NYJC H2 ECONS CSQ1 QP with answers

1 2018 JC2 H2 ECONOMICS PRELIM CSQ 1 Figure 1: Plastic Waste and Recycling Rates in Singapore Source: National Environmental Agency (n.d.). Waste Statistics and Overall Recycling Figure 2: Change in environmental impacts of Pre- and Post-Ban Bag-use in San Diego Footnote: GHG – Greenhouse gas; MJ – Megajoule; Fresh Water consumption due to paper bag production and washing of reusable bags Source: Center for Sustainable Energy, Plastic Bag Bans: Analysis of Economic and Environmental impacts, 23 October, 2013 Plastic Waste Produced (tonne) Plastic Recycled (%) Millions of Tonx CO2 Equiv. Millions of Kg Millions of MJ Millions of Gallons 0.014 0.012 0.010 0.008 0.006 0.004 0.002 0 2.4 2.3 2.2 2.1 2.0 1.9 1.8 250 200 150 100 50 0 60 40 20 0 Pre-Ban Pre-Ban Pre-Ban Pre-Ban Post-Ban Post-Ban Post-BanPost-Ban GHG emissions Per Year Solid Waste Per Year Total Energy Per Year Fresh Water Consumption Per Year

2 Extract 1: A War the World Must Win Kathmandu alone uses around 4,700,000 to 4,800,000 plastic bags daily. In Nepal, 16 per cent of urban waste is comprised of plastic, which is 2.7 tons of daily plastic garbage production. Besides the sheer quantity of plastic wast e being produced, one of the major problems with plastic is its resistance to degr adation. A conservative estimate puts the average time for one single plastic bag to completely biodegrade at 500 years. This means that not only most of the plastic we use during our lives will outlive us, but that our plastic footprin t also will affect the generations to come. The Hindu Kush Himalaya covering the connected mountains of eight countries — Afghanistan, Bangladesh, Bhutan, China, India, Myanmar, Nepal and Pakistan — are the source of ten great rivers that provide drinking water, irrigati on, hydropower and life, and eventually reach the oceans. The flow of water from the Himalayas to the oceans also carries plastics and solid waste, posing a threat to both ecosystems and people in the mountains, plains and seas. In Nepal, plastic waste is well known for clogging the ri vers and streams in the mountains and hills, resulting in flash floods. Source: A War the World Must Win, The Statesman, 3 July 2018 Extract 2: England's plastic bag usage drops 85% since 5p charge introduced The number of single-use plastic bags used by shoppers in England has plummeted by more than 85% after the introduction of a 5p charge last October, early figures suggest. More than 7bn bags were handed out by seven main supermarkets in the year before the charge, but this figure plummeted to slightly more than 500m in the first six months after the charge was introduced, the Department for Environmen t, Food and Rural Affairs (Defra) said. This shows that plastic bag consumption can be price-sensitive to UK consumers. Retailers with 250 or more full-time equivalent employees have to charge a minimum of 5p for the bags they provide for shopping in stores and for deliveries, but smaller shops and paper bags are not included. There are also exemptions for some goods, such as raw meat and fish, prescription medicines, seeds and flowers and live fish. Source: Adapted from England's plastic bag usage drops 85% since 5p charge introduced, The Guardian, 30 July, 2016 Extract 3: Designing a solution to plastic bag waste that fits Plastic bags are given out freely with purchases at supermarkets. Approximately 3 billion plastic bags were used in Singapore in 2011, resulting in an average of 1.6 plastic bags used per person on a daily basis. This high annual usage of plastic bags has been cause of much concern from environmentalists and concerned members of the public alike. Several countries and cities around the world have already introduced legal measures such as plastic bag levies and taxes, to put an end to t he practice of shoppers receiving an unlimited

3 amount of plastic bags at no charge. These financial disincentives take two main forms – taxes that are enforced on plastic bag m anufacturers or importers for t he plastic bags sold by them and levies that are imposed on consumers at the point of sale. On a worldwide scale, more than 75 countries have taken steps to reduce the consumption of single-use plastic bags. About one- third of these have instituted bans, approximately one-third have instituted fees. A tax on plastic bags would be the most direct and effective way of correcting this market failure. On the other hand, environmental advocates, wh ile encouraging the recycling of plastic bags, propose several alternatives to traditional plastic bags, including biodegradable or compostable bags for single-use purposes, paper bags for si ngle-use purposes, reusable bags made from low density polyethylene (LDPE) or non-woven polypropylene, and cotton tote bags. However, in the real world, recycling carries costs that are often overlooked. For example, recycling paper could cause more severe water pollution or soil contamination as the removal of ink from paper requires harsh chemical treatment, with the resultant sludge needing to be disposed of somehow. The process of recycling could also be more energy intensive than the extraction of raw materials. Source: Multiple sources Questions (a) Describe the trend of plastic waste pr oduction and plastic recycled from 2010 to 2016. [2] (b) Explain the probable price elasticity of demand for plastic bags in the UK. [3] (c) (i) Explain the source of market failu re for the plastic bag market mentioned in Extract 1. [2] (ii) With the use of a diagram, illustra te how free provision of plastic bags worsens the issue of market failure identified above. [5] (d) With reference to Extract 3 and any ot her data, comment on the effectiveness of the solutions proposed by the environmental advocates to reduce consumption of plastic bags in Singapore. [8] (e) Assess the factors the Singapore gov ernment should consider when deciding between imposing a ban and a tax on plastic bags. [10] [Total : 30] Copyright Acknowledgements: Extract 3 © Designing a solution that fits, The Straits Times, 11 Nov 2017 © An Analysis of the Impact of Single-Use Plastic Bags, New York State Plastic Bag © Task Force Report, 13 January, 2018 © Identifying and mitigating the wastage an inefficient use of plastic bags in Singapore, Singapore Environment Council, 2013 © Recycling can be too much of the of a good thing, The Straits Times, 17 March, 2018

4 Suggested answers: (a) Describe the trend of plastic waste production and plastic recycled from 2010 to 2016. [2] Plastic waste production has been generally increasing from 2010 to 2016 [1m] and the rate of plastic recycled has been gener ally decreasing from 11% to less than 5% [1m]. (b) Explain the probable price elasticity of demand for plastic bags in the UK. [3] • Definition: PED measures the responsiven ess of the quantity demanded to a change in the price of the good, ceteris paribus. [1m] • Identification: PED of plastic bags in the UK is price elastic. [1m] • Justification: As mentioned in Extract 2, UK consumers are price sensitive (or the significant fall in 85% of pl astic usage due to the 5p charge). This shows that UK consumers are very responsive to any change in plastic bag price. Hence, an increase in price of plastic bags will lead to a more than proportionate fall in quantity demanded of plastic bags in the UK. [1m] (c) (i) Explain the source of market failure for the plastic bag market mentioned in Extract 1. [2] • Identify source of MF: Negative externality due to consumption. [1m] • Evidence with analysis: From Extract 1, the dam age to irrigation system and dam; contamination of drinking wate r, causing farmers living near the damaged dam to lose their livelih ood and people who consumed the contaminated water to suffer from deteriorating healt