The Adani Group have proposed the development of the Carmichael coal mine in the Galilee Basin area in Queensland along with a rail and port project. The scale of the project, environmental sensitivities, job creation, and potential role of government assistance are issues that have gathered a lot of media and political attention in the last 18 months and meant that this is a very controversial project. The aim of your essay is to analyse key aspects of this coal mine project using economic fundamentals developed in Hubbard, G., A. Garnett, P. Lewis and T. O'Brien. (2016)(chapter 1-9). Essentials of Economics, 3rd edition, Pearson. You should use the links below to start your research process, and you are encouraged to research further in order to help you answer the following questions. Make reference to your research sources within the essay where relevant (author, article name, date).
1. Introduction - provide a summary of the proposed Adani project – 15 marks
2. Assuming the project goes ahead, how would the a) global market for coal and b) the electricity market in India, be affected. Depict each market separately using a supply and demand graph. Show a shift in either supply or demand in each market, clearly explaining the variable that causes the shift in each case (eg. see terminology used in Tables 3.1 and 3.2 from the textbook). What is the predicted change to quantity and price in each market? – 30 marks
3. Discuss the possible negative externalities associated with the project and how this would affect the efficient level of output. Depict this on a diagram. How could a Pigovian tax be used to address this? – 30 marks
4. Provide an example of positive analysis (including the reference), as well as normative analysis, relating to the project. – 15 marks
5. Summary and conclusion – 10 marks
Some sources of information:
The essay should be well written in very simple English terms and terminology as in developed in Hubbard, G., A. Garnett, P. Lewis and T. O'Brien. (2016). Essentials of Economics, 3rd edition, Pearson.
Word limit 1000 words. Due: 30/04/18
Should follow the pattern of essay structure very clearly.