This is considered market failure because there is no way to account for external benefits and costs