DataTotal damages due to increase in temperatureTotal cost of emis.docx

DataTotal damages due to increase in temperatureTotal cost of
emissions controlTotal damages ($ trillions)Increase in
temperature (°C)Total cost of control ($/ton of
carbon)Emissions control
(fraction)0.00000.00.531230.11.331.5750.22.4021620.33.732.52
900.45.3334650.57.203.56930.69.3349800.711.734.513320.814.
40517550.917.335.520.536
Sheet3
Running head: PROJECT MANAGEMENT ROAD MAP
1
PROJECT MANAGEMENT ROAD MAP 12
Project Management Road Map
Student’s name
Course name and number
Instructor’s name
Date
Part 1: Project Management Plan
A) Executive Summary
Business need

Gladwell Grocery operates ten stores. It has around four
hundred and twenty employees to assist in performing the daily
work activities. The firm has one main employee who performs
both the human resources and operations management functions.
This person visits all the stores on a weekly basis to perform
various functions. The majority of the employees are part-timers
thus, the chance of meeting all the employees during a visit are
low. Additionally, travelling costs are high because of increased
fuel prices. The manager further wastes time visiting these
locations. It is also tiresome making regular visits and
performing similar tasks manually. It is therefore, recommended
that the firm adopts a Human Resource Information System
(HRIS) to benefit from low costs, rapid decision making, and
reduced paper work.
Work statement
The activities that are required for this project are:
· Assess the retail sector in which Gladweell stores falls under
and identify issues
· Define the human resources functions recommended for
Gladwell stores
· Select the most important function
· Choose the HRIS type that is appropriate for the selected
function
· Research HRIS vendors
· Choose the best software for implementation
· Implementation phase
· Project schedule
· Going live
Project objectives
The objectives are:
· To identify the most significant human resources function for
Gladwell
· To recommend on the best HRIS
· To show how Gladwell stores will implement the selected
HRIS
Constraints / limitations

The constraints and limitations identified for this project:
· The costs and benefits of the HRIS are based on estimates
· Exerted effort depends on voluntary involvement by the
stakeholders
Assumptions
The assumptions are:
· This project has the approval from authority
B) Scope overview
Phase 1 –Requirements
a. Find out retail sector issues:
· High labor turnover
· Adhering to regulatory laws- Wage rules and labor laws
· Heart breaks encountered by employees as a result of
interacting directly with the customers
· Diversity management challenge
· Season fluctuation-Existing workers clashing with new
workers added during high season.
b. Define human resources functions for Gladwell based on
identified issues:
· Planning
· Compensation and benefits
· Recruitment and selection
· Performance appraisal
· Training and development
· Employee and labor relations
· Employee safety and health
· Preparing payroll
c. Select most important function
d. Select the best HRIS type with regards to recruitment and
selection function
· Decision support system
· It will be of great help to Gladwell in assessing and
forecasting staffing needs
· The system offers weights and criteria to evaluate and assess
job candidates

e. Choose HRIS vendors
SAP Business Objects BI
Assists in viewing, sorting, and analyzing data
The functions offered by the software:
I) Designing and producing reports
II) Creating interactive dashboards
III) Visualizing data
IV) Developing queries
V) Analyzing data
VI) Searching via data sources
Benefits
I) Eliminates report duplication
II) Guarantees consistent and accurate data
III) Works together with other enterprise solutions
IV) It is flexible, scalable, easy to use, and of high quality
Supported human resource functions
I) Strategic planning
II) Performance appraisal
III) Budgeting
IV) Forecasting
V) Benchmarking
Price
I) Thirty-day free trial
II) Pay $21 per month to use it
1000 Minds software
The functions offered by the software:
I) Decision making
II) Prioritization
III) Money value evaluation
IV) Comprehending stakeholder values
Benefits
I) It is quick
II) Has won numerous awards for being innovative
III) User-friendly
IV) Scientifically valid
Supported human resource functions

