Last Blog

Sorry for the Post being late, I was experiencing computer problems.
Callie, Sara, and I learned many important concepts in environmental economics through our research of Raven's Rock and the Tanawha Trail. We proved that a demand curve slopes downward. We studied different variables to see if any were significant enough to shift the demand curve. We calculated travel cost and consumer surplus of which both were unrealistically too large. However, we still learned valuable lessons of preparation and clarification. All in all, it was an enjoyable experience.
Link to our Powerpoint
http://www.appstate.edu/~whiteheadjc/ECO3620/projects/demand/present.htm

Coding the Data

The number of times each person hiked the tanahwa trail is defined as the variable "TRIPS". The different sections of the trail are represented as follows: (A) cold prong to holloway mountain road, (B) Holloway mountain to Price Lake, (C) Boone fork to cold prong, (D) Beacon heights to boone fork, (E) other. If the section was hiked it was entered as a (1), if the section was not hiked it was entered as a (0). The distance traveled to the trail is represented as the variable "DISTANCE". If the person hiked ravens rock trail it was entered as a (1) if the trail was not hiked it was entered as a (0). The number of trips to ravens rock is represented by the variable "RPTRIPS". If the person saw a park ranger it was entered as a (1), if not it was entered as (0), and the variable is defined as "RANGER". The number of times a person saw a park ranger is represented by the variable "TIMESEEN". The hypothetical questions of number of trips if increased chance of seeing a park ranger and if the trail was maintained by national park service are defined as "SPTRIPS1" and "SPTRIPS2" respectively. Willingness to purchase a permit is defined as "PERMIT", and entered (1) if yes and (0) if no. The amount of a person's willingness to pay is represented as "WTP" and is divided into five catogories: (3),(7.5), (15), (25), (35), (45). These values are the average of the different ranges on the survey. The stated preference question about in increase in the gas price and the effect on the number of visits is defined as "GAS". (1) for yes and (0) for no. The number of trips is defined as "SPTRIPS3". Age was entered by subtracting the date of birth from the current year and is defined as "AGE". The level of education was defined as "EDU" and is represented by (12) high school, (14) two years of college, (16) four year degree, (18) masters degree, (20) other graduate degree. If the person was a male it was entered as a (1) and if it was a female it was entered as a (0).

WSJ article

In the Wall Street Journal article "Backlash Spreads As Profits Surge At Oil Companies", the net income for top grossing oil companies are highlighted. The concern is that these companies are benefiting too much from higher energy prices. While the quantity of oil consumed is not on the rise, the amount of money these companies are receiving is. This is causing problems politically as they are viewed as taking advantage of the Katrina and Rita disasters. The Bush Administration is considering creating stockpiles of already refined fuels to be used in the event of future crises. Of course, the oil companies think this is not a wise move since it will cost them between $12 to $15 billion to build a five day supply and the tanks to store them in. They argue that this will take fuel off the current market and result in even higher prices.


2) Yes Exxon and Shell will benefit today from consumer expectations that the price of gasoline is going to rise. If consumers believe that the price with rise in the near future then they will attempt to get it before hand and the demand will increase and these companies will profit from that. They won't necessarily benefit in the distant future from the consumer expectation that gasoline prices are going to increase permanently. If the price increase permanently then consumers will find ways to consume less and thus spend less money on it. For example, consumers will trade in their SUVs for smaller, more fuel efficient cars.

3) If the government pass regulation to make it more difficult or gasoline retailers to increase their prices, it could have positive and negative effects. The short term effects of shortages would be less than ideal. The demand for gasoline wouldn't change but the supply would be considerably less. If the prices didn't rise then consumers would continue to use the gasoline until there wasn't any left. Regarding incentives to drive more fuel efficient cars, in the long run, it would be more difficult. If the prices were locked in place and the companies couldn't raise them then people wouldn't have any reason to turn to the use of more fuel efficient cars. Why be concerned with fuel efficiency if it's cheap to drive a big vehicle that get 13 miles per gallon?
While there are negatives, there are also positives to consider. In the event of another natural disaster such as Katrina, these companies wouldn't be able to price gouge and make a profit off people's bad circumstances of having no other choice. So, essentially, regulation should be in place but not one that is so strict that is causes shortage problems and disregard for the environment.

