ASRB NET and ARS / SMS / STO recruitment · India · Agricultural Scientists Recruitment Board (ICAR)
Original practice questions written to the published syllabus · not past papersEconomics applied to land, water, forests and the environment: property rights, depletion, valuing what markets do not price, and correcting externalities.
In the exams: agricultural economics PhD entrance and fellowship examinations, resource and environmental economics (heavy); agricultural scientist eligibility tests (heavy); agricultural development bank officer recruitment, climate change and soil and water conservation (present)
How our questions for ASRB NET and ARS / SMS / STO recruitment spread across the units of Natural Resource & Environmental Economics. Difficulty: 28 easy, 43 medium, 26 hard.
| Valuing non-market benefits: contingent valuation, travel cost, hedonic pricing | 12 | |
| Classification of natural resources | 9 | |
| Common property and open access | 9 | |
| Hotelling rule for exhaustible resources | 9 | |
| Externalities and the Pigouvian tax | 9 | |
| Sustainability indicators | 9 | |
| Environmental accounting | 8 | |
| Command-and-control versus emission trading | 8 | |
| Property rights | 7 | |
| Ecosystem services | 6 | |
| Economics of water resources | 6 | |
| Environmental impact assessment | 5 |
Choose an answer, then open the working. Each explanation says why the right answer is right and why the others are not.
Why do some newer frameworks, such as the Common International Classification of Ecosystem Services, not list supporting services as a separate class for valuation?
B. Their value is already embodied in the final services they support, so counting them separately would double-count
Soil formation and nutrient cycling matter because they produce crops, clean water and so on. Adding their value to the value of those final services counts the same benefit twice. They are highly valuable, just not additive.
Further reading: CICES; Millennium Ecosystem Assessment
A government pays farmers to plant trees on land that, according to satellite records, most of them would have afforested anyway because timber prices rose. The main design flaw is lack of:
D. Additionality
Additionality asks whether the payment causes the service to be supplied. Paying for what would have happened anyway buys nothing. Leakage is when clearing moves elsewhere; permanence is whether gains last. Both are separate PES design problems.
Further reading: Tietenberg and Lewis, Environmental and Natural Resource Economics
In dynamic fishery models, what happens to the optimal stock as the discount rate rises toward infinity?
A. It falls to the open-access stock
A higher discount rate lowers the value of leaving fish in the water to grow. Clark showed that with an infinite discount rate future rent counts for nothing, the same as under open access, so the optimal stock approaches the open-access stock. At a zero discount rate it equals the static MEY stock.
Further reading: Clark, Mathematical Bioeconomics
A factory's effluent causes damage of 300 per season to a downstream fish farm. A filter costing 200 per season would eliminate it. Transaction costs are zero. If the factory holds the legal right to discharge, what is the efficient outcome under the Coase theorem?
A. The fish farmer pays the factory between 200 and 300 and the filter is installed
Installing the filter (200) is cheaper than the damage (300), so it is efficient. With the right held by the factory, the victim will pay any amount up to 300 and the factory accepts anything above 200. If the fish farmer held the right, the factory would install the filter at its own cost. The allocation affects who pays, not whether the filter is installed.
Further reading: Coase 1960
The UN framework for integrating environmental information with national accounts, whose Central Framework was adopted as an international statistical standard in 2012, is called:
B. System of Environmental-Economic Accounting (SEEA)
SEEA is the satellite framework to the SNA for environmental assets and flows. The SNA is the core national accounts system; the MA is an ecosystem assessment; the HDI is a development index.
Further reading: UN SEEA Central Framework 2012
In natural resource accounting, the net-price method values depletion as:
B. Resource rent per unit (price minus marginal or average extraction cost) times the quantity extracted
The net-price method multiplies unit rent by quantity extracted. Counting only the reinvestment component is El Serafy's user-cost method, which gives a smaller depletion charge. Restoration cost is a maintenance-cost approach to degradation.
Further reading: El Serafy 1989; UN SEEA
Expenditure by households on water purifiers because of polluted supply raises measured GDP although it only offsets a loss of environmental quality. Such spending is called:
C. Defensive expenditure
Defensive (or averting) expenditures protect against environmental damage. Green accounting argues they should not count as net welfare gains. They are not transfers, and user cost refers to resource depletion.
Further reading: Perman et al., Natural Resource and Environmental Economics
A pollution control policy is cost-effective when:
D. Marginal abatement costs are equal
The equimarginal principle: if one source can abate more cheaply at the margin, shifting abatement to it lowers total cost. Uniform amounts or percentages ignore cost differences. Equal total costs has no efficiency meaning. The equality must hold across all sources.
Further reading: Tietenberg and Lewis, Environmental and Natural Resource Economics
Strategic environmental assessment (SEA) differs from project-level EIA in that it:
D. Applies to policies, plans and programmes, allowing cumulative effects and broad alternatives to be considered earlier
Project EIA comes late, when location and design are largely fixed. SEA applies at the plan or policy stage, such as a state irrigation master plan, where cumulative impacts across many projects and strategic alternatives can still be chosen.
Further reading: Therivel; UNEP
A reviewer finds that an EIA report for a large irrigation project considers only the proposed dam site, gives no quantitative baseline for downstream fisheries and relies on a consultant paid by the proponent. Which widely cited weaknesses of EIA practice does this illustrate?
A. Weak analysis of alternatives, inadequate baseline data and lack of independence
Reviews of EIA systems worldwide repeatedly identify weak treatment of alternatives, poor baselines (especially for downstream and cumulative effects) and conflict of interest when the proponent pays the consultant. The other options describe the opposite of common failings.
Further reading: Glasson, Therivel and Chadwick, Introduction to Environmental Impact Assessment
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