An electric utility in Massachusetts is considering installing a wind-farm invol

Question

An electric utility in Massachusetts is considering installing a wind-farm involving 100 electricity-generating wind turbines placed 1/2 mile off-shore. The local regulators are concerned that the wind turbines will negatively impact both beachfront property owners and beach-going recreationists. You've been hired by the regulators to assess these environmental costs stemming from the proposed wind-farm. The regulators have agreed to pay for a survey of your design. (a) Briefly describe the method(s) (contingent valuation, hedonic pricing, recreation demand, etc.) you would employ in assessing the environmental damage from the wind-farms. Justify your choice, noting the key advantages and potential risks your choice brings to the task. (b) Briefly describe the survey your would employ, including what sections it would contain (and why), who it would be sent to, and the mode used to send it (e.g., mail, telephone, in-person, etc.).

Explanation / Answer

Dear sir /madam,

It is well known that some activities measured as adding to GDP in fact represent the use of resources to avoid or contain "bads" such as crime or risks to national security. Similarly, the accounts do not subtract anything for environmental pollution and degradation. This issue is particularly important in developing countries. For instance, there is a study like this condition that properly accounting for environmental degradation would reduce the measured growth rate of the economy by 3%

Environmental protection is important , however. Even here, technology can be directed to assist us. For example, the conversion of urban transportation systems from horses to internal combustion engines has eliminated most of the pollution associated with transportation. As incomes rise and populations move away from the edge of survival, people and governments choose to spend more on protecting the environment. Unlike other consumption choices, environmental protection is often "bought" through political choices rather than in the marketplace. Because the benefits of environmental protection flow across property boundaries, there is greater reason for the government to intervene on environmental issues than there is with respect to purely private goods.

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