| Course | ECO 370 Environmental Economics (ECO/370) |
|---|---|
| Week | 2 |
| Paper type | Natural resource valuation paper |
| Length | about 1,021 words, 4 double-spaced pages plus title page and references |
| Format | APA 7 student paper |
| School | University of Phoenix |
| Program | BS in Business |
| Updated | October 2026 |
Free sample paper for ECO 370 Week 2
Putting a Price on a Clear Lake: Market Prices, Hedonic Home Values, Fishing Trips and Survey Methods Applied to Western Lake Erie's Algal Blooms
[Student Name]
University of Phoenix
ECO/370: Environmental Economics
Week 2 Assignment
[Instructor Name]
[Date]
The survey, the trip data and the dollar figures are composites written for a model paper; valuation methods and research findings come from the sources listed and are stated generally.
Week 1 showed that phosphorus runoff from Maumee basin farms imposes costs on people around western Lake Erie that fertilizer prices do not reflect. To judge whether reducing runoff is worth its cost, a policymaker needs those costs in dollars. But no one sells clear lake water by the gallon or bloom-free summers by the day. Environmental economics has developed ways to read values from the choices people make and the answers they give, and each method sees a different part of what a lake is worth. This paper applies them.
Total Economic Value
Economists divide the value of a natural resource into use values and non-use values. Use values come from direct contact: drinking water, fishing, swimming, boating and living nearby. Non-use values come from knowing the resource exists in good condition and can be passed on, even if a person never visits. Total economic value adds both. Different methods capture different parts, which is why several are needed.
Market Prices and Avoided Costs
The simplest estimate uses market prices for things affected by blooms. Water utilities on the western basin spend more on activated carbon, ozone treatment and testing in bloom years. For a composite utility serving 500,000 people, extra treatment and monitoring cost about $3 million a year, plus the annualized cost of plant upgrades of roughly $4 million. Avoided cost is a lower bound: it measures what is spent to prevent harm, not the full value of the harm avoided, and it misses everything that does not pass through a treatment plant.
Hedonic Pricing for Lakeside Homes
Home prices reveal how much buyers value nearby environmental quality, because a house is a bundle of features each carrying an implicit price (Rosen, 1974). A hedonic study compares homes that differ in exposure to blooms while controlling for size, age, location and other features. Wolf and Klaiber (2017) studied homes near Lake Erie and inland lakes in Ohio and found that homes near water with heavy algal blooms sold for substantially less, with losses on the order of a tenth or more of value in high-bloom conditions. Applied to a composite stretch of shoreline with 8,000 homes averaging $250,000, a 10 percent discount in bloom years represents $200 million of lost property value, though only part of that reflects a change from current conditions.
Travel Cost for Fishing
Western Lake Erie supports a large walleye and yellow perch fishery. Anglers spend time and money to reach it: fuel, boat launches, charter fees and the value of their time. A travel cost model uses these costs, which differ by how far anglers live from the lake, to trace a demand curve for fishing trips and estimate the consumer surplus anglers receive. If a composite survey found that bloom years reduce trips by 15 percent and the average trip yields $85 of consumer surplus, 600,000 trips a year would lose about $7.7 million of value in a bad bloom year.
Contingent Valuation for Non-Use Value
Contingent valuation asks people directly what they would pay for an environmental change. A composite survey of Ohio and Michigan households asked whether they would vote for a one-time charge to fund a program reducing blooms by half, with different respondents offered different amounts. The results implied a median willingness to pay of about $40 per household. Across two million households, that suggests roughly $80 million of value, much of it from people who never fish or live on the lake.
The Contingent Valuation Debate
Critics argue that survey answers can be inflated by the hypothetical nature of the question, by respondents expressing approval rather than real willingness to pay and by insensitivity to the size of the change offered. After the Exxon Valdez spill, a panel convened by the National Oceanic and Atmospheric Administration recommended guidelines for credible surveys, including referendum formats, reminders of budget constraints and tests of sensitivity to scope (Arrow et al., 1993). Following those guidelines improves reliability but does not remove all doubt.
Which Value Matters for Which Decision
Different decisions call for different values. A water utility deciding whether to invest in treatment upgrades needs avoided costs. A county assessing its property tax base needs the hedonic estimates. A state weighing a statewide program, such as the one in Week 3, needs total economic value, including non-use value, because statewide taxpayers bear its cost. Matching the method to the decision avoids both understating benefits, by counting only market costs, and overstating them, by counting uncertain survey values for a narrow local choice.
Benefit Transfer
When a new study is too costly, analysts transfer values from studies of similar resources, adjusting for population and income. Transfers are quicker but less reliable, especially when the original site differs from the new one.
