Solution Code : 1EIDB
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Section A: Wind Power Generation
Wind power generation capacity has been growing worldwide since the early 1990s. Table 1 shows the installed wind generation capacity (measured in megawatts, MW) in the top 10 countries, as at the end of 2011.
Section B: Gross Domestic Product (GDP)
In this section, we consider some issues with measuring “well-being” and “sustainability.” For a much more detailed discussion of these topics, see the report by Stiglitz, Sen, and Fitoussi (2009).
A central focus of sustainability is the measurement of human “well-being,” so that economic policies can be designed and evaluated against the rubric of maximizing the welfare of the people affected.
A popular way to measure people’s well-being is by Gross Domestic Product (GDP), which is the final value of all goods and services in the economy. GDP includes everything produced by the economy, including investment and goods and services not consumed by individuals.
The following model for consumption is proposed:
C = aY + b (1)
where C is consumption, a is the marginal propensity to consume, b is autonomous consumption, and Y is GDP.
Section C: Ecological Footprint
The Ecological footprint (EF) measures how much of the regenerative capacity of the biosphere is used up by human activities. It is the sum of productive land and water area required to support the population and provide the resources it consumes, absorb its waste and provide infrastructure (Stiglitz et al., 2009, p. 244).
Section D: LED Lighting
The City of Sydney is an area covering over 26km2, and is one of Australia’s most important social and economic centres. As part of Sydney 2030, a study into the city’s long-term sustainability, the city council committed to reducing its carbon footprint 70% over the next 20 years.
A study found that around 31% of the city’s carbon emissions arise from public lighting. So, in 2011, the City of Sydney announced a project to replace its lighting systems with energy efficient LED lights. It would choose lighting systems based on both their economic and environmental value. After a consultation period, the City chose a supplier in late 2011 to replace 6,448 luminaries (lights).
Before the project, suppose that the 6,448 luminaries slated for replacement consumed 5,252,613 kWh of electricity annually. In 2010/11, the annual lighting bill was $654,476. Suppose that the new LED lights will consume considerably less power, just 2,595,743 kWh per year.
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Section A
1. Total wind generation installed capacity in the world = 237,669 MW
Total wind generation installed capacity in China = 62,364 MW
Percentage share of China = (62364/237669)*100 = 26.24%
2. Let us assume that for China to account for 40% of the global capacity, incremental capacity is X MW
Thus, total global installed capacity = 237669 + X
Also, (40/100)*(237669 + X) = (62364+X)
Solving the above, we get X = 54,506 MW
Thus, the incremental capacity China would have to put to account for 40% of the wing energy capacity is 54,506 MW.
3. Total installed capacity at the end of 2011 = 237669 MW
Increase in capacity during 2011 = 41 GW or 41,000 MW
Hence, installed capacity at the end of 2010 = 237669 – 41000 = 196,669 MW
Increase in capacity during 2010 = 39 GW or 39,000 MW
Hence, installed capacity at the end of 2009= 196,669 – 39,000 = 157,669 MW
Hence, percentage increase in capacity in 2010 = (39000/157669)*100 = 24.74%
4. Total installed capacity at the end of 2011 = 237,669 MW
Total installed capacity at the end of 2009 = 157,669 MW
Percentage increase = [(237,669-157,669)/157,669]*100 = 50.74%
5. The annual growth rate in wind energy capacity is assumed to be 24.74% p.a.The above growth rate continues from end of 2011 to end of 2020 i.e. for 9 yearsPercentage increase in wind power installed capacity from the end of 2011 to the end of 2020 = (1.24749 -1)*100 = 631.23%
6. Let the time required to double be assumed as T years
Current capacity = 237669 MW
Expected capacity = Twice of the existing or 2*237669
Thus, (2*237669) = 237669*1.2474T
Solving the above, we get T = 3.135 years
7. Let the time required in years for the installed capacity to become m times be equal to T Further, it is assumed that the annual growth rate is 24.74% p.a.
Hence, the requisite expression is highlighted below.m = 1.2474TThe above can also be expressed in the form of logarithmic function as highlighted below.Log m = T log 1.2474
8. The actual growth in the wind energy installed capacity has been significantly lower than the growth rate predicted in the computations above (Brown, 2014). This may be attributed to the following reasons (GEWC, 2015).
Section B
1. The given equation is a model of well-being since it tends to capture a linear relationship between the GDP and the consumption. Hence, the consumption is dependent on the GDP. Thus, as the GDP of a particular nation would increase, the consumption would also increase which would increase the living standard of a given individual. Hence, the given equation tends to express human well-being in relation with economic well being represented through the use of GDP.
2. Based on the equation highlighted, the respective consumption of the two regions A and B can be stated as indicated below.
CA = aYA + bA
CB = aYB + bB
The combined consumption function C = CA + CB
The requisite equation is highlighted as shown below.
