Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Ecological scientists suggest the closing of a national marine park for one year for restoration purposes. It is owned by the county, which allows free

Ecological scientists suggest the closing of a national marine park for one year for restoration purposes. It is owned by the county, which allows free access to visitors. However, a parking fee of $10 per vehicle is required to enter the park. You are involved in estimating the economic losses to local businesses and are asked to find tourists' welfare loss as a result of this plan. Almost all visitors to the national marine park are families on a vehicle who come from the towns up to 100 miles from the park. Visitors are allocated to a particular zone, depending on their distance to the park. Zones are easily formed by drawing concentric rings around the site on a map.

An analyst for the county has collected data for a travel cost study to estimate the benefits of the national park.Visitors were asked to log in as they enter the national park and fill out an information form. He also observed a sample of visitors from which he estimated that each family who visited the site is composed of 4 individuals with 2 adults, on average.The following table summarizes the data he collected:

Zone Round Trip Travel Time (Hours) Miles from the park Total No. of Visitors

Zone 1 1 22 33,000

Zone 2 2 45 27,000

Zone 3 3 70 19,000

Zone 4 4 100 13,000

In order to translate the distance traveled into an estimate of the cost visitors faced in using the park, the analyst made the following assumptions.First, the average operating cost of vehicles is $0.50 per mile.Second, the opportunity cost to adults of travel time is 50 percent of their wage rate; it is zero for children.Fourth, adult visitors have the average county wage rate of $20 per hour.

a. Using the preceding information, calculate the travel cost per person from each zone.

b. Calculate the value of the national marine park for each zone and the overall value for the amenity (the annual welfare loss to tourists when the national park is closed).

Step by Step Solution

There are 3 Steps involved in it

Step: 1

a To calculate the travel cost per person from each zone we need to consider the cost of travel time ... blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Cost Benefit Analysis Concepts and Practice

Authors: Anthony Boardman, David Greenberg, Aidan Vining, David Weimer

4th edition

137002696, 978-1108448284, 1108448283, 978-0137002696

More Books

Students also viewed these Accounting questions