Refer to Fig 5: Okanagan Lake supplies fresh water that is used by households, agriculture, and other activities. Each additional unit of water withdrawn provides benefits to users, shown by the downward‑sloping marginal benefit curve. The lake is naturally replenished by rainfall and snowmelt of approximately 410 billion litres per year, while it loses about 328 billion litres annually through evaporation.

Refer to figure 5 and identify the correct statement.

Question

Refer to Fig 5: Okanagan Lake supplies fresh water that is used by households, agriculture, and other activities. Each additional unit of water withdrawn provides benefits to users, shown by the downward‑sloping marginal benefit curve. The lake is naturally replenished by rainfall and snowmelt of approximately 410 billion litres per year, while it loses about 328 billion litres annually through evaporation.

Refer to figure 5 and identify the correct statement.

BlackTom AI · Accepted Answer

This is a classic common‑pool resource: water in Okanagan Lake is rivalrous (each litre withdrawn reduces what others can use) and difficult to exclude users from without institutions or enforcement.

1) Relevant concepts
- Common‑pool resource: subtractable (rival) and non‑excludable. Left open access, users tend to overuse (tragedy of the commons).
- Marginal benefit (MB) curve downward‑sloping: each additional unit of water yields less benefit to a user, so private choice often ignores effects on others (no internalization of externality).
- Renewable supply constraint: natural inflow minus losses sets sustainable withdrawal capacity.

2) Step‑by‑step reasoning and calculation
- Natural replenishment = 410 billion L/year.
- Evaporation loss = 328 billion L/year.
- Net natural addition available on average = 410 − 328 = 82 billion L/year.
- Any withdrawals in addition to this net inflow reduce stored water and/or reduce availability to other users if total withdrawal approaches or exceeds the sustainable 82 billion L. Because the resource is rivalrous, one user’s withdrawal lowers another’s possible withdrawal.
- Without clear property rights, pricing mechanisms, or regulation, it is hard to exclude users (households, agriculture, recreation), so individual incentives lead to overuse relative to the social optimum.

3) Why the correct answer is correct
- The chosen option states that withdrawals reduce others’ availability (rivalrous) and restricting access is difficult without strong institutions (non‑excludable). That accurately describes the lake’s economics and sustainability constraint shown by the replenishment/evaporation figures and the MB curve.

4) Why the other options are incorrect
- Option A: Incorrect — annual replenishment is limited (net +82 billion L); withdrawals can exceed sustainable supply and deplete the lake.
- Option B: Incorrect — the good is hard to exclude; setting and enforcing a price is not “exceptionally easy.”
- Option C: Incorrect — individual use does affect others (rivalry); private markets alone will not yield efficient outcomes without institutions.

Conclusion: The correct statement is that water withdrawals reduce the amount available for others and restricting access is difficult without strong institutional controls, which matches the provided answer.

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