Explain why the exploitation of common access resources, such as uncontrolled fishing, might pose a threat to sustainability.

Evaluate whether the use of carbon taxes is the most effective way for the government to deal with the threat to sustainability posed by the use of fossil fuels.

Answers may include:

• definitions of common access resources and sustainability
• diagram to show the negative externality associated with common access resources and/or demand and supply diagram
• explanation of why the exploitation of common access resources, such as uncontrolled fishing, might pose a threat to sustainability
• examples of the over-exploitation of common access resources.

Marks should be allocated according to the Paper 1 markbands for May 2013 forward, part A.

Answers may include:

• definitions of carbon taxes, sustainability, negative externalities
• diagrams to show the effect of carbon taxes on the market for fossil fuels and how market failure is eliminated
• explanation of how carbon taxes will increase costs of production and increase the price of fossil fuels, leading to a decrease in their consumption
• examples of government responses to the threat to sustainability arising from the use of fossil fuels
• synthesis or evaluation.

Evaluation may include: the limitations of using carbon taxes, such as identifying the size of the externality and estimating the impact on demand, the difficulty of identifying which firms are liable to the tax, the fact that taxes do not stop the use of fossil fuels but only discourage it; alternative methods, such as legislation and “cap and trade”; references to subsidies / investment in alternative energy sources.

Examiners should be aware that candidates may take a different approach which, if appropriate, should be rewarded.

Opinions or conclusions should be presented clearly and should be supported by appropriate examples.

Marks should be allocated according to the Paper 1 markbands for May 2013 forward, part B.