Question 1
A drought reduces the quantity of cocoa supplied to a market while consumer demand for cocoa remains unchanged.
Define scarcity.
[1]
Outline how the reduction in supply is likely to affect the market price and quantity of cocoa exchanged.
[2]
Question 2
Figure 1 shows selected costs associated with the production of synthetic fabric.
Identify one negative externality shown in Figure 1.
[1]
Explain why the situation shown represents market failure.
[2]
Question 3
Figure 2 presents an advertisement and selected environmental information for a fictional energy company.
Identify two features of Figure 2 that indicate possible greenwashing.
[2]
State one type of evidence that would make the company's environmental claim more credible.
[1]
Question 4
A government proposes including the depletion of groundwater and the loss of wetland area in its national accounts.
Define environmental accounting.
[1]
Outline two reasons why stakeholders may not agree on the monetary value assigned to the wetland.
[2]
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Question 5
Distinguish between technocentric and ecocentric perspectives on the economic management of environmental problems.
[4]
Question 6
A lake is used by several villages for fishing. Individual fishers gain the full income from each additional fish caught, while the effects of declining fish stocks are shared by all villages.
Explain why this situation may result in a tragedy of the commons.
[2]
Outline two features of community management that could reduce overexploitation of the fish stock.
[2]
Question 7
A survey investigates the value of conserving a coastal wetland. The wetland supports a commercial fishery, reduces storm flooding and contains an endemic frog that many respondents never expect to see.
Identify one use value and one non-use value in this scenario.
[2]
Distinguish between willingness to pay and willingness to accept as methods of estimating the wetland's value.
[2]
Question 8
A higher-income country offers payments to a lower-income, forest-rich country to conserve a tropical forest instead of permitting commercial logging.
Outline two ecosystem-service values of the forest other than timber production.
[2]
Outline two possible sources of tension created by the payment arrangement.
[2]
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Question 9
A country's GDP increased from $800 billion to $840 billion in one year. Its population at the end of the year was million.
Calculate the annual percentage economic growth.
[1]
Calculate the per capita GDP at the end of the year.
[1]
Outline two reasons why these indicators do not provide a complete measure of prosperity or sustainability.
[2]
Question 10
Figure 1 shows the market for a manufactured product. Production releases untreated wastewater into a river, imposing an external environmental cost that is not paid by the producer.
State the free-market equilibrium quantity shown in Figure 1.
[1]
Calculate the total external environmental cost per day at the free-market equilibrium.
[1]
Explain why the free-market outcome shown represents market failure.
[2]
Explain how an environmental tax could move this market towards the socially efficient outcome.
[2]
Question 11
An energy company published the advertisement in Figure 2(a). Figure 2(b) shows selected information from its independently audited accounts.
Selected independently audited accounts. Operational emissions exclude supply-chain and product-use emissions.
| Measure | 2021 | 2023 | 2025 |
|---|---|---|---|
| Renewable investment / billion currency units | 0.2 | Not reported | 0.6 |
| Fossil-fuel investment / billion currency units | 4.8 | Not reported | 4.4 |
| Total investment / billion currency units | 5.0 | Not reported | 5.0 |
| Operational emissions / million tonnes equivalent | 42 | 44 | 46 |
Calculate the percentage of the company's total investment allocated to renewable energy in 2025.
[1]
Describe the change in the company's absolute operational emissions between 2021 and 2025.
[1]
Analyse the evidence that the advertisement may represent greenwashing.
[3]
Suggest two additional pieces of evidence needed to assess the carbon-neutral claim more reliably.
[2]
Question 12
A coastal fishery was open to unrestricted access until the end of 2018. In 2019, local fishing communities introduced agreed catch limits, monitoring and graduated sanctions.
Describe two changes in the fishery between 2010 and 2018.
[2]
Calculate the percentage increase in breeding-stock biomass between 2018 and 2026.
[2]
Explain how the trends before 2019 illustrate the tragedy of the commons.
[2]
Outline why the community-management system may have produced the recovery shown after 2018.
[1]
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Question 13
A government introduces a pollution tax of $35 per tonne of waste discharged by a factory. The factory currently discharges tonnes each year. Installing treatment equipment would reduce the discharge to tonnes each year and cost $120 000 annually.
Calculate the annual pollution tax paid by the factory before installing the treatment equipment.
[2]
Explain whether the tax provides the factory with a financial incentive to install the treatment equipment.
[2]
Question 14
Figure 3 represents an ecological economics model.
