Economics

Kerto Raharjo, a medium sized village, inhabited by 100 families, owns a vast open prime grazing land of 30,000 m2. Currently the Village Council allows all residents to graze cows and goats freely. The small livestock census that the Village Council do every year shows that there are currently 25 cows and 75 goats owned by the village residents.
a. The new Village Council worries that the land will eventually be overgrazed, as the census shows an annual growth of livestock of 5 percent within the last 5 years. One Council member suggests that the villagers should be advised to use the land sparingly while also help cultivating the grass to preserve the sustainability of the land. Do you think the Council’s fear of overgrazing is likely to be true? Do you think the Council member’s suggestion will work? Explain your answer.
b. Another Council member suggests that the Council should charge the grazers based on the amount of grazing their cows and/or goats do. This idea refers to the billing mechanism of electricity or water supply consumption. Meanwhile, the youngest Council member suggests that the Council should require grazers to purchase an annual grazing permit based on the number of cows and goats owned. Do you think any of these two suggestions would be effective in preserving the land? Explain your answer.

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