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Philip Anderson
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The study attempts to allay the inconsistency issues involved with the costs and benefits of natural resource preservation. Being able to get a better sense of the current benefits of ecotourism can help alleviate the time imbalance of value. Because, in terms of preservation, ecotourism is better than a lot of alternatives. The study finds empirically that divers value seeing more sea turtles. By quantifying this added value of sea turtles and including this value into the market price of diving in the Barbados (or subsidizing the providers of ecotourism) it could help create incentives to reduce turtle exploitation. By better understanding how much tourists are willing to pay, and creating prices closer to the WTP levels, we can create greater short term economic incentives for natural resource preservation. Price discrimination has many negative connotations, and for many markets its not optimal. However for a market such as ecotourism, where the price of the activity consistently doesn't take into account a large amount of consumer surplus, implementing some sort of price discrimination could be interesting. To do this, it is necessary to quantify the non-market benefits of ecotourism.
Toggle Commented 2 days ago on Reading for Thursday at Jolly Green General
In Krutilla's article he gives an example of market failure for rare land or endangered species. Specifically, he examines option demand, and explains a very interesting instance of the free rider problem associated with public goods. A public good has two main characteristics: non exclusive and non rival. In this case, the market fails for option demand because the good is not exclusive. In option demand, someone's willingness to pay perhaps could only reflect that the good (the species, the grand canyon etc.) exists. As mentioned in the article, people gain utility just by knowing that a certain species exists, or that the grand canyon is still there. So, if someone in Georgia purchases an option regarding the grand canyon, they have no way to exclude a local who did not pay from also receiving benefit. Option demand seems very integral to look at when evaluating why private and social returns of rare occurrences in nature are asymmetric. People all over the world gain substantial sentimental benefit from the existence of the Grand Canyon, Yet, as Krutilla points out, there are a lot of problems when a quantity of a public good is determined by the private market. I also enjoyed Krutilla's discussion and conclusions about changes of tastes and the "asymmetric implications of technology." The irrevocability aspect of rare occurrences in nature creates the inelasticity. So, as time proceeds, the relative value of these rare goods should increase as more and more manufactured goods are made. If his theory about increases in future demand for natural environments due to changing tastes and increased appreciation is correct, rare occurrences in nature should greatly increase in value. This is a very optimistic outlook that I haven't really thought about. It is easy to think about preferences as constant throughout time but that is obviously not the case. Preferences change over time. Being able to discount all of the future utility from a certain good to the present is the key in order to make a "rational" decision. But obviously it is extremely hard to be accurate in that calculation.
Toggle Commented 7 days ago on Readings for Thursday at Jolly Green General
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7 days ago