Combining the Estimates
Adding all four estimates would double count: lakefront homeowners who fish appear in both the hedonic and travel cost results, and survey respondents may include recreational and drinking water values in their answers. A careful summary keeps the categories separate: treatment costs for utilities, property value changes for homeowners, recreation value for anglers not living on the shore and non-use value from the survey, adjusted to exclude use values respondents reported.
Where the Estimates Are Weakest
The hedonic estimate depends on how much of the price discount reflects blooms rather than other features of affected areas. The travel cost estimate depends on how anglers value their time. The survey depends on question design. The avoided cost estimate is firm but incomplete. Policymakers should treat the total as a range rather than a point.
Conclusion
Valuing western Lake Erie requires several methods: avoided treatment costs give a firm lower bound, home prices reveal homeowners' losses, travel costs reveal anglers' losses and surveys capture non-use values with known weaknesses. Combined carefully, they show that the costs of blooms run to tens of millions of dollars a year or more, the figure the cost-benefit analysis in Week 3 will weigh against the cost of reducing runoff.
References
Arrow, K., Solow, R., Portney, P. R., Leamer, E. E., Radner, R., & Schuman, H. (1993). Report of the NOAA panel on contingent valuation. Federal Register, 58(10), 4601-4614.
Rosen, S. (1974). Hedonic prices and implicit markets: Product differentiation in pure competition. Journal of Political Economy, 82(1), 34-55. https://doi.org/10.1086/260169
Wolf, D., & Klaiber, H. A. (2017). Bloom and bust: Toxic algae's impact on nearby property values. Ecological Economics, 135, 209-221. https://doi.org/10.1016/j.ecolecon.2016.12.007
What the ECO 370 Week 2 instructions ask
ECO 370 Week 2 assignments generally ask how natural resources and environmental quality can be valued in monetary terms. Common requirements include the concept of total economic value, use and non-use values, revealed preference methods such as market prices, avoided cost, hedonic pricing and travel cost, stated preference methods such as contingent valuation and choice experiments, benefit transfer and the strengths and limitations of each. Many prompts ask students to apply methods to a specific resource or environmental problem. Explain each method's logic, show simple calculations, discuss what each captures and misses, cite research using the methods and use APA style.
How this ECO 370 Week 2 example is built
A lake that people drink from, fish in, live beside and simply value for existing offers every kind of value, so the paper uses western Lake Erie to apply each method in turn. It begins with total economic value. Avoided treatment costs at water utilities give a market-based floor. Hedonic analysis of home prices shows how blooms lower property values, drawing on a study of Ohio's shoreline. A travel cost estimate measures fishing value from the trips anglers take. A contingent valuation survey asks residents what they would pay for fewer blooms, with the method's critics noted. The paper adds the estimates carefully, avoiding double counting, and closes with the weaknesses that matter for policy.
ECO 370 Week 2 grading rubric: where the points go
Grading this week usually rewards an accurate explanation of each valuation method, a sound application to the resource and an honest discussion of limits. Credit goes to papers that distinguish use from non-use values, explain why revealed and stated preference methods differ, compute or describe estimates with clear assumptions and cite studies that used the methods on similar resources. Avoiding double counting when combining estimates, and acknowledging the controversy around stated preference surveys, shows careful judgment. Instructors also value a closing view of which estimates are most reliable for decisions. Clear calculations and APA references complete a strong paper, and a short table listing each method, the value it captures and its main weakness earns credit, since that summary shows command of the whole toolkit. Stating every assumption beside its number lets a reader test the estimate.
ECO 370 Week 2 help: mistakes to avoid
A common ECO 370 Week 2 error is adding values from different methods that measure the same benefit, such as counting lakefront recreation in both home prices and travel costs. Explain how you avoid double counting. Another frequent gap is presenting contingent valuation figures as precise; note the biases critics raise. Students also skip non-use values, which can be large for iconic resources. Include them with caveats. Avoid describing methods without applying them. Show the assumptions behind each number. Cite at least one study that used each method. Finally, say which values a decision maker can rely on most, and which should be treated as rough.
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ECO 370 Week 2 questions, answered
What does ECO 370 Week 2 usually cover?
It usually covers valuing natural resources, including total economic value, use and non-use values, market price and avoided cost methods, hedonic pricing, travel cost, contingent valuation and benefit transfer.
Where can I find a free ECO 370 Week 2 sample paper?
A complete paper valuing western Lake Erie with four methods, from water treatment costs to a resident survey, with notes on each step, sits on this page. We can draft your own valuation free.
What is hedonic pricing?
A method that estimates the value of an environmental feature from its effect on market prices, often home prices, by comparing properties that differ in that feature while controlling for other characteristics.
What is the travel cost method?
A method that infers the value of a recreation site from what visitors spend in time and money to reach it, treating those costs as the price of a visit.
What is contingent valuation?
A survey method that asks people how much they would be willing to pay for a change in an environmental good, used especially to capture non-use values that leave no market trace.
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