VJC_H2_ECON_P1

1 VICTORIA JUNIOR COLLEGE 2011 JC2 PRELIMINARY EXAM H2 ECONOMICS – PAPER NO. 9732/01 16 September 2011 8:00 – 10:15 am READ THESE INSTRUCTIONS FIRST Write your name and class on all the work you hand in. Write in dark blue or black pen. You may use a soft pencil for diagrams. Do not use staples, paper clips, glue or correction fluid on the work that you hand in. Answer all questions. The number of marks is given in [ ] at the end of each question or part question. At the end of the examination, fasten your work securely, by question, using the strings provided. ____________________________________________________________________ This document consists of 9 printed pages.

2 Answer all questions. Question 1 Water: Scarcity or Shortage? Extract 1 Drinkable water, a basic human need, is a scarce natural resource, just like oil and gas. Water may become the most precious natural resource as the world’s population grows. Of principal concern is our failure to recognize and accept that there is a finite supply of water. Over half of the world’s population could be living in areas w here water is projected to run short by 2030. This would be a result of a number of factors such as the increased demand for food and agricultural products and the cultivation of biofuel crops. Studies have shown that demand for water increases significantly as the world population expands and economies grow, which further intensifies the competition and conflicts among water users for the limited supplies of water. Source: Adapted from various reports from World Bank, 2009 Extract 2 To mitigate and adapt to water scarcity, there have been some policy responses such as preserving or improving the quality of the available resource. This is done through enhanced pollution abatement and wastewater treatment. While most developed countries have tackled surface water pollution problems through regulation, pollution from diffuse sources continues, particularly from agriculture. Figure 1: Projected world water use: By sector

3 Another way is to manage its demand. The cheapest new source of water has often been water gained through conservation. Demand management changes the nature of needs for water supply infrastructure. Improving conservation can reduce the need for new and expensive water supply projects, which require high capital intensity, large initial outlays and long payback periods. Climate change and over-use of wa ter will mean that nearly one in every two people will live in water-stressed areas by 2030. This has given the private sector the opportunity to be involved in the development of technology for water provision. New studies say that putting the right price on water will give people the inc entive to waste less, pollute le ss, and invest more