ECO-6003B - Economics of the Environment
Economics of the Environment
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ECO-6003B - Economics of the Environment
Economics of the Environment – TCM Report
Introduction
For this assignment, your role is that of a researcher working for an environmental consultancy.
Your firm has been hired by the State of North Carolina (USA) to assist them in the evaluation
of a new policy aimed at improving environmental quality in the Albermarle and Pimlico sounds.
Your task is to gauge whether it would make economic sense for the Governor of North
Carolina (USA) to introduce a new policy to control agricultural and fishing practices that
pollute water and damage wildlife habitat. The policy would be able to restore the sounds
resources and increase fish and shellfish catches. The estimated cost of the policy is between
US$ 15-20,000,000.
As a first step, your boss has asked you to provide an estimate of the recreational benefits
of the policy. You have been given access to survey data collected by a team of experts on
current and prospective recreation participation using a representative sample of the 800,000
households living in the area, and you have been tasked with analysing the data and write a
short memo to provide a quick answer to the question your boss asked you.
As the memo will be shared with the very busy clients of your firm, you have to provide some
background on the question you are trying to answer and a brief description of the data,
together with a succinct discussion of the method/procedure you are using to estimate the
change in welfare and your estimate(s) in no more than 1,000 words. You will also need to
provide the STATA log file alongside the memo, appropriately commented to provide details
of the outcome of each step of your analysis. Importantly, besides possibly help restoring large
swathes of the coast of North Carolina, this memo will also contribute 25% towards your final
mark in this module!
Your task is to prepare a short memo that provides your estimate(s) of the change in welfare
as discussed above.
This must be an individual effort, and the deadline for submission is April 29, 2022 at 15:00.
The assignment must be submitted electronically via BB. You can find specific guidelines for
the submission procedure on the module’s Blackboard pages.
What should you do?
The aim of this piece of work is to demonstrate your ability to understand the use of the travel
cost method, to work with data and to apply simple econometrics methods to answer simple
willingness to pay questions.
To recall, your 1,000-word report should as a minimum briefly present the question at
hand and describe the data. Given the description of the data, explain which one is the
methodology you are going to use, providing sufficient information to make your analysis
understandable to a reader with minimal expertise in statistics. You also should discuss
the welfare implications of your analysis for the individual household, and explain how you
may extrapolate welfare changes to the aggregate WTP of the relevant population as a
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ECO-6003B - Economics of the Environment Spring 2021/22
whole. Finally, you will need to provide a recommendation, based on your analysis, on the
introduction of the policy mentioned above.
As discussed above, you will need to attach the commented STATA log file detailing your
analysis alongside your memo. The technical details on how to create a log file in STATA are
described in the appendix below.
The markers will look for clarity, coherence, balance, and use of detail. They will also assess
your ability to present your results clearly and fluently, with correct grammar and spelling, to
keep to the required word limit, and to use a word processor.
If you exceed the word limit by more than 10%, a penalty will be applied. See the University
Handbook for detailed information.
Do not hesitate to contact me, should you have any questions on any of the above. I hope
you enjoy this challenge!
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ECO-6003B - Economics of the Environment Spring 2021/22
Appendix: How to create a ’Log’ file in STATA
This note describes how to create a log file within STATA. It assumes that you have set STATA
up on your computer, and that you have read in the set of data that you want to analyze.
A log file records all your STATA commands and output in a given session, with the exception
of graphs. The log file is a separate file that has either a ‘.log’ or ‘.smcl’ extension. Saving
the log as a .smcl file (‘Stata Markup and Control Language file’) keeps the formatting from
the Results window.
It is recommended that you save the log as a .log file. Although saving it as a .log file removes
the formatting and saves the output in plain text format, it can be opened in most text editing
programs. A .smcl file can only be opened in STATA.
You may create a log file by typing
log using "filepath & filename"
in the STATA Command box.
For example if you wanted to save a log file (.log) called analysis log.log on your PC, to
save a set of analyses on hard disk C:, in the folder “LOGS”, you would simply type:
log using "C:\LOGS\analysis log.log"
Similarly, if you were using a Mac and you wanted to save a log file (.log) for a set of analyses
in user1’s folder on the hard drive, in the folder ”logs”, you would need to type:
log using "/Users/user1/logs/analysis log.log"
If you would like to replace an existing log file with a newer version, simply add replace after
the file name. E.g., on a PC you would write:
log using "C:\LOGS\analysis log.log", replace
Note that the previously-written file will be erased and overwritten with a log of your current
STATA session.
To add some additional output to an existing log file, you could type:
log using "C:\LOGS\analysis log.log", append
in the Command window.
Your new material will appear at the end of the previously-written log file.
To close the log file, you can type:
log close
in the Command window.