Explain why the economy is shown as a subsystem of the biosphere.
[2]
Outline how the precautionary principle could influence an economic decision involving uncertain but potentially irreversible ecosystem damage.
[2]
Question 15
A ceramics factory discharges wastewater into the River Luma. The factory does not currently pay for downstream water treatment or habitat restoration.
The regional government is considering an environmental tax or a legally enforced pollution quota.
Calculate the total social cost of producing one ceramic unit at the current annual output.
[2]
Explain why the current production of ceramics represents market failure.
[3]
Using Figure 2, determine the minimum environmental tax shown that would reduce pollution below the proposed quota.
[2]
Evaluate the use of an environmental tax rather than a pollution quota to apply the polluter-pays principle in this case.
[5]
Question 16
Meralis Energy describes itself as a company “leading the transition to a clean-energy future”. The following resources compare its advertising with company-wide performance.
Meralis Energy company-wide investment and greenhouse-gas emissions
| Year | Renewable investment / USD million | Fossil-fuel investment / USD million | GHG emissions / million tonnes |
|---|---|---|---|
| 2021 | 40 | 760 | 42 |
| 2022 | Not reported | Not reported | 45 |
| 2023 | Not reported | Not reported | 47 |
| 2024 | 90 | 910 | 50 |
Calculate renewable-energy investment as a percentage of Meralis Energy's total investment in 2024.
[2]
Identify two features of the advertisement that may indicate greenwashing.
[2]
Analyse whether the performance data support the company's advertised image.
[3]
Evaluate the use of carbon-neutral certification and mandatory environmental reporting to reduce greenwashing by Meralis Energy.
[5]
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Question 17
A regional authority introduced a tradeable permit scheme for four industrial plants. One permit allows the release of one tonne of a regulated pollutant. Table 1 shows emissions before the scheme, initial permit allocations and emissions during the first year.
Industrial emissions and tradeable permits
| Plant | Emissions before scheme / tonnes | Initial permit allocation / tonnes | First-year emissions / tonnes |
|---|---|---|---|
| A | 32 | 30 | 20 |
| B | 28 | 25 | 25 |
| C | 30 | 20 | 26 |
| D | 25 | 15 | 19 |
| Total | 115 | 90 | 90 |
| Note | Unused permits may be sold; each plant must surrender one permit per tonne emitted. |
Identify the plant that sold the greatest number of permits.
[1]
Calculate the percentage reduction in total emissions from before the scheme to the first year. Show your working.
[2]
Explain the permit transfers required for all four plants to comply with the scheme.
[1]
Evaluate the effectiveness of the tradeable permit scheme in applying the polluter-pays principle.
[3]
Question 18
A government is considering whether to protect the Luma wetland from commercial development. Table 2 gives estimated annual use values. Table 3 summarizes a survey of households concerning wetland protection or destruction.
Table 2: Estimated annual use values of the Luma wetland.
| Ecosystem benefit | Type of use | Estimated annual value / million currency units per year |
|---|---|---|
| Commercial fish harvest | Direct use | 7 |
| Recreation and tourism | Direct use | 5 |
| Flood regulation | Indirect use | 18 |
| Water purification | Indirect use | 10 |
| Total annual use value | All listed uses | 40 |
Table 3. Household valuation survey for the Luma wetland; values are reported group medians.
| Income group | Households surveyed | Reported median WTP / currency units per year | Reported median WTA / currency units (one-off) |
|---|---|---|---|
| Low income | 120 | 12 | 240 |
| Middle income | 80 | 36 | 520 |
| High income | 50 | 90 | 900 |
Identify the ecosystem service with the greatest estimated indirect use value.
[1]
State the total estimated annual use value of the wetland.
[1]
Calculate the household-number-weighted mean of the reported median annual willingness to pay values across the surveyed income groups. Show your working.
[2]
The reported median willingness to accept is numerically higher than the reported median willingness to pay for each income group, but willingness to accept is stated as a one-off amount whereas willingness to pay is annual. Explain one reason that could contribute to this difference.
[1]
Evaluate the usefulness of the survey results for environmental accounting of the wetland.
[3]
Question 19
Figure 4 represents annual material and energy flows through an economy using an ecological-economics systems model.
Identify the system that contains both the social system and the economic subsystem.
[1]
Calculate the percentage of end-of-life material that is recycled.
[2]
Explain why recycling does not remove the economy's dependence on natural capital.
[2]
Suggest two ways in which an ecological economist could use this model to guide policy.