I) Budgeting
II) Forecasting
III) Sensitivity analysis
IV) Data analysis
V) Decision tree analysis
VI) It will help Gladwell Stores to assess staffing needs and
analyze the labor market.
Price
I) Twenty-one day free trial
II) Pay annual fee
f) Best software for implementation
The best system for Gladwell is 1000 minds. It is a decision
support system that will quicken recruitment and selection
besides hire the best job candidate, the most significant function
for the firm. Employees are needed to perform work. It is the
most costly function. Hiring the wrong people may contribute to
high exits leading to missed opportunities and delays in doing
work, eventually pulling down the company’s productivity
level.
Phase 2: Implementation planning
Current human resource function determination
Gladwell manually performs its functions. The only system that
it uses is spreadsheets when preparing payrolls. The firm needs
to invest in new system to reap the benefits of HRIS
implementation. The stakeholders who will be affected are the
employees. Training will be required to help them learn and
adopt new system. The human resources team will be the key
participants of the new software.
Project lead
The implementation will be overseen by the project manager.
Interface choice
Gladwell will use a single interface. One system is suitable to
address the need.
Risk management
The amount of time and resources to manage risks will be
determined. In addition, a risk assessment will help to make a

decision on how to treat anticipated and unexpected risks.
Implementation
The new system will be rolled out gradually
Team leaders will be chosen focused on qualifications and the
ability to handle work stress during the transition period.
Extended support
Systems often fail even if the plans are understandable.
Moreover, workload tends to increase as implementation nears.
The resources will not however, be reduced to save costs in
order to attain the highlighted project objectives.
Implementation steps
First, configure the system for policies and processes. Come up
with particular workflows and policies related with various
function such as training and payroll. Then, try to internalize
how the system is required to function. Ensure that the system
accommodates how the business is run. Second, the data is
interfaced with other systems. Change the historic data into the
new system. Thorough preparation will be needed for example,
training preparation. In addition, the employees must
acknowledge the fact that they will have to perform things in a
different way. It is recommended to test the system on a small
group to collect feedback on how to conduct the training. Also
form teams to handle various HRIS activities (Gomez-Mejia,
Balkin & Cardy, 2016). Finally, get prepared for the HRIS.
Estimate resources needed for implementation, communications,
and training. Stress and problems may occur because several
changes will happen before, during, and after the
implementation (Mahajan, 2015). Communication plans and
using teams will assist in managing change.
Scope management Plan
The proposed changes will be analyzed in relation to effect on
resource use, project schedule, and cost. Revisions and
documentations will be made if changes occur. Any changes
made will be approved by the project manager. Changes to
funding or staffing will be approved by project owners.
C) Budget overview

The firm will pay $300 per annum for software license fee. $50
will account for the pay whenever technical personnel are called
upon to assist in using the software. In addition, the human
resources team will be trained on how to use the software. $150
is needed as training cost.
D) Project team
The stakeholders who will participate in the planning are:
Executive sponsors: Contribute resources and act as project
influencers
· Kathy Arbeit
· Jackson Kelly
Project owners: Ensure resources sufficiency and monitor the
project
· Ross peters
· Adams Clarke
Project Manager: Direct planning and execution
· John Bells: Company manager
Implementation team: Rollouts the new software
· Edith Romney
· Ann Harrison
E) Project schedule
The approximated time for each task and the responsible
persons will be detailed. The schedule will be updated as soon
as each task is completed. The project manager will endorse the
schedule.
F) Going live
Communication
Through communication, the staff will know what to expect.
Communication prepares staff to deal with new functions. To
avoid rumors, outline what is going to take place and the
specific dates for implementation (Employee Connect, 2016).
Meetings will be held weekly to check on work progress and
clarify issues.
Switching over
The project lead will leave the system to lower staff to control
configuration after mastering it (Employee Connect, 2016). The

human resource staff should learn to configure and maintain the
system.
G) Issues management
The team will establish if an issue is important to involve the
project manager if it occurs. The project manager together with
the team lead will arrive at a consensus whether the entire
organization should be involved in the matter.
I) Approval
The executive sponsors, project manager, and owners will
approve the plan. Any changes to the project will be approved
by the project manager and owners.
Part 2: Cost justification
Cost-Benefit matrix
Direct
$ estimate
When benefit / cost is incurred
Indirect
$ estimate
When benefit / cost is incurred
Reduced cost (benefit)
Eliminates travelling cost.
$300 / month
During travelling
Potential costs (saves time that would have been spent doing the
work manually)
$1000 per annum

