1. Suppose you have been hired by the developing country of Equatoria to calculate its environmentally adjusted net domestic product (EDP). Assume for simplicity that only three adjustments need to be made to account for natural capital depreciation and pollution damages: timber capital, oil capital, and carbon dioxide damages. You have been given the following data:

Economic Data Gross domestic product: $40 billion Depreciation of manufactured capital: $6 billion Timber Data End-of-year timber stocks (board-feet): 2.0 billion Start-of-year timber stocks (board-feet): 2.4 billion End-of-year timber price ($/board-foot): $6 Start-of-year timber price ($/board-foot): $4 Oil Data End-of-year oil stocks (barrels): 500 million Start-of-year oil stocks (barrels): 550 million End-of-year oil price ($/barrel): $60 Start-of-year oil price ($/barrel): $50 Carbon Data CO2 emissions (tons): 75 million Damage per ton of CO2 emissions: $20 For timber and oil, you will need to calculate the value of depreciation, or appreciation, as the change in the total market value of the resource during the year, where total market value is the physical quantity times the resource price. What is the EDP for Equatoria?
Would you recommend that Equatoria use EDP to measure its progress toward sustainability objectives? Why or why not? Would you make any other recommendations to policy makers in Equatoria?