#### (Solved): 4.) I Want To Estimate The Recreational Value Of A Lake That Is Only Accessible If You Own A Home Wi ...

4.) I want to estimate the recreational value of a lake that is only accessible if you own a home with an attached dock. There are three such houses that can be purchased. I observe the price of these homes, and I want to collect data on similar homes that are not on the lake so that I can estimate the premium paid for lake access. a. List at least two characteristics of the lakefront houses I should “match” when I search for comparable non-lakefront houses. b. When I perform this exercise, I generate the following data. Estimate the average premium based on the 3 house prices as they compare to otherwise similar homes. House H1 H2 H3 Price 200,000 300,000 350,000 Price of Comparable Homes 150,000 275.000 275,000 5.) I want to know the recreation value of the Wichita Mountains. Since value is derived by visitors instead of home-owners, I need to use the travel-cost method instead of a hedonic pricing approach. I sit at the gate all year and ask people where they are visiting from. This gives me data on number of visits per origin city (data below). a. Name 3 things that should be included in the cost of a visit to a recreational activity. b. Fill in the visitors per capita column of this table. | Miles Visits per Capita 25 25 Origin Lawton Norman Dallas Visit Cost | Visitors | Population 9,000 90,000 120,000 100 20,000 1,200,000 50 90 220 c. Sketch an estimate of an average individual's demand curve to visit these mountains based on this data. d. Briefly explain how we'd compute the total value of these mountains based on this demand curve. 6.) To value the effects of climate change, one thing we need to do is value the effect of temperature on crop yields. Suppose we estimate that for every degree of global warming our agricultural output falls by 5%. In the wheat sector, we are currently producing 1 million bushels of wheat annually, and it sells at a price of \$5.50. If the temperature were to rise by 3 degrees, what is the monetary cost of climate change from this sector? (Hint: compute how much wheat we lose from this change, then use the price data to value the wheat). Is this an annual cost that we face every year, or is it a one-time cost?