Stream Preservation Suppose that a trout stream is threatened with destruction b
ID: 1116421 • Letter: S
Question
Stream Preservation Suppose that a trout stream is threatened with destruction by a nearby logging operation. Each of the 10,000 local fishers would be willing to pay $5 to preserve the stream. The owner of the land (that is the land owner) would incur a cost of $20,000 to change the logging operation to protect the stream. Answer the following questions: 1. Is the preservation of the stream efficient from the social perspective explain who benefits and how? 2. If the land owner has the right to log the land any way he/she wants, will the stream be preserved? Why or why not? 3. Prepare a solution to this problem describe a transaction that would benefit the fishermen and landowner. 4. Will your solution work explain? 5. Should the government intervene why or why not?Explanation / Answer
i.e. $5*10000=$50000
The cost incurred by the land owner to change the logging system to protect the stream is $20000.
4. This transaction would be beneficial to both the land owner and the local fishermen so it would work.
5. There is no need of government intervention as the markets will correct themselves.