Question

Draw the demand curve for an environmental service, for example carbon sequestration (process of capture and long-term storage of atmospheric carbon-dioxide) from tree planting and discuss what its slope means as a measure of willingness to pay for the service (explain the direction of slope). Label the axes on your graphs clearly.

Answer 1

The above graph shows demand for carbon sequestration from tree planting. Y axis shows Price of the planting trees/ carbon sequestration and X axis shows amount of trees planted / carbon sequestrated. At price P, people are willing to plant Q trees. As Price of planting trees falls people will be willing to plant more trees.

Slope of the demand curve is negative (direction) which shows that people are willing to pay less to plant greater amount of trees. In other words, More number of people quit planting trees because they are not willing to pay the higher price.