Disscussion on any Economic Resource Which is Scarce in UAE or a Well Known Country - Assignment Example

Apart from that the water consumption in the emirates is massive and it is almost four times as that of Europe and desalinization plants will not be able to protect the fresh water resources for long time (Oil Rich But Water Scarce UAE in Grave Danger of Losing It’s Water Resources in Just 50 Years,2010). Thus identifying the problem, the paper focuses on the governmental measures to tackle this problem, cost structure and mechanism of the emirates on fresh and its price elasticity of demand.

Finally it points out in suggesting optimal strategies to tackle this problem. Governmental measures to tackle the problem of water scarcity The government had been well aware of the water scarcity problem and devised many policies to overcome this problem (Massad & Kannan, n.d., p.100). However the scope of discussing all is limited and the focus is some particular strategies. The oil wealth of the UAE has attracted myriad of population into this arid empire with high demand of water which made the government to face severe challenges to tackle the problem.

The scarcity of water and high demand for water can be explained in a demand supply equilibrium framework. Fig.1 In the above diagram the initial equilibrium is attained at the point E, where the demand curve (DD) and supply curve SS intersects each other and the equilibrium price is P0 and the equilibrium quantity is Q0. Now as we have discussed that the population pressure has increased the demand of water to a great extent. So at the same price P0 it is found that the new demand curve (DD1) has shifted rightwards and an excess demand of occurs at that price.

The supply being short there is problem in adjusting and attainment of equilibrium is a problem. Government has implemented strategies to lower the immigration rate. As for example in Dubai, the employers are subject to a new work permit quota system and are required to obtain pre-approval in order to sponsor individuals for work permits. Again in Abu Dhabi, the foreigners are required to have medical insurance or health card in order in order to obtain work permits and growing charges for attestations confirming foreign degrees .

As direct consequences of the population boom heavy pressures fell on the agricultural sector of the Arab emirates. Enhanced technology research, support to local farmers, use of waste water and innovative solutions are adapted and implemented by the government to solve the water crisis problem. Other policies include large scale water production through eco-friendly techniques applied in desalinization plants, tight controls are kept on the quality of the imported produce as well as the stockpiling of the key crops (Szabo, 2011, p.6). Stress have been also given on non water policies because they are critically central to water policy reforms as the tasks becomes easier and productive when people outside the water sector show their eagerness to engage in complementary actions (Jagannathan et al, 2009, p.28). Awareness programs are also initiated by the government as well in solving the problem.

Price elasticity of demand and water scarcity in UAE “The price elasticity of demand measures the sensitivity of the quantity demanded to changes in the price” (Elasticity n.d.). In other words it is a measure of how much a quantity demanded of a commodity changes when its price changes. Mathematically the price elasticit