Question
The Town Council of Flic-en-Flac in Mauritius wonders if the towns public beach should be kept cleaner. The Council estimates that the benefit of a
The Town Council of Flic-en-Flac in Mauritius wonders if the towns public beach should be kept cleaner. The Council estimates that the benefit of a cleaner beach would be a 6% increase in annual tourist spending from the current level of $2 million per year. The main cost is paying staff for picking up debris on the beach, most of which is plastic trash left by beach users. The Council estimates that 6 staff will be needed for 4 hours per day, every day of the year, and the local wage is $11 per hour. There is an initial expense of $40,000 to build a small shelter and buy equipment for the staff. If the Council uses a discount rate of 8%, is it beneficial to run this program as a 3-year pilot? (The program may or may not be continued after 3 years.) In your report for the Town Council, provide an answer to their question along with the actual B/C ratio.
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