[2]
Question 20
Figures 5(a) and 5(b) show selected economic and environmental indicators for the industrial region of Norvale.
Calculate the percentage increase in real GDP between 2015 and 2025.
[1]
Describe two relationships between economic growth and the environmental indicators shown in Figure 5(a).
[2]
Explain how the data illustrate both a negative and a positive potential effect of economic growth on environmental welfare.
[2]
Analyse the environmental-justice implications of the particulate-exposure data.
[3]
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Question 21
A government claims that its economy achieved eco-economic decoupling between 2025 and 2040. Figure 4 shows indices for economic output and environmental pressure, where each index equals 100 in 2025.
Identify the type of decoupling shown between economic output and domestic environmental pressure by 2040.
[1]
Calculate the percentage change in the domestic environmental-pressure index between 2025 and 2040.
[1]
Outline two reasons why the data do not demonstrate that the country's economic growth is globally sustainable or environmentally just.
[2]
Question 22
The Nambara Lagoon fishery is a common good used by eight coastal villages. Until 2024, access was unrestricted and fishers retained the full income from their own catch.
Nambara Lagoon fishery indicators, 2014–2024.
| Year | Fishing boats / boats | Annual catch / tonnes | Catch per boat / tonnes |
|---|---|---|---|
| 2014 | 120 | 4800 | 40.0 |
| 2015 | 135 | 5000 | 37.0 |
| 2016 | 150 | 5150 | 34.3 |
| 2017 | 165 | 5100 | 30.9 |
| 2018 | 180 | 4950 | 27.5 |
| 2019 | 195 | 4700 | 24.1 |
| 2020 | 205 | 4450 | 21.7 |
| 2021 | 220 | 4200 | 19.1 |
| 2022 | 225 | 4000 | 17.8 |
| 2023 | 235 | 3800 | 16.2 |
| 2024 | 240 | 3600 | 15.0 |
In 2025, village councils proposed a community-management agreement.
Describe two changes in the Nambara Lagoon fishery between 2014 and 2024.
[2]
Calculate the percentage decrease in catch per boat between 2014 and 2024.
[2]
Explain how the data illustrate the tragedy of the commons.
[3]
Evaluate the proposed community-management agreement as a strategy for sustaining the lagoon fishery.
[6]
Question 23
The government of Arvena is deciding whether to retain the 1000-hectare Miro Wetland or convert most of it to irrigated agriculture.
Environmental-accounting estimates for retaining or converting the 1000-hectare Miro Wetland.
| Intact wetland service | Value / USD million per year | Conversion outcome | Value / USD million |
|---|---|---|---|
| Harvested fish | 0.8 | Agricultural development income (one-off) | 55 |
| Tourism and recreation | 1.2 | Agricultural income (annual) | 7 |
| Flood regulation | 4.5 | Ecosystem services retained (annual) | 2 |
| Water purification | 2.0 | Not applicable | Not applicable |
| Carbon storage | 0.5 | Not applicable | Not applicable |
| Notes | Annual values are undiscounted; intrinsic, spiritual and future-use values are excluded. | Notes | A discount rate and time horizon are needed to compare the one-off value with annual flows. |
A survey was used to estimate non-use values associated with retaining the wetland.
Calculate the total estimated annual value of ecosystem services provided by the intact wetland.
[2]
Distinguish between the use values and non-use values of the Miro Wetland.
[3]
Explain two reasons for the differences between the willingness-to-pay and willingness-to-accept results.
[3]
Evaluate the usefulness of environmental accounting for deciding whether the wetland should be converted.
[5]
Question 24
The lower-income country of Belora contains the 80 000-hectare Tavi Forest. A consortium of resource-depleted countries has offered payments if Belora prevents commercial logging for 20 years.
Figure 2: comparison of proposed forest-policy options for Tavi Forest.
| Policy / information | Value | Period or detail |
|---|---|---|
| Commercial logging | USD 240 million | Present value; 12 years |
| Commercial logging | 1800 direct jobs | During logging period |
| Carbon storage | USD 8 million per year | Ecosystem service under conservation |
| Water regulation | USD 6 million per year | Ecosystem service under conservation |
| Soil protection | USD 3 million per year | Ecosystem service under conservation |
| Tourism and recreation | USD 5 million per year | Ecosystem service under conservation |
| International conservation offer | USD 18 million per year | 20 years |
| Gross conservation payments | USD 360 million | USD 18 million per year 20 years |
| Payment administration | of gross payments | Central government initially retains this share for administration |
| Conservation payment after retention | USD 234 million | 65% of USD 360 million over 20 years |
| Conservation | 950 direct local jobs | During conservation agreement |
| Customary land users | Approval not yet obtained | Proposed agreement |
| Forest monitoring | Satellite imagery possible | Forest cover can be monitored |
| Biodiversity and spiritual values | No monetary estimate | Potential conservation values |
Identify two outputs from the economic subsystem that may affect the biosphere.