Final Survey Questions

1. About how many times during the past 12 months have you hiked part of the Tanawha Trail?
_____ trips

2. Which sections have you hiked (read categories)?

a. Cold Prong to Holloway Mtn. Road _____
b. Holloway Mtn. Road to Price Lake ____
c. Boone Fork to Cold Prong _____
d. Beacon Heights to Boone Fork ____
e. Other _____

3. How far is it from your home to Tanawha Trail? _____ miles

4. Have you ever hiked Raven’s Rock trail?

Yes No

5. About how many times during the past 12 months have you hiked Raven’s Rock Trail?
_____ trips

6. Have you ever seen a National Park Ranger while hiking the Tanawha or Raven’s Rock Trail?

Yes No (skip next question)

7. If yes, how many times have you ever seen a National Park Ranger? _____ times

Consider the following situation. Suppose that every time you hiked the Tanawha or Raven’s Rock Trail the chances that you would see a National Park Ranger were 25% (1 in every 4 visits).

8. In this situation, about how many times during the next 12 months would you hike Raven’s Rock Trail?
_____ trips

Consider another situation. Suppose that Raven’s Rock trail was maintained by the National Park Service as part of the trail system.

9. In this situation, about how many times during the next 12 months would you hike Raven’s Rock Trail?
_____ trips

Suppose that as part of the Raven’s Rock trail management, the National Park Service charged a fee for trail access. The “Raven’s Rock hiking permit” would allow you to hike there all year.

10. Would you be willing to purchase a Raven’s Rock hiking permit?

Yes No (skip next question)

11. If the Raven’s Rock hiking permit was required for hiking the Raven’s Rock trail, what is the most that you would be willing to pay for the permit?

a. Between $1 and $5
b. Between $5 and $10
c. Between $10 and $20
d. Between $20 and $30
e. Between $30 and $40
f. More than $40

Consider another situation. Suppose that gas prices rise to $6/gallon.

12. Would you still visit Raven’s Rock?
Yes No (skip next question)

13. If gas prices rise to $6/gallon, about how many times during the next 12 months would you hike Raven’s Rock Trail?
_____ trips

14. In what year were you born? 19 ___ ___

15. What is the highest level of education you have completed?

High School 2-year college 4-year college Masters degree Other graduate degree

Market Valuations

The United States Environmental Protection Agency (EPA) was established in 1970 by the federal government. The EPA is charged with enforcing environmental laws. These laws are enacted by Congress to reduce/prevent pollution (air, water, and other forms). Another function of the EPA is to assist law makers in their decision making by providing evironmental information. Valuations are important to the mission of the EPA because of the assistance they offer to law makers. The EPA can give information gathered from studies to law makers in hopes of influencing the decisions made.

One case study is the 1999 Drinking Water Infrastructure Needs Survey. 4,000 public water systems were surveyed to determine if they were eligible to recieve aid from the Drinking Water State Revolving Fund (DWSRF). The 1996 Safe Drinking Water Act (SDWA) is the legislation passed that would make the allocation of these funds possible. The values examined in the survey were health related. And the survey appears to be using the avertying behavior method, although I think some stated preference methods were used as well.

Market Valuations - EPA

We're going to do the US Environmental Protection Agency.

Survey Questions

1. How many times a month do you go to Raven's Rock?
a) 0 b) 1-3 c) 4-6 d) more than 6

2. If there was a cost associated with hiking there, how much would you be willing to pay?
a) $1 b) $5 c) $10 d) $15

3. If there were harsher repercussions for trespassing, how much of a fine would it take to deter you from going?
a) $20 b) $50 c) $100 d)$200

4. How many times have you seen a Park Ranger?
a) 0 b) 1-2 c) 3-5 d) more than 5

5. What percentage of your visits would you need to encounter a Park Ranger in order to decrease your number of visits?
a) 10% b) 25% c) 50% d) 75%

6. What is the reason the area is off limits?
a) dangerous b) private property c) cendangered animal d) protections of an endangered plant

7. Which of the following reasons would deter you the most from visiting the area?
a) dangerous b) private property c) protection of an endangered animal d) protection of an endangered plant

8. How high would gas prices have to be to affect your number of visits?
a) $4 b) $5 c) $6 d) $8

Research Topic

Our group is going to research a trail off the parkway called Raven's Rock. Raven's Rock is an overlook about 25 miles south of the Blowing Rock entrance to the parkway. The trail has been closed for the past several years to help preserve endangered wildlife in the area; however, the 'No Trespassing' sign and the 'Endangered Wildlife' sign havent stopped people from hiking the trail. The trail is about a half mile long and straight up hill. It ends at the top of the mountain where there are hundreds of huge boulders and cliffs to climb around on and enjoy. Occasionally park rangers will search the area for trespassers and write them tickets which can have fines anywhere from fifty to a couple thousand dollars. Even with such a risk, people still go there everyday. Our group would like to find out if there is a better way to get people not to hike the trail. We are going to conduct a survey with questions that could help us better determine what could be done to keep people off the trail.
If anyone has any questions or comments about our topic please dont hesitate to ask thanks Andrew