When performing the HR functions.
Enhanced revenue (benefit)
New revenue (new sales as work delays are eliminated via
correct hiring)
$500 / annum
During grocery sale
Rapid decision making
$300/ month. The cost is related to traveling cost. Initially, the
manager had to visit locations before a decision was made.
Automation will eliminate the cost.
When performing the HR functions, notably recruitment and
selection.
Implementation costs (cost)
Software fee
Training cost
$300 / annum
$150
During installation
To facilitate training materials and pay the instructor
Technical support need
Productivity lost

$50 every time a technician is consulted.
$200
Technician support
During switching to the new system
Justification
The available strategies to justify the HRIS costs are
organization enhancement and avoiding risk. Risk avoiding
strategies help to justify the purchases which are likely to
mitigate future risks. For example, change needed to adhere to
new laws needs justification focused on avoiding risk. By doing
so, future issues which could affect firm survival are avoided
(Kavanagh, Thite & Johnson, 2014). Enhancement strategies
show how the firm will become effective and is measured by
reduced costs and increased revenue.
Part 3: HR metrics
Recruitment and selection was chosen as the most important
Human Resource function for Gladwell. Installation of 1000
minds software will quicken the recruitment and selection
process. By assigning weights and criteria, it will enable the
ranking of job candidates and selecting the best. The labor
turnover rate will therefore, determine if the software promoted
right hiring. The second metric is revenue per employee. The
revenue per employee will determine whether the electronic
recruitment and selection process was effective or not. The
average time taken per hire will determine if electronic
recruiting is fast or not. Finally, the cost of hiring using
traditional techniques will be compared to electronic recruiting
to ascertain if the cost per hire due to implementing the new

system is low or not.
References
Employee Connect. (2016). The roadmap to HRIS
implementation. Retrieved from
https://www.employeeconnect.com/wp-
content/uploads/2016/10/The-Roadmap-to-HRIS-
Implementation.pdf
Gomez-Mejia, L., Balkin, D., & Cardy, R. (2016). Managing
human resources. New York, N.Y.: Pearson Education.
Kavanagh, M., Thite, M., & Johnson, R. (Eds.). (2014). Human
Resource Information Systems: Basics, Applications, and Future
Directions. Thousand Oaks: SAGE Publications, Inc.
Mahajan, J. (2015). Managing Human Resources. New Delhi,
India: Vikas Publishing House.
Needs Assessment
One outstanding benefit of a Human Resource Information
System (HRIS) is that it lowers costs. Gladwell Grocery Stores
considers the manager’s visit to the various stores as expensive
due to increased fuel prices. An HRIS is cost-effective because
it integrates activities into a database. In addition, few people
are needed to operate and maintain the database (Mahajan,
2015). For instance, a module in the system can calculate
automatically the payroll information for all employees by
keying in worked hours and if an employee took a leave of
absence. If the payroll preparation was done manually, the

organization would need the entire staff to calculate taxes,
leaves, and deductions, among other elements for each
employee.
The second benefit is that it promotes rapid decision making.
For instance, the manager has to visit all ten locations to
respond to employee or leadership inquiries. This delays
decision-making because each store has to wait for the
manager’s response to make a decision. An HRIS is an
automated linked network (Jain, 2014), so employees from the
various locations can access the information at the same time.
The needed information by use of key words is typed and
searched, and the information is displayed on the screen.
Furthermore, the system simplifies data comparison and
evaluation, resulting in the production of timely reports.
The third benefit is that it reduces paperwork (Jain, 2014). The
data is keyed into a computer and saved in folders and hard
disks, a process that is fast unlike when the work is done
manually and stored in physical files.
If Gladwell Grocery Stores automates the recruitment and
selection process, it will reduce hiring costs for the
organization. Having an electronic recruitment and selection
process eliminates the costs of hiring recruiters to oversee the
process. Electronic recruitment and selection tools record and
examine data on received applications and screens applicants
(Mahajan, 2015).
HRIS Type
HRIS systems are chosen based on the organizational level to be
supported by the system. Examples include managerial,
operations, strategic, comprehensive, executive, tactical, and
boundary-span levels. Under the boundary spanning level is the
decision support system. This decision support system is
appropriate for Gladwell Grocery Stores because it supports
decision-making. It also helps to forecast activities (Kavanagh,
Thite & Johnson, 2014). By adopting the system, Gladwell
Grocery Stores will be able to assess staffing needs. This
staffing ratio technique is used to forecast hiring needs. If an

