ICAR AICE-JRF/SRF (PhD admission and fellowship) · India · National Testing Agency for 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)
ICAR AICE-JRF/SRF Agricultural Economics (Units 2 and 5)
Property-right regimes and the commons; Coase theorem; Pigouvian tax and deadweight loss; Hotelling rule and user cost; MSY, MEY and open access; Faustmann rotation; valuation methods (CVM biases, travel cost consumer surplus, hedonic); weak and strong sustainability, Hartwick rule; green accounting; groundwater externalities. Expect short numericals and 'which method or instrument fits' questions.
How our questions for ICAR AICE-JRF/SRF spread across the units of Natural Resource & Environmental Economics. Difficulty: 20 easy, 36 medium, 26 hard.
| Valuing non-market benefits: contingent valuation, travel cost, hedonic pricing | 11 | |
| Classification of natural resources | 8 | |
| Common property and open access | 8 | |
| Externalities and the Pigouvian tax | 8 | |
| Sustainability indicators | 8 | |
| Hotelling rule for exhaustible resources | 7 | |
| Command-and-control versus emission trading | 7 | |
| Environmental accounting | 6 | |
| Ecosystem services | 5 | |
| Property rights | 5 | |
| Economics of water resources | 5 | |
| Environmental impact assessment | 4 |
Choose an answer, then open the working. Each explanation says why the right answer is right and why the others are not.
A fish stock that has been harvested below its critical minimum level, from which it cannot recover, is best described as:
B. A renewable resource that now behaves like an exhaustible one
Renewable resources regenerate only above a critical zone. Below it the stock cannot rebuild, so further use permanently reduces it, as with an exhaustible stock. Fish are not a flow resource because harvest does reduce the stock.
Further reading: Perman et al., Natural Resource and Environmental Economics
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 scarcity rent (price minus marginal extraction cost) of a mineral is 50 per tonne today and the interest rate is 5 per cent per year. According to the Hotelling rule, what will the rent be after 10 years?
D. 81.44 per tonne
Rent grows at r with compounding: 50 × 1.05^10 = 81.44. Simple interest gives 75.00; compounding at 10 per cent gives 129.69; a constant rent ignores the opportunity cost of waiting.
Further reading: Hotelling 1931
In a zonal travel cost study, visits per 1,000 population are V = 12 − 0.2 × TC. A zone of 50,000 people has a travel cost of 30 per visit. What are the zone's annual visits and its total consumer surplus?
C. 300 visits; consumer surplus 4,500
Visit rate = 12 − 6 = 6 per 1,000, so visits = 6 × 50 = 300. Choke cost = 12/0.2 = 60. Surplus per 1,000 people = ½ × 6 × (60 − 30) = 90; for 50 thousand people, 90 × 50 = 4,500. Forgetting to scale by population gives 90; travel expenditure 9,000 is not surplus; 13,500 is total willingness to pay, surplus plus expenditure.
Further reading: Clawson and Knetsch
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
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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