Project management question

Compare and contrast the following risk assessment methodologies: (a) the Delphi technique, (b) sensitivity analysis, and (c) Monte Carlo simulation. Provide a rationale for your response.

• Environmental eonomicsis unique from standard economic analysis in that risks and benefits may be very difficult to assess, there may be incremental benefits, unknown linkages, and sometimes devastating unforeseen consequences. Given this uncertainty, suppose that you are part of a research teamevaluating a proposal to clean up a hazardous waste site. How would you assess the benefits? What would be the primary variables of interest, the data requirements, and potential pitfalls?

 

• Restoring wetlands today may convey benefits 50 years from today estimated at $50,000 (fishing, oyster cultivation, habitat preservation).

1. i)  Calculate the present value of this project using a social discount rate of 3% and assuming that inflation is 2% (thus a nominal social discount rate of 5%).
   ii) Next, calculate the present value using the same inflation rate but a social discount rate of 1%. Show your calculations in a table.

If the cost of preserving the wetlands is $10,000 in the present, would the project be feasible? Use the present value of net benefits to support your decisions and explain how this differs from the benefit-cost ratio.

Discuss the importance of choosing the social discount rate and how society may be inappropriately evaluating the benefits of environmental projects.

• Briefly summarize economist Paul Portney’s critique of the Clean Air Act Amendment, referencing allocative efficiency and marginal analysis versus total cost-benefit analysis. Contrast this to the EPA analysis and critique these two assessments.

 

• Discuss various pricing mechanisms that reduce municipal solid wastes (MSW) including flat-fee pricing, waste-end charges, retail-disposal charges, and deposit-refund charges. What are the pros and cons of each mechanism with regard to efficiency of waste reduction and ability to implement the mechanism?

 

• The World Trade Organization and its predecessor GATT are frequently criticized for their decisions regarding the environment. Briefly discuss the relationship between economic growth and environmental degradation, and then discuss the contribution of international trade to economic growth. Use this as a background to discuss the 1991 GATT ruling that the United States could not block imports of tuna from Mexico that were harvested under conditions yielding an unacceptably high incidental kill rate of dolphins.