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3. The U.S. and India are entering into a climate-accord and the as a developing country, India is demanding that the U.S. compensate India for

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3. The U.S. and India are entering into a climate-accord and the as a developing country, India is demanding that the U.S. compensate India for the economic costs of carbon abatement technologies. India claims that the proposed treaty would cost India 10.5 billion dollars each year. Assume an annual discount rate of 5%. 1 (a) If the U.S. were interested in only providing a one time compensation as an incentive for India to sign the treaty, how much would the U.S. have to pay India today to cover India's economic losses? [10 points) (b) However, the U.S. envoy to the negotiations argues that in reality the economic costs to India will be much lower since India will also benefit from carbon abate- ments. Using recent studies, the envoy estimates that India will receive a health benefit of monetized value of at least 9.45 billion dollars per year for the next 50 years. What is the present value of the economic benefit to India? (10 points) (c) The Indian envoy argues, however, that while the economie damage to India's growing economy will be immediate, the health benefits from carbon abatement will not manifest for at least 10 years. If India accepts that the monetized value of the health benefits to its own economy are 9.45 billion dollars per year, and the U.S. accepts that these benefits don't start accruing until the end of the 10th year after which the treaty starts, what is the present value of the monetized benefits? 20 points) (a) Assuming the U.S. accepts India's cost projects of 10.5 billion dollars each year for a period of 50 years, and India accepts a local benefit of 9.45 billion dollars per year for 50 years (benefits that the U.S. does not need to compensate India for) and both parties agree that these benefits don't start accruing for until the end of the 10th year after which the treaty is signed, how much would the U.S. need to offer India to convince her to sign the treaty? (20 points) 3. The U.S. and India are entering into a climate-accord and the as a developing country, India is demanding that the U.S. compensate India for the economic costs of carbon abatement technologies. India claims that the proposed treaty would cost India 10.5 billion dollars each year. Assume an annual discount rate of 5%. 1 (a) If the U.S. were interested in only providing a one time compensation as an incentive for India to sign the treaty, how much would the U.S. have to pay India today to cover India's economic losses? [10 points) (b) However, the U.S. envoy to the negotiations argues that in reality the economic costs to India will be much lower since India will also benefit from carbon abate- ments. Using recent studies, the envoy estimates that India will receive a health benefit of monetized value of at least 9.45 billion dollars per year for the next 50 years. What is the present value of the economic benefit to India? (10 points) (c) The Indian envoy argues, however, that while the economie damage to India's growing economy will be immediate, the health benefits from carbon abatement will not manifest for at least 10 years. If India accepts that the monetized value of the health benefits to its own economy are 9.45 billion dollars per year, and the U.S. accepts that these benefits don't start accruing until the end of the 10th year after which the treaty starts, what is the present value of the monetized benefits? 20 points) (a) Assuming the U.S. accepts India's cost projects of 10.5 billion dollars each year for a period of 50 years, and India accepts a local benefit of 9.45 billion dollars per year for 50 years (benefits that the U.S. does not need to compensate India for) and both parties agree that these benefits don't start accruing for until the end of the 10th year after which the treaty is signed, how much would the U.S. need to offer India to convince her to sign the treaty? (20 points) 3. The U.S. and India are entering into a climate-accord and the as a developing country, India is demanding that the U.S. compensate India for the economic costs of carbon abatement technologies. India claims that the proposed treaty would cost India 10.5 billion dollars each year. Assume an annual discount rate of 5%. 1 (a) If the U.S. were interested in only providing a one time compensation as an incentive for India to sign the treaty, how much would the U.S. have to pay India today to cover India's economic losses? [10 points) (b) However, the U.S. envoy to the negotiations argues that in reality the economic costs to India will be much lower since India will also benefit from carbon abate- ments. Using recent studies, the envoy estimates that India will receive a health benefit of monetized value of at least 9.45 billion dollars per year for the next 50 years. What is the present value of the economic benefit to India? (10 points) (c) The Indian envoy argues, however, that while the economie damage to India's growing economy will be immediate, the health benefits from carbon abatement will not manifest for at least 10 years. If India accepts that the monetized value of the health benefits to its own economy are 9.45 billion dollars per year, and the U.S. accepts that these benefits don't start accruing until the end of the 10th year after which the treaty starts, what is the present value of the monetized benefits? 20 points) (a) Assuming the U.S. accepts India's cost projects of 10.5 billion dollars each year for a period of 50 years, and India accepts a local benefit of 9.45 billion dollars per year for 50 years (benefits that the U.S. does not need to compensate India for) and both parties agree that these benefits don't start accruing for until the end of the 10th year after which the treaty is signed, how much would the U.S. need to offer India to convince her to sign the treaty? (20 points) 3. The U.S. and India are entering into a climate-accord and the as a developing country, India is demanding that the U.S. compensate India for the economic costs of carbon abatement technologies. India claims that the proposed treaty would cost India 10.5 billion dollars each year. Assume an annual discount rate of 5%. 1 (a) If the U.S. were interested in only providing a one time compensation as an incentive for India to sign the treaty, how much would the U.S. have to pay India today to cover India's economic losses? [10 points) (b) However, the U.S. envoy to the negotiations argues that in reality the economic costs to India will be much lower since India will also benefit from carbon abate- ments. Using recent studies, the envoy estimates that India will receive a health benefit of monetized value of at least 9.45 billion dollars per year for the next 50 years. What is the present value of the economic benefit to India? (10 points) (c) The Indian envoy argues, however, that while the economie damage to India's growing economy will be immediate, the health benefits from carbon abatement will not manifest for at least 10 years. If India accepts that the monetized value of the health benefits to its own economy are 9.45 billion dollars per year, and the U.S. accepts that these benefits don't start accruing until the end of the 10th year after which the treaty starts, what is the present value of the monetized benefits? 20 points) (a) Assuming the U.S. accepts India's cost projects of 10.5 billion dollars each year for a period of 50 years, and India accepts a local benefit of 9.45 billion dollars per year for 50 years (benefits that the U.S. does not need to compensate India for) and both parties agree that these benefits don't start accruing for until the end of the 10th year after which the treaty is signed, how much would the U.S. need to offer India to convince her to sign the treaty? (20 points)

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