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ECON 416 FALL 2023 – ASSIGNMENT 3

TO BE SUBMITTED VIA BRIGHTSPACE BY

11:59 PM ON DECEMBER 1, 2023

Question 1: Reading Report

1. [Reading Report] Read the following paper:

Kumar, S. (2002). Does “Participation” in Common Pool Resource Management Help the Poor? A Social Cost-Benefit Analysis of Joint Forest Management in Jharkhand, India. World Development, 30(5), 763-782.

Available at: https://doi-org.ezproxy.library.uvic.ca/10.1016/S0305-750X(02)00004-9 

a. Complete a 3-2-1 reading report on the article above, using the template found on Brightspace. You can (should) include your 3-2-1 report as a separate file in your submission.

Question 2: Equity Weights (Lecture 22)

This question relates to the paper from Question 1.

2.a (Regular, 88 marks)

The author of the paper recognized that there were two types of equity issues that needed to be addressed: (in)equity within a generation, and (in)equity between generations. In the “Methods” section of the paper, the author explains that they used equity weighting to address equity issues within a generation, and discounting using a social discount rate to address equity issues between generations.

Briefly describe the method of equity weighting used in the paper from Question 1 (the author calls these “intragenerational distribution weights”). Do you believe that the approach taken by the paper (using these specific weights to deal with intragenerational equity, and discounting with a social discount rate address intergenerational equity) is appropriate and will lead to useful results, given what the paper is studying? Why or why not?

[Write your answer below, in 5 to 500 words]

As always, there’s no minimum length – if you can do this in 10 words, great!

2.b (Challenge, 12 marks)

In Lecture 22, we looked at two specific methods of calculating equity weights: Poverty Impact Ratios (PIR) and the method used by the European Union (an income or consumption ratio raised the power of a measure of marginal utility).

Do you think the author should have used one of these two methods, instead of the equity weight calculations they actually used (and which you described in 2.a)? Why or why not? Briefly explain your reasoning.

[Write your answer below, in 5 to 500 words]

As always, there’s no minimum length – if you can do this in 10 words, great!

Question 3: Sustainability (Lecture 25)

This question relates to the paper from Question 1.

3.a (Regular, 88 marks)

The paper from Question 1 only uses the word “sustainability” once. Despite this, the paper is about forest management, and the author spends a lot of time describing how the villagers involved think about resources, depletion, preservation, and related matters, and the financial and environmental contexts in which the forest preservation takes place. A perspective on sustainability is implied, very strongly, even if it is not explicitly stated.

Based on what you learned about strong sustainability and weak sustainability in ECON 416, is the perspective taken by the paper closer to strong sustainability, or weak sustainability? Briefly explain your reasoning.

(Hint: This question can be answered very quickly and briefly. Things to think about: are there any substitutes for the resources involved? Is there anything about how the villagers think about present user of resources for food, fuel, etc. vs setting them aside for future needs? If you’re still stuck on where to start, try watching the YouTube videos associated with Lecture 25.)

[Write your answer below, in 5 to 500 words]

As always, there’s no minimum length – if you can do this in 10 words, great!

3.b (Challenge, 12 marks)

As mentioned in 3.a, the author of the paper did not explicitly address sustainability. In Lecture 25, we saw that there were steps that could be taken to incorporate strong and weak sustainability concerns explicitly into a cost-benefit analysis.

Based on your knowledge of the situation the paper was studying, and material from ECON 416, would the paper have benefited, in the sense of having more useful results, by explicitly incorporating sustainability concerns into its analysis (e.g. by imposing a resource floor, or calculating “genuine saving”)? Why or why not? Briefly explain your reasoning.

[Write your answer below, in 5 to 500 words]

As always, there’s no minimum length – if you can do this in 10 words, great!

Question 4: Sensitivity Analysis (Lectures 23-26)

This question relates to the paper from Question 1.

4.a (Regular, 88 marks)

The paper from Question 1 does include a sensitivity analysis, in the form of a scenario analysis. The main sensitivity results are summarized in Table 6.

The paper’s author is very clear about what numbers they ended up using, and why. Based on your reading of the paper, was a scenario table (Table 6) the best choice for a sensitivity analysis, or would it have benefited from including other sensitivity analysis tools you were introduced to in ECON 416, such as a spider plot, tornado diagram, Monte Carlo simulation, etc.? Briefly explain your reasoning.

[Write your answer below, in 5 to 500 words]

As always, there’s no minimum length – if you can do this in 10 words, great!

4.b (Challenge, 12 marks)

The paper’s author was very open about what information was available regarding various parameters, and challenges related to uncertainty in parameter values.

If you could only choose one of the following tools for the paper’s sensitivity analysis, which would you choose, and why? Possible choices: scenario table, tornado diagram, spider plot, Monte Carlo simulation, bootstrapping simulation.

(Hint: You’ll want to make sure you know what information is actually available about each parameter. It’s no use saying, “a Monte Carlo simulation is the best choice” if there’s no way to know what probability distribution each parameter is drawn from. You’ll also want to think about what each tool is best for. Certain things are more visible in a tornado graph than a spider plot, but the  spider plot shows things a tornado graph can’t.)

[Write your answer below, in 5 to 500 words]

As always, there’s no minimum length – if you can do this in 10 words, great!