Anna Alberini

Assessing Voluntary Programs to Improve Environmental Quality

The last decade has seen a dramatic increase in the use of voluntaryapproaches (VAs) to environmental protection, which has spurned agrowing literature on the relative merits of voluntary vs. mandatoryapproaches. This paper draws on that literature to discuss both thetheoretical and empirical issues that arise in the evaluation orassessment of a particular VA. We consider both the environmentaleffectiveness and the efficiency of this policy approach. Our aim is toaid policymakers in evaluating a specific program or in thinking aboutthe use and design of a VA. We identify some key features that arelikely to increase both the effectiveness and the efficiency of VAs.

Analysis of contingent valuation data with multiple bids and response options allowing respondents to express uncertainty

Abstract The NOAA Panel on Contingent Valuation advocated a “no answer” response option to dichotomous-choice payment questions, but did not give guidance as to how this additional response should be interpreted conceptually or analytically. We investigate the econometric modeling and response effects associated with multiple-bounded, polychotomous-choice payment question. We find that using multiple bids with responses to each bid can increase the efficiency of welfare estimates, but this approach is not free from bid design effects. Moreover, in our application, explicitly modeling uncertain responses can increase welfare estimates by over 100%.

Handbook on contingent valuation

Contents: 1. Introduction Anna Alberini and James R. Kahn PART I: CONTINGENT VALUATION AND ECONOMIC THEORY 2. Fifty Years of Contingent Valuation V. Kerry Smith 3. A Practitioners Primer on the Contingent Valuation Method John C. Whitehead 4. The Use of Contingent Valuation in Benefit-Cost Analysis John C. Whitehead and Glenn C. Blomquist 5. Hypothetical Preferences and Environmental Policy Gregory Cooper 6. Protest Bids, Commensurability, and Substitution: Contingent Valuation and Ecological Economics Brent Haddad and Richard Howarth PART II: ECONOMETRIC AND EMPIRICAL ISSUES IN CONTINGENT VALUATION 7. An Introduction to Choice Modeling for Non-market Valuation Steven Stewart and James R. Kahn 8. Experimental Methods for the Testing and Design of Contingent Valuation Laura O. Taylor 9. Designing a Contingent Valuation Study to Estimate the Benefits of the Conservation Reserve Program on Grassland Bird Populations Mary Clare Ahearn, Kevin J. Boyle and Daniel R. Hellerstein 10. Modelling Behaviour in Dichotomous Choice with Bayesian Methods Carmelo J. Leon and Roberto Leon 11. Temporal Reliability in Contingent Valuation (with a Restrictive Research Budget) Paul M. Jakus, Becky Stephens and J. Mark Fly PART III: APPLICATIONS 12. Non-market Valuation on the Internet Hale W. Thurston 13. Use of Contingent Values of Wildlife and Habitat Preservation in Policy and Benefit-Cost Analyses John B. Loomis 14. Valuing Wildlife at Risk from Exotic Invaders in Yellowstone Lake Todd L. Cherry, Jason F. Shogren, Peter Frykblom and John A. List 15. The Demand for Insecticide-Treated Mosquito Nets: Evidence from Africa Christine Poulos, Maureen Cropper, Julian Lampietti, Dale Whittington and Mitiku Haile 16. Choice Modeling of Farmer Preferences for Agroforestry Systems in Calakmul, Mexico James F. Casey 17. The Use of Contingent Valuation in Developing Countries: A Quantitative Analysis Dan Biller, Karoline Rogge and Giovanni Ruta 18. Combining Stated-Choice and Stated-Frequency Data with Observed Behavior to Value NRDA Compensable Damages: Green Bay, PCBs, and Fish Consumption Advisories William S. Breffle, Edward R. Morey, Robert D. Rowe and Donald M. Waldman 19. Public Preferences Toward Environmental Risks: The Case of Trihalomethanes Richard T. Carson and Robert Cameron Mitchell 20. Conclusions Anna Alberini and James R. Kahn Index

