Q.4. (20 Points) Lets simplify the concept of economic efficiency and write it as a ratio of yield over costs: Efficiency =CostsYield Higher levels of efficiency can be achieved by either increasing the yield or lowering the costs or both. Typically, environmental damages, depletion of scarce resources, and the extinction of species also result in costs which cannot be easily calculated in monetary terms. Thus, efficiency expression is modified to include these costs and referred as: Environmetnal Efficiency =EnvironmentalDamageEconomicProsperity The current total environmental damage is too high, which exceeds the Earth's natural ability absorb and regenerate itself. The absorptive capacity and natural 2 regeneration rate of Earth allows us to have some degree of flexibility regarding our degradation and waste. By following the environmental efficiency quotient, to halve the current total global environmental damage, the environmental efficiency must increase two folds, given that the economic prosperity does not change. However, economic prosperity increases due to two main reasons; the average prosperity per person increases and the World population rises. Let's simplify the formula of the economic prosperity to: Economic Prosperity = Prosperty per person x Number of People By including the expansion of the economic prosperity, the Environmental Efficiency can be rewritten as: Environmetnal Efficiency =EnvironmentalDamageProspertyperpersonxNumberofPeople. Let's have a simple exercise with these specifications. Assume that the World population is 8 billion. The richest 10 percent experiences an economic growth of 2 percent per person per year, whereas middle 50 percent experiences 9 percent growth per year and lowest 40 percent (the poorest) only experiences a growth of 1 percent per year. a. Calculate average economic growth per person per year. b. Calculate the average economic growth per person per year over a period of 40 years if the growth continues throughout the period. Write your result as a percentage and a factor. c. If the World population increases by 80 percent over the same period while environmental efficiency stays as it is, calculate by want factor the environmental damage will increase. d. If our goal is to halve the damage that we cause to the environment over this period, calculate by what factor we have to increase the environmental efficiency? Q.4. (20 Points) Lets simplify the concept of economic efficiency and write it as a ratio of yield over costs: Efficiency =CostsYield Higher levels of efficiency can be achieved by either increasing the yield or lowering the costs or both. Typically, environmental damages, depletion of scarce resources, and the extinction of species also result in costs which cannot be easily calculated in monetary terms. Thus, efficiency expression is modified to include these costs and referred as: Environmetnal Efficiency =EnvironmentalDamageEconomicProsperity The current total environmental damage is too high, which exceeds the Earth's natural ability absorb and regenerate itself. The absorptive capacity and natural 2 regeneration rate of Earth allows us to have some degree of flexibility regarding our degradation and waste. By following the environmental efficiency quotient, to halve the current total global environmental damage, the environmental efficiency must increase two folds, given that the economic prosperity does not change. However, economic prosperity increases due to two main reasons; the average prosperity per person increases and the World population rises. Let's simplify the formula of the economic prosperity to: Economic Prosperity = Prosperty per person x Number of People By including the expansion of the economic prosperity, the Environmental Efficiency can be rewritten as: Environmetnal Efficiency =EnvironmentalDamageProspertyperpersonxNumberofPeople. Let's have a simple exercise with these specifications. Assume that the World population is 8 billion. The richest 10 percent experiences an economic growth of 2 percent per person per year, whereas middle 50 percent experiences 9 percent growth per year and lowest 40 percent (the poorest) only experiences a growth of 1 percent per year. a. Calculate average economic growth per person per year. b. Calculate the average economic growth per person per year over a period of 40 years if the growth continues throughout the period. Write your result as a percentage and a factor. c. If the World population increases by 80 percent over the same period while environmental efficiency stays as it is, calculate by want factor the environmental damage will increase. d. If our goal is to halve the damage that we cause to the environment over this period, calculate by what factor we have to increase the environmental efficiency
