PREPARED BY:

NURNASYRAH BINTI ABD GHAFUR (1311171339)

NUR HANANI BINTI ADNAN (1311171336)

ASIAH NADHIRAH BINTI NOR NIZAM (1311171317)

1. Outline the nature of the two most costly environmental problems that Iran faces.

The two most costly environmental problems that Iran faces are the land degradation and water degradation. Degradation of land is mainly because of deforestation that can lead to the increasing number of floods. Meanwhile, water degradation is because of water is being overexploited leading to excessive usage of water. Moreover, the intensive farming techniques have make it worse.

2. Why might these problems be caused by a failure of markets to include externalities in the resource allocation decisions of consumers and producers?

Externalities is the decision of producers and consumers that affect the third party which is the society. In this problem, the negative externalities happened due to they failed to take a good care of their environment. The disaster such as flood happened due to drain blockage can also cause the water pollution. Moreover, due to deforestation the local inhabitants had depleted because the local citizen do not have shelter so they will be exposed to the harm. Deforestation and the erosion of wetland can cause the variation of bio-diversity had decreased.

Next, in terms of water degradation mostly it had impact on health which is about 78% damage as shown in the Figure 9. Sub-standard quality and inadequate quantities of water for drinking and hygienic purpose and inadequate sanitation facilities lead to waterborne illness and mortality. This happened because of the water in Iran are being overexploited and thus lowering the water table. Other than that, diarrhea also will takes place among the children. Therefore, the consumers have to bear the costs of visits the doctor and medicine. If they did not been cure, the life expectancy of Iran will decrease in future.

Lastly, the problem of air pollution. Most of the pollution occur in the urban area as the urban area are including the huge factory, usage of car and open-burning. Air pollution enables the presence of particulates which could leads to chronic bronchitis and other respiratory problems. As a result, it will give negative impact to the society such as their rate of health will decrease due to these diseases . The death rate because of the air pollution will rise over time.

These three types of pollution cause a negative externalities that affect the external costs where MSC exceed MPC. The point A is market equilibrium point such that MPC = MPB while point B will be the social optimum point where MSC = MSB. Then, the region of area ABC will present the net welfare loss to the society.

3. Evaluate whether Iran should ignore the concept of sustainable development if this means that it can boost production of essential goods such as food and energy.Sustainable development does include economic growth, environmental protection and

social equality and also defined as improving the quality of human life while living within the carrying capacity of supporting ecosystem. In this case, the main issue is environmental protection which degraded the environment in Iran.

Deforestation is needed in order to open a new farms or creating a new dam for the energy production. Sometimes the government have to make the trade-off (degradation of environmental) so they could satisfy the basic needs of increased of the population. Human needs food and energy to survive. Therefore, Iran have to ignore the pollution occur so they can fulfil the essentials of the population.

However, deforestation had led to lower crop field due to increase of soil salinity which is opposite with the government’s aim. The government also have to increase the expenditure on the farming incentive so the soil salinity could be eliminated implying that the resources (budget) should be spend on other sector. Hence, the government’s objective cannot be achieved since the deforestation does have negative impact on food production.

Other than land, water does contributed to the environmental degradation. Some wells are now dry and new wells have had to be dug as stated in the passage leading to the water degradation is happened in order to find another water resources that sufficient for the locals. Soil erosion due to more intensive farming techniques which satisfy the foods supply should be consider as one of the producers incentive to help providing foods. Therefore, Iran have to ignore the concept of sustainable development .

However, the water pollution and scarcity of water will affect the health state of the citizens of Iran. The water pollution will reduce the access of the citizens to the clean water to fulfill their basic needs. Thus, the malnutrition and dehydration will reduce the life expectancy of the citizens. The standard of living will be reduced even though the they are getting the sufficient foods supply.

By highlighting the air pollution, most of indoor pollution are caused by burning of woods and biomass fuel for cooking and heating. Human needs these energy in their daily life to survive, like in Iran, many of the citizens are still using firewood to cook at home. Even though it is true the burning of woods could lead to mass air pollution but the locals need the energy to cook food to eat and boil the water for drinking. Thus, there is nothing can be done to concern more on environmental if the lifestyles of Iran do not be upgraded.

Nevertheless, in long term the effect of releasing too much carbon dioxide would distort the economy. For instance, a worker would ask for a leave letter from the clinic due to health problem which would disturb the productivity of the place he works or the provision of public goods such as public hospitals would be hugely under-provision since there are many of people are coming to get a treatment on health caused by the air pollution. This would lead to more government expenditure instead of only maintaining the weaver of environmental protection. Hence, in the long run Iran have to spend more on healthcare due to air degradation.