organization has ten supervisors and each supervisor controls
five attendants, it has to employ the ratio when filling the job
vacancy for attendants. Productivity ratio can also be used to
forecast hiring needs. In this case, the organization considers
the amount of units each employee produces and the sales
forecasts to compute the ratio (Gomez-Mejia, Balkin & Cardy,
2016). The decision support system will ensure that the
calculations are correct and unbiased. This tool will also assist
in analyzing the labor market. The retail sector is affected by
seasonal fluctuation. During the high season, firms add workers
and when the season is low, some workers are laid off. By
implementing this tool, Gladwell Grocery Stores will be able to
analyze the demand and supply of labor. If the supply is high,
the organization benefits by lowering wages and vice versa.
This decision support system will be of great benefit to
Gladwell’s recruitment and selection function. While selecting,
assessing, and evaluating staff, oral and written examinations
are often used. This method is inadequate because it does not
use weights and criteria to evaluate and assess job candidates.
Decision support systems enable firms to first choose the
criteria to take note of during recruitment and selection,
followed by assigning weights to each criterion. Computation is
done using decision support software. The fuzzy model enables
translating verbal words into numeric figures (Kavanagh, Thite
& Johnson, 2014). Examples of multi-criteria decision methods
that can be used to select staff are group decision support
systems, fuzzy set theory, ELECTRE method, and minimally-
based weight. To fill in the position of a sales manager,
Stanujkic, Djordjevic & Karabasevic (2015) used work
experience, organizational skills, education, computer skills,
problem solving, communication skills, and foreign languages
criteria. The Step-Wise Weight Assessment Ratio Analysis
method was used to determine the criteria weights, while the
new ratio method was employed to rank job candidates. The
second reason why Gladwell Grocery Stores should purchase a
decision support system is that it will enhance the matching of

skills with employer needs. Keenan et al. (2004) gave an
illustration of an electronic system which enables job searchers
to log on and key in required details on a database. The system
also permits employers to access the database and look for job
searchers under various criteria. Thereafter, the system displays
similarity matching on the results page. Skill matching provides
prospective candidates list to the employers which, in turn, help
them to make decisions.
HRIS Vendor
SAP Business Objects BI is decision-support software that
assists in viewing, sorting, and analyzing data. This application
is suitable for designing and producing reports, creating
interactive dashboards, and visualizing data. Moreover, it offers
a self-service platform for developing queries and analyzing
data including searching via data sources. The platform utilizes
a semantic layer which eliminates duplicating reports. It further
guarantees consistent and accurate data. The software can work
together with enterprise solutions inclusive of Microsoft Office
and Salesforce. It is flexible, scalable, easy to use, and of high
quality. The human resource functions that Gladwell Grocery
Stores will benefit from with the application are strategic
planning and performance appraisal. The application also
promotes budgeting, forecasting, and benchmarking (Capterra,
2017). The owner offers a thirty-day free trial. If an
organization likes it, then it will pay $21 per month to obtain
permission to use it.
1000 Minds is software that supports decision making,
prioritization, evaluating money value, and comprehending
stakeholder values. It supports multi-criteria decision-making
and choice-modeling. It implements pair-wise rankings of
alternatives technique. It is quick and follows a six-step
decision process. It has won numerous awards for being
innovative, and it is user-friendly and scientifically valid. It
was founded in 2003. It is internet-enabled with servers in New
Zealand and the United States. It is good for developing
applications, budgeting and forecasting, sensitivity analysis,