C = a(YA+YB) + bA + bB
3. The objective is to obtain a formula for YB in terms of the other variables which may be achieved as indicated below.
C = a(YA+YB) + bA + bB
C- bA - bB = a(YA+YB)
(C- bA - bB)/a = YA+YB
Hence, YB = [(C- bA - bB)/a] - YA
4. The requisite graph is shown below.
5. The slope for the function is 1/a. GDP in region B is associated with a lower level of well-being since for a given value of C, there are constants in the form of b/a and YA which would subtracted from the consumption to arrive at the GDP value for the region B.
6. Yes, GDP as a measurement of well-being does capture this inequality. This is because if the region A is very rich, then the same would be reflected in the GDP of A which would lead to YA being higher. As a result, for a given consumption level, the value of YB would be small only which would be reflective of the poor economic status of the nation B.
7. The contribution of the loaf of bread and a movie ticket would be $ 6 and $ 150 respectively. This is because GDP is the sum total of the value of the goods and services produced in a given nation. This clearly does not adequately reflect the contribution to the human well-being even though bread fulfils the basic necessity of food but still it is priced considerably lower than a movie ticket which tends to provide mere entertainment. Thus, their respective values individually do not reflect the contribution they make to the human well-being.
8. Since country 1 has capitalised on the forest wealth and generated earnings to the tune of $ 100 million, hence the GDP of this country would be higher in comparison to country 2 which does not exploit the forest resources. Thus, if GDP is the grading metric, it is apparent that country 1 seems better off as the GDP increases. However, this is not an accurate assessment as the extensive forests play a significant role in the ecological balance and their intrinsic worth could be significantly higher than the commercial gains derived. Also, GDP as an evaluation metric does not consider the incremental environmental cost which is essentially not direct. Thus, essentially country 2 which decides to conserve the rich forests would be better off in the long run n comparison to country 1.
Section C
1. The human population is living beyond the Earth’s natural bio-capacity. This has been the case since 1987 when the ecological footprint crossed 1. Clearly, this trend is not sustainable and needs to be rectified.
2. Ecological footprint in 1986 =1
Ecological footprint in 2005 = 1.3
Thus slope = (1.3-1)/(2005-1986) = 0.016 per year
The unit of measurement is number of earths per year.
The requisite graph is indicated below.
3. Ecological footprint in 2005 = 1.3
Number of years to 2050 = 2050-2005 = 45
Hence, expected ecological footprint in 2050 at the given rate = 1.3 + 45*0.016 = 2.01
Thus, more than 2 earths would be required to sustain human race.
4. The largest component of land use in accordance with EF is carbon uptake land,
Level in 1961 = 0.05
Level in 2005 = 0.65
Total increase = 0.65-0.05 = 0.6
Number of years elapsed = 2005-1961 = 44 years
Rate of growth = 0.6/44 or 0.0136 per year (assuming a linear trend)
5. It is apparent that major land use pertains to carbon uptake land, crop land and grazing land. It is essential that the amount of carbon emissions need to be lowered so that the carbon uptake increase is contained which is of utmost importance. This can be achieved by migrating to the renewable sources of energy to the extent possible. Also, energy efficiency needs to be enhanced so that wastage of energy is reduced. Further, with regards to crop land, the emphasis should be on environmentally friendly practices such as organic farming which tend to maintain the soil fertility in the long run. Also, practices such as mulching, drip irrigation need to be practised so as to lower the overall water consumption. Further, for grazing, there should be dedicated parcels of land where the same can be sustained. Grazing activity in areas where plant growth is is nascent stage need to be regulated. Through the above measures, the ecological footprint may be improved.
Section D
1. Annual consumption of electricity by original luminaries = 5,252,613 Kwh
Annual lighting bill in 2010/2011 = $654,476
Annual consumption of electricity by LED’s = 2,595,743 Kwh
Annual light bill with LED = 654,476*(2,595,743/5,252,613) = $ 323,430
Annual savings during the first year = 654476 – 323430 = $ 331,046
Hence, during the first year, the city would save $ 331,046 on public lighting.
2. Total saving of electricity annually due to energy efficient LED’s = 5,252,613 - 2,595,743 = 2,656,870
Savings in terms of CO2 emissions = 2,656,870 * 1.07 = 2,842,851 kg or 2,842.85 tonnes
Owing to higher carbon dioxide emissions, there is climate change which tends to impact the health of people along with their respective energy usage for heating and cooling. Further, it also impacts the energy prices along with the crop productivity. These incremental costs are clubbed together and referred to as social costs (EPA, nd).
Social savings of the project in the first year = 2,842.85*17 = $ 48,328.5
3. The project breakeven is achieved at the end of the 12th year. Also, the discount factor = 5% pa.
The maximum price that should be paid for the project would be equal to the net present value of the social savings expected from the project over a 12 year period as has been computed below.
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