QQuestionEnvironmental Science
QuestionEnvironmental Science
Question 3
Read the excerpt below and then answer questions 3.1 and 3.2.
Both the failing water infrastructure and the ever-increasing population have exacerbated the
water crisis in South Africa, forcing its residents to adopt strict habits. Official mandates
regarding significant reductions in water usage have led to overcrowded communal water taps,
dangerous bore-holing, and the desperate acceptance of contaminated groundwater sources, all
to combat a drought that has plagued the South African locale for over seven years. While local
crisis response groups are available to support residents, there is only so much that can be done
to solve the water crisis in South Africa when there are simply no sources of clean, freshwater
available.
https://earth.org/water-crisis-in-south-africa/
3.1 3.1 You want to clean up a lake where ten households live. Explain the problem of free
riding given that you want to charge each household the same amount for cleaning the
lake. [10]
3.2 Efficiency implies cost-effectiveness, but cost-effectiveness does not necessarily imply
efficiency. Explain. [3]
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Answer
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Step 1:Q^3.1: Define the public good problem
Cleaning the lake creates a public good because all households benefit from a cleaner lake regardless of who pays.
Step 2:Q^3.1: Explain free riding
Free riding occurs when individuals benefit from resources, goods, or services without paying for the cost of the benefit.
Step 3:Q^3.1: Connect to the lake cleaning scenario
If you charge each household the same amount, some may refuse to pay, expecting others to cover the cost while they still enjoy the clean lake.
Step 4:Q^3.1: Describe the consequence
If too many households free ride, there may not be enough funds to clean the lake, resulting in under-provision of the public good.
Q^3.1: Final Answer
The free rider problem arises because cleaning the lake is a public good: all households benefit regardless of payment. If you charge each household the same amount, some may choose not to pay, relying on others to fund the cleaning. This leads to underfunding and potentially no cleanup, as households try to avoid paying for a benefit they cannot be excluded from.
Step 6:Q^3.2: Define efficiency
Efficiency means resources are allocated so that it is impossible to make someone better off without making someone else worse off (Pareto efficiency).
Step 7:Q^3.2: Define cost-effectiveness
Cost-effectiveness means achieving a specific outcome or output at the lowest possible cost.
Step 8:Q^3.2: Explain the relationship
A solution can be cost-effective (minimizing costs for a given outcome) but not efficient if the outcome itself is not optimal or does not maximize total welfare. Efficiency requires both the right outcome and the lowest cost, while cost-effectiveness only concerns minimizing costs for a chosen outcome.
Q^3.2: Final Answer
Efficiency implies cost-effectiveness because an efficient allocation must use resources wisely, but cost-effectiveness does not guarantee efficiency since the chosen outcome may not be optimal or welfare-maximizing.
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