analyzing data, and decision tree analysis (Greco, Ehrgott &
Figueira, 2016). Gladwell Grocery Stores will find this tool
helpful, especially in assessing staffing needs and analyzing the
labor market. The owner offers a twenty-one day free trial.
Students use it freely for research purposes. Firms however,
have to pay an annual fee, a price that has not been disclosed by
the company.
Recommendation
Although the owner of 1000 minds has not disclosed the price,
the software is recommended to Gladwell Grocery Stores
because it offers a multi-criteria technique to rank and select
job candidates. The software will, therefore, quicken the
recruitment and selection process, a function that was chosen as
a most critical component for the grocery store.
References
Capterra. (2017). SAP BusinessObjects. Retrieved from
http://www.capterra.com/p/92075/SAP-BusinessObjects/
Greco, S., Ehrgott, M., & Figueira, J. (Eds.). (2016). Multiple
criteria decision analysis: State of the art surveys. New York,
N.Y.: Springer.
Jain, A. (2014). Study on effectiveness of Human Resource
Information System at Vistaar technologies (Mumbai). SIES
Journal of Management, 10(2), 63-78.
Kavanagh, M., Thite, M., & Johnson, R. (Eds.). (2014). Human
Resource Information Systems: Basics, Applications, and Future
Directions. Thousand Oaks: SAGE Publications, Inc.
Keenan, P., McGarraghy, S., McNamara, C., & Phelan, M.
(2004). Human resource managementDSS.
https://pdfs.semanticscholar.org/6730/489f53951e3bc8f5297d2e
5fc473608a17c7.pdf

Rouyendegh, B., & Erkan, T. (2012). An application of the
Fuzzy ELECTRE method for academic staff selection. Human
Factors and Ergonomics in Manufacturing & Service Industries,
23(2), 1-9.
Stanujkic, D., Djordjevic, B., & Karabasevic, D. (2015).
Selection of candidates in the process of recruitment and
selection of personnel based on the SWARA and ARAS
methods. QUAESTUS Multidisciplinary Research Journal, (7),
53-62.
Running head: ASSIGNMENT 1-BUSINESS ASSESSMENT
1
ASSIGNMENT 1-BUSINESS ASSESSMENT
6
Business Assessment: Gladwell Stores
Student’s name
Professor’s name
Course title
Date
Introduction
It is evident from the scenario that Gladwell Grocery is not a
small firm. One person playing the roles of the human resources
manager and the operations manager is not an easy task. The
person represents ten distant stores with an estimate of around
four hundred and twenty employees. The key task performed by

this manager is preparing payroll. Although spreadsheets are
used, Gladwell could have adopted payroll software exclusively
meant for preparing payrolls. The software simplifies the
calculation of gross and net pay, taxes, and social security. In
addition, it enables the subtraction of employee contributions
such as union fees and health insurance from the paycheck
(Mahajan, 2015). The software promotes recording and updating
information, issuing deposits and checks. Some software
indicates compensation package for the competitors’. The data
ensures the firm does not under pay its employees. The other
challenge is that the manager has to pay a visit to all locations
on a weekly basis to perform the roles of hiring, recruiting,
replying to questions, and scheduling. Unfortunately, more than
half of the employees work on a part-time basis, a reflection
that the manager is unlikely to meet all the employees during a
store visit. Traveling is also costly due to increased fuel prices
and not forgetting the time wasted during traveling. Moreover,
it is tiresome visiting these locations regularly and manually
performing similar tasks. The manager can ease the burden by
adopting a Human Resource Information System (HRIS). The
system is computerized and can assist in data management.
Gladwell would have reduced hiring costs if it had implemented
the system. A company can create a website which supports
filling in the required information for a particular job vacancy.
Job screening is performed online and if an interview is used to
select the right job candidates then, the process can be
conducted from one location, followed by posting the new hires
to respective locations. Gomez-Mejia, Balkin & Cardy (2016)
cited tracking and skills inventory programs as tools that can
improve recruitment and selection. Tracking program store
applicant’s information for access and analysis purposes,
schedule interviews, update applicant’s status, and produces job
offers. Skills inventory program aligns skill supply with
demand. There is also a program for managing time. A database
containing absence and leave records is prepared. The database
assists in determining leave eligibility. The employees’ key in