[2]
Calculate the undiscounted value of the four listed ecosystem services over 20 years and compare it with the value of commercial logging.
[2]
Explain how Figure 1 represents an ecological-economics perspective.
[4]
Evaluate the proposed international conservation-payment agreement for the Tavi Forest.
[6]
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Question 25
Between 2010 and 2025, the country of Oranto experienced sustained economic growth while introducing several environmental policies.
Oranto economic growth, environmental pressures and policy timing, 2010–2025.
| Year | Real GDP per capita / USD | GHG emissions / t e person | Material footprint / t person | Policy development |
|---|---|---|---|---|
| 2010 | 18 000 | 8 | 12 | None stated |
| 2015 | 22 000 | 10 | 14 | None stated |
| 2020 | 26 000 | 11 | 16 | Coal phase-out and public transport begin |
| 2025 | 30 000 | 7 | 18 | None stated |
Calculate the percentage increase in real GDP per capita between 2010 and 2025.
[2]
Describe the changes in environmental pressure shown in Figure 1.
[2]
Explain why the increase in GDP per capita does not necessarily demonstrate increased sustainable prosperity.
[4]
Evaluate the effects of Oranto's economic growth on environmental welfare and environmental justice.
[6]
Question 26
The government of Ardin claims that its economy has achieved eco-economic decoupling. Figure 6 shows indices for economic output and environmental pressures. All indices equal 100 in 2010.
Economic output and environmental-pressure indices in Ardin, 2010–2025 (2010 = 100). Consumption-based emissions and material footprint include impacts embodied in imports.
| Year | Real GDP index | Territorial GHG emissions index | Consumption-based GHG emissions index (incl. imports) | Domestic material consumption index | Material footprint index (incl. imports) |
|---|---|---|---|---|---|
| 2010 | 100 | 100 | 100 | 100 | 100 |
| 2015 | 116 | 94 | 106 | 98 | 108 |
| 2020 | 132 | 82 | 111 | 92 | 116 |
| 2025 | 150 | 70 | 118 | 86 | 124 |
Calculate the percentage change in territorial greenhouse-gas emissions per unit of real GDP between 2010 and 2025. Show your working.
[2]
Distinguish between the decoupling indicated by territorial emissions and that indicated by consumption-based emissions.
[2]
Evaluate the government's claim that Ardin has achieved eco-economic decoupling.
[2]
Suggest two circular-economy measures that could improve the environmental trends shown.
[2]
Question 27
A textile-manufacturing district provides employment and export income but releases polluted water into a river used by downstream communities. The market price of textiles does not include the costs of water treatment, ecosystem damage or reduced fishing income.
Explain the concepts of market failure and negative externalities in relation to the textile-manufacturing district.
[4]
Explain how environmental taxes and tradeable pollution permits could apply the polluter-pays principle in this district.
[7]
Using named real-world examples, evaluate the effectiveness of market-based instruments in reducing industrial pollution.
[9]
Question 28
A global clothing retailer advertises a new collection as “planet positive”. The campaign emphasizes recycled packaging and tree planting, but provides little information about total production, supply-chain emissions, water consumption or the disposal of unsold clothing.
Outline three features of corporate environmental claims that may indicate greenwashing.
[3]
Analyse how life-cycle evidence and environmental reporting could be used to determine whether the retailer's claim represents substantial environmental improvement.
[8]
Using named real-world examples, evaluate strategies for reducing greenwashing by companies.
[9]
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Question 29
A semi-arid watershed contains a shared aquifer used by farmers, households and small industries. Individual users benefit from pumping additional groundwater, but falling water levels, land subsidence and the loss of spring-fed habitats affect the entire watershed.
Explain why the aquifer is vulnerable to a tragedy of the commons.
[4]
Explain how community-based governance could promote sustainable use of the aquifer.
[7]
Using named real-world examples, discuss whether community management is more effective than privatization or government regulation in preventing overexploitation of common goods.
[9]
Question 30
The government of Vardis claims that it achieved eco-economic decoupling between 2012 and 2024 through renewable energy and circular-economy policies.
