Question #1: [5 points] Canada's Boreal Forest produces 300 million tons of natural products a year, part of which is harvested by people in the form of timber. This amount of harvested timber is 225 million tons, of which only 120 million tons of lumber is produced and taken out for commercial purposes. The remaining amount is recycled back to nature [soil and atmosphere], with 5% of the total natural product going to the atmosphere as carbon dioxide upon burning. Assuming no other activities, is this process sustainable? Can the Boreal Forest sustain itself year after year or, in other words, maintain its capacity at the same level? Show your justification using the Fundamental Balance model learned in this class. Question #2: [5 points] Stavely, a small town in Southern Alberta, has 200 families. They are considering installing a mini weather station, which costs 550,000 annually. This weather station will benefit everyone in the town. The town mayor believes this venture is too costly and not worth trying. You are one of the residents of the village. Being enrolled in Econ 369, you understand how to find people's willingness to pay and decide to survey a representative sample of 20 families. The survey result of the annual WTP from the 20 representative samples is presented in the table below. Given the information, would it be feasible for you to convince the village Mayor to go for the project? Why or why not? Explain your position. 01 0 11 50 Question #3: [6 points] As a student in the Environmental Economics course, you are to examine the following: Prince Edward, a beautiful small town on the shore of Lake Ontario, receives air pollution from the United States. Please assume that the town has no right to prevent pollution as it comes through the air over the lake, The town examines that its marginal abatement cost [MAC] function is 60 4E, where E is the pollution level, and the marginal damage cost [MDC] is 2E. The current emission level, with no abatement, is 15, as the graph below explains. % &0 WAL MDC o 15 E a. How much 1s the cost if the town does not control [does not abate at all] pollution at all? Show your calculation in detail. You may refer to the graph. [2 points] Answer: b. How much would the cost be if the town decided to control all pollution [completely abate] so that no pollution damage exists? Show your calculation 1n detail. You may refer to the graph. [2 points] Answer: c. What is the efficient level of emission? At the efficient emission level, how much is the damage cost, and how much is the abatement cost? How much 1s the total cost of the town? Show vour calculation in detail. [2 points] Answer: Question #4: [4 points] The Greater Edmonton Region is attempting to reduce air pollution with several possible alternative policies (1) levying fees on motor vehicles by type and weight, (2) increasing gasoline taxes, (3) putting tolls on bridges over the Morth Saskatchewan River, and (4) taxing parking facilities in the downtown core. You are to examine the WTP of the two options a tax on vehicles and a toll on bridges and recommend the one that is better for the region. After surveying 200 representative samples, you found that the average WTP for vehicle levy is $5 per 100 kg and examining vehicle weights and the number of vehicles on the road for a year, you found that the aggregate annual WTP is $15 million. On the other hand, the toll bridge option says the WTP for each bridge is $1 per vehicle with an aggregate annual WTP of 536.5 million. If the pollution reduction impact of both policies is the same, but the enforcement cost of vehicle levy is $10 million more than the bridge toll, which policy do you recommend and why? Explain