data for example, hours worked then, the manager confirms
holiday requests and feeds it to payroll. The tool is also of help
in monitoring attendance and punctuality. Coded cards are
swiped during exit and entry. The respective times are logged in
for analysis (Mahajan, 2015). Furthermore, data is stored in the
system and can be accessed at any location and at any time,
reducing the questions that require clarification.
Assessment
The retail sector is known for high labor turnover. There are
costs involved in hiring, training and developing employees.
Labor turnover also creates a bad impression from the
customers’ perspective who meets new people daily. Low pay is
the probable reason for the high rate of turnover. Krell (2013)
confirmed that retail stores offer the lowest pay, unlike other
sectors. As a result, the sector encounters difficulty in attracting
workers. To solve the problem, firms should hire the right
people; strengthen relations with employees; offer perks; and
generous pays.
The other issue is adhering to regulatory laws. Wage rules differ
from one state to another. Firms have to understand labor laws
including the differences between full time versus part-time and
exempt versus non-exempt. Healthcare reforms and constant
wage increase is a challenge. The profits made by retail stores
are low. Krell (2013) reported that the labor costs represented
more than half of the expenses. To lower costs, firms opt for
part-time workers. Grocery stores are at a disadvantage because
they are bound by the minimum wage law. Most firms therefore,
dismiss workers, minimize hiring, and hike prices to survive.
Part-time workers are also employed to minimize health
insurance costs.
The retail sector is also unique as customers interact directly
with the workers. The customers value low prices and
memorable experiences. Some customers may mobilize other
customers to switch to a nearby store or purchase online if the
prices are high or if irritated by a certain attendant which can

upset the employees (Krell, 2013). Hence, training the workers
on customer expectations is needed. It can motivate them to
press on even when things are bad.
Employee diversity is another significant area. Diverse
employees contribute ideas and solutions to problems,
increasing productivity. However, diversity management is a
challenge. Conflicts are likely to occur because employees come
from different backgrounds. Conflicts pull down team spirit
(Krell, 2013). The firm should educate on diversity, encourage
the employees to share differences and appreciate one another.
The other problem is season fluctuation. The firm hires more
workers during high season. The new hires may lack the needed
skill and also clash with other workers. Several workers are
dismissed during low season to cut back costs. In the recent
finance crisis for example, the retail sector was greatly affected
(Krell, 2013). It had to eliminate one million jobs. The firm can
arrange for a meeting to enable the new hires to familiarize
themselves with the regular workers and learn how work is
done.
Identifiable issues
The key human resources functions recommended for Gladwell
stores are:
· Planning
· Compensation and benefits
· Performance appraisal
· Training and development
· Employee and labor relations
· Employee safety and health
· Preparing payroll

The most essential function is recruitment and selection. A firm
cannot run without employees. The employees are needed to
perform work functions. In addition, it is costly recruiting and
selecting people. Wrong people affect organization performance
while high employee exit leads to work delays and missed
opportunities. Absar (2012) argued that it is the most significant
function. It consumed a large proportion of the human resources
departments’ time. Hence, the recruiting personnel must be
careful during recruitment and selection to hire people with the
correct skills, knowledge, and abilities (Gomez-Mejia, Balkin &
Cardy, 2016). Overall, the recruitment and selection process
ensures that under qualified, unmotivated, and incompetent
employees are sieved therefore, remaining with right people for
right jobs.
Conclusion
Gladwell should implement HRIS. The data stored in the system
is up-to-date and accurate. Such information ensures that people
with the right skills are hired. Due to high labor turnover and
the low profit recorded by grocery stores hence, unable to
purely hire full-time workers, the firm can introduce the system
because it lowers costs. The system integrates needed
information. The information is accessible anywhere and by
several people at any time. It streamlines tasks (Mahajan,
2015). Few people can maintain the database thus, reducing the
required staff. Furthermore, it minimizes paper work because
everything is automated. HRIS is fast, unlike recording the data
manually. Lastly, it promotes rapid decision making and quickly
answering questions (Jain, 2014). The manager for example,
does not waste time searching for physical files. Data is
accessed electronically and from one location. Message can be
conveyed via emails, online chats, cell phones, or text
messaging instead of travelling.
References
Absar, M. (2012). Recruitment & selection practices in