Vardis environmental and economic indicators, indexed to 2012 = 100.
| Year | Real output index | Territorial index | Consumption index | Material footprint index | Final waste index |
|---|---|---|---|---|---|
| 2012 | 100 | 100 | 100 | 100 | 100 |
| 2013 | 104 | 98 | 101 | 102 | 98 |
| 2014 | 107 | 95 | 103 | 104 | 97 |
| 2015 | 111 | 93 | 104 | 106 | 95 |
| 2016 | 115 | 91 | 106 | 109 | 94 |
| 2017 | 119 | 88 | 108 | 111 | 92 |
| 2018 | 123 | 86 | 109 | 113 | 91 |
| 2019 | 126 | 84 | 111 | 115 | 89 |
| 2020 | 130 | 81 | 112 | 117 | 88 |
| 2021 | 134 | 79 | 114 | 120 | 86 |
| 2022 | 138 | 77 | 115 | 122 | 85 |
| 2023 | 141 | 74 | 117 | 124 | 83 |
| 2024 | 145 | 72 | 118 | 126 | 82 |
Circular-economy and related policy indicators in Vardis, 2012 and 2024.
| Indicator | 2012 | 2024 |
|---|---|---|
| Discarded appliances repaired or reused | ||
| Municipal waste recycled | ||
| Imported manufactured goods in consumption | ||
| Renewable electricity | ||
| Binding national material-use cap | None | None |
Calculate the percentage changes in economic output and territorial carbon dioxide emissions between 2012 and 2024.
[3]
Distinguish between relative and absolute eco-economic decoupling, using the data from Vardis.
[3]
Explain how circular-economy measures could reduce environmental degradation in Vardis.
[3]
Evaluate the claim that Vardis achieved eco-economic decoupling between 2012 and 2024.
[5]
Question 31
The Ardan government introduced a tradeable carbon-permit scheme for three large industrial firms. The scheme's first-year cap was set below baseline emissions.
Figure 1. First-year carbon-permit allocation and verified emissions in Ardan.
| Firm | Baseline emissions / kt | Initial permits / kt | Verified emissions / kt | Permit-market terms |
|---|---|---|---|---|
| A | 500 | 350 | 280 | Not applicable |
| B | 400 | 300 | 340 | Not applicable |
| C | 300 | 250 | 280 | Not applicable |
| Total | 1200 | 900 | 900 | Tradeable permits; price: USD 45 per tonne; surrender 1 permit per tonne emitted |
A policy review compares the aims of environmental economics with concerns raised by ecological economists.
Calculate the percentage reduction between total baseline emissions and the first-year emissions cap.
[2]
Interpret the permit trading required by the three firms after their first-year emissions were verified.
[2]
Explain how the permit scheme applies environmental-economic principles to market interaction.
[4]
Discuss whether the tradeable-permit scheme provides an adequate response to environmental and social concerns in Ardan.
[6]
Question 32
A government is considering constructing a hydroelectric dam in a river valley. The project would generate electricity and employment but would inundate farmland, wildlife habitat, archaeological sites and places of cultural significance to Indigenous communities.
Distinguish between use values and non-use values associated with the river valley.
[4]
Explain the methods and limitations of including the river valley in environmental accounting.
[7]
Using named real-world examples, evaluate the usefulness of environmental accounting in deciding whether large development projects should proceed.
[9]
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Question 33
Growing demand for minerals used in batteries has increased interest in extracting mineral deposits from the deep seabed. Scientific knowledge of deep-sea ecosystems and their rates of recovery remains incomplete.
Draw a systems diagram representing the relationship between the biosphere, the social system and the economic subsystem according to ecological economics.
[4]
Explain how an ecological-economics perspective could influence decisions about deep-seabed mineral extraction.
[7]
Using at least two named real-world examples, to what extent does ecological economics provide a more sustainable basis for decisions about resource extraction than environmental economics?
[9]
Question 34
A government plans to expand digital services, renewable energy and public transport while reducing the use of virgin materials. It predicts continued GDP growth and claims that a circular economy will allow national prosperity to increase while total environmental degradation declines.
Explain why GDP growth and per capita GDP are incomplete indicators of sustainable prosperity.
[4]
Analyse how circular-economy policies could contribute to eco-economic decoupling, and why the resulting decoupling may be limited.
[7]
Using named real-world examples, evaluate whether continued economic growth can be compatible with environmental welfare and environmental justice.
[9]
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