manufacturing firms in Bangladesh. Indian Journal of Industrial
Relations, 47(3), 436-449.
Jain, A. (2014). Study on effectiveness of Human Resource
Information System at Vistaar technologies (Mumbai). SIES
Journal of Management, 10(2), 63-78.
Krell, E. (2013). Lessons from retail. HR Magazine, 58(9), 51-
56.
ECN 236 – Economics of the Environment
HW # 1 – due date: September 7, 2017
1
Answer all questions. Show all your work. You will get 0 points
for just writing down the
answer. Group work is encouraged BUT each student should
turn in their individual homework.
1. Go on the internet and put together a data-set of agricultural
profits by U.S. states for a
particular year. Find data on average annual temperature in each
state. For each state you should

have two numbers: agricultural profits and average annual
temperature. Plot these data (profits
on vertical axis and temperature on horizontal axis). Is there a
relationship between agricultural
profits and average temperature? What can you conclude about
the overall effect on profits of a
3°C increase in the temperature? Are there additional variables
that might be needed to fully
understand the relationship between temperature and profits?
2. We will develop a simple model that relates greenhouse gas
accumulation and temperature.1
Let � be the level of greenhouse gases (in billions of tons) and
� be the level of emissions from
factories in a particular time period. A certain fraction of the
greenhouse gases is “cleaned” by
the environment (assimilative capacity of the environment). The
following expression shows
how � evolves over time:
∆�
∆�
= ��(�) − ��(�)

where � represents the transformation of � into �, �
represents the assimilative capacity of the
environment and � = time.
Let � be the increase in global temperature due to greenhouse
warming. The temporal
relationship between � and greenhouse gases (�) is given by
the following expression.
∆�
∆�
= �[��(�) − �(�)]
where � is in °C, � measures the increase in global temperature
due to increase in � and �
captures the delay in temperature change due to greenhouse
gases.2 The values of these
parameters are given in the following table.
Parameter Value
� 0.50
� 0.005
� 0.02
� 0.003
a. Steady-state is defined as the long-run equilibrium where
climatic impacts of industrial
activity have stabilized. All emissions and concentrations of

greenhouse gases are
therefore constant. That is, in steady-state, neither � nor � are
changing. Using the values
1 For a more complicated model, see Nordhaus, William D.
1991. “To slow or not to slow: The economics of the
greenhouse effect.” The Economic Journal, 101(407): 920 –
937.
2 The average climate responds slowly to increases in
greenhouse gases and estimates of the delay range from 6 to
95 years.
https://www.jstor.org/stable/pdf/2233864.pdf?refreqid=excelsio
r:3f3d4d8b13c6647652666b761df366c9
https://www.jstor.org/stable/pdf/2233864.pdf?refreqid=excelsio
r:3f3d4d8b13c6647652666b761df366c9
2
of the parameters, derive expressions for the steady-state of
emissions (�) and the steady-
state of temperature (�).
b. Define marginal damages as the decrease in global GDP in
dollars due to increase in

temperature. The data on Moodle (HW1_data.xlsx), contains
information on total
damages as a function of temperature increases. Using the data,
plot marginal damages
against changes in temperature.
c. (i) The steady-state uncontrolled level of emissions are 12
billion tons of carbon. Using
your answers to a. and b., compute the steady-state of �, � and
marginal damages per ton
of carbon.
c. (ii) Suppose 10% of 12 billion tons of carbon are controlled.
Using your answers to a.
and b., compute the steady-state of �, � and marginal damages
per ton of carbon.
c. (iii) Suppose 20% of 12 billion tons of carbon are controlled.
Using your answers to a.
and b., compute the steady-state of �, � and marginal damages
per ton of carbon.
c. (iv) Repeat exercise c. (iii) for higher control levels (30%,
40%, …, 90%). Tabulate
your answers. Using these answers and your answers to c. (i) –
c. (iii), plot marginal

damages per ton of carbon as a function of percentage of
emissions controlled.
d. (i) Controlling emissions is expensive and these costs
increase as abatement increases.
The data on Moodle (HW1_data.xlsx) contains information on
total cost of abatement
and control levels. Plot the relationship between marginal
control costs and control
levels. Interpret the shape of the function.
d. (ii) Put the plots of c. (iv) and d. (i) on the same graph. What
level of emissions control
balances marginal cost of control with marginal damages?
3. Explain the four myths identified by Fullerton and Stavins
(1998) on how economists think
about the environment.
4. For each of the following social choice methods, which of
Arrow’s axioms are violated and
why.

a. Pareto criterion
b. majority – rule voting
c. Pulling a choice out of a hat (at random)
3
5. Suppose we have a small island with three residents and a
volcano, Mount Doom that
generates air pollution. Two people live upwind of the volcano
and are unaffected by the
pollution. One person, Frodo, lives downwind and is affected by
the air pollution.
For $21,000 we can clean-up the volcano with a patented
“smoke guzzler”. The two-upwind
people are willing to pay $1,000 each to get rid of the smoke
whereas Frodo would be willing to

pay $15,000. Consider two plans to finance the “smoke
guzzler”.
Plan A: Each resident will pay $7,000 (head – tax)
Plan B: Frodo, who is affected by pollution, pays $21,000
Compare each plan to the status quo and indicate society’s
choice using (a) Pareto criterion, (b)
majority rule and (c) potential Pareto improvement.
6. In the figure below, using the Pareto criterion, identify the
points that are socially preferred to
W. Explain your answer.
4

7. Borda Count is a common way of making a choice among
more than two alternatives. Each
member of the society assigns a rank to the social alternatives
with 1 corresponding to first
choice, 2 corresponding to second choice and so on. The ranks
each alternative gets are summed
over all individuals. The alternative with the lowest sum wins.
For example, suppose there are
three individuals and their rankings between three
environmental commodities �,�,� are given
below.
Rank Person 1 Person 2 Person 3
1 � � �
2 � � �
3 � � �
In the example above, choice � has a score of 1 + 3 + 1 = 5;
choice � has a score of 2 + 1 +
3 = 6; and choice � has a score of 3 + 2 + 2 = 7. Since � has
the lowest score, � will be
chosen.
Set up an example to show that Borda Count violates
independence of irrelevant alternatives.

Hint: introduce a fourth alternative in the example above.
8. A society consists of two individuals, Alex and Menza, who
consume two goods, food (�) and
national parks (�). The following table ranks their preferences
for different bundles of � and �.
Alex’s preferences
Rank Food National parks
1 2.1 1.0
2 1.0 2.0
3 2.4 0.7
4 1.7 1.3
5 2.0 1.0
Menza’s preferences
Rank Food National Parks
1 1.4 1.4
2 1.0 2.0
3 1.6 1.3

4 1.8 1.1
5 2.0 1.0
a. For Alex, all bundles containing less than 0.9 units of
national parks are inferior to (1.0, 2.0) --
- bundle ranked second for Alex. Given Alex’s rankings, draw
an indifference curve that goes
through (1.0, 2.0).
5
b. For Menza, all bundles containing less than 1.2 units of
national parks are inferior to (1.0, 2.0)
--- bundle ranked second for Menza. Given Menza’s rankings,
draw an indifference curve that
goes through (1.0, 2.0).
Three social choices are available for these two individuals
where the allocations of food and

national parks are given below.
Alex’s allocation Menza’s allocation
Social choice Food National parks Food National parks
A 2.0 1.0 2.0 1.0
B 1.7 1.3 1.8 1.1
C 1.0 2.0 1.0 2.0
c. Between social choices A and B, which option does our two-
person society prefer. Explain
d. Is there a way to shuffle around the total amount of food and
national parks in choice A so that
your answer to c. is reversed? Does this imply that the
compensation principle is flawed?

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