Overcoming Public Aversion to Congestion Pricing

We have completed a survey of Southern California residents designed to examine whether the details of policy design can make congestion pricing more attractive to the motoring public. A congestion fee proposal is often regarded as simply a tax increase; also, especially in the US, motorists apparently regard the use of congestion fees as coercive, in that they often have few if any practical alternatives to paying the fee. Unlike most opinion surveys on congestion pricing, our survey was quite explicit about the fate of the collected revenues. For example, we presented respondents with policies that returned a substantial portion of the revenues to the public, either in the form of cash (through reductions in sales taxes and vehicle registration fees or through income tax credits) or in the form of coupons to be used for vehicle emissions equipment repair, transit, and the like. In addition, we examined whether the typically intense opposition to congestion pricing if applied only to a part of a roadway, leaving the motorist free to choose between free lanes and toll lanes. We find that a promise to offset the imposition of congestion fees by other taxes can result in a 7% point increase in support for congestion pricing policies, and the restriction of congestion pricing to a single lane on a freeway attracts from 9% to 17% points of additional support.

Willingness to Pay to Reduce Mortality Risks: Evidence from a Three-Country Contingent Valuation Study

Valuing a change in the risk of death is a key input into the calculation of the benefits of environmental policies that save lives. Typically such risks are monetized using the Value of a Statistical Life (VSL). Because the majority of the lives saved by environmental policies are those of older persons, there has been much recent debate about whether the VSL should be lower for the elderly to reflect their fewer remaining life years. We conducted a contingent valuation survey in the UK, Italy and France designed to answer this question. The survey was administered in these three countries following a standardized protocol. Persons of age 40 and older were asked questions about their willingness to pay for a specified risk reduction. We use their responses to these questions to estimate the willingness to pay (WTP) for such a risk reduction and VSL. Our results suggest that the VSL ranges between Euro 1.052 and Euro 2.258 million. The VSL is not significantly lower for older persons, but is higher for persons who have been admitted to the hospital or emergency room for cardiovascular and respiratory problems. These results suggest that there is no evidence supporting that VSL should be adjusted to reflect the age of the beneficiaries of environmental policy. They are also partly inconsistent with the QALY-based practice of imputing lower values for persons with a compromised health status. We also find that income is positively and significantly associated with WTP. The income elasticities of the WTP increase gradually with income levels and are typically between 0.15 and 0.5 for current income levels in EU countries. We use the responses to the WTP questions to estimate the value of an extension in remaining life expectancy. We find that the value of a months extension in life expectancy increases with age and with serious cardiovascular and respiratory illnesses experienced by the respondent. The value of a loss of one years life expectancy is between Euro 55,000 and Euro 142,000.

Context and the VSL: Evidence from a Stated Preference Study in Italy and the Czech Republic

We report on the results of a survey based on conjoint choice experiments that was specifically designed to investigate the effect of context on the Value of a Statistical Life (VSL), an important input into the calculation of the mortality benefits of environmental policies that reduce premature mortality. We define “context” broadly to include (1) the cause of death (respiratory illness, cancer, road traffic accident), (2) the beneficiary of the risk reduction (adult v. child), and (3) the mode of provision of the risk reduction (public program v. private good). The survey was conducted following similar protocols in Italy and the Czech Republic. When do not distinguish for the cause of death, child and adult VSL are not significantly different from one another in Italy, and the difference is weak in the Czech sample. When we distinguish for the cause of death, we find that child and adult VSLs are different at the 1% level for respiratory illnesses and road-traffic accidents, but do not differ for cancer risks. We find evidence of a “cancer premium” and a “public program premium.” In both countries, the marginal utility of income is about 20% lower among wealthier people, which makes the VSL about 20% higher among respondents with incomes above the sample average. The discount rate implicit in people’s choices is effectively zero. We conclude that there is heterogeneity in the VSL, and that such heterogeneity is primarily driven by risk characteristics mode of delivery of the risk reduction, and income, while other individual characteristics of the respondent (e.g., age and education) are less important. For the most part, our results are in agreement with environmental policy analyses that use the same VSL for children and adults, and that apply a cancer premium.

Age, Health and the Willingness to Pay for Mortality Risk Reductions: A Contingent Valuation Survey of Ontario Residents

A contingent valuation survey was conducted in Shizuoka, Japan, to estimate the willingness to pay (WTP) for reductions in the risk of dying and calculate the value of statistical life (VSL) for use in environmental policy in Japan. Special attention was devoted to the effects of age and health characteristics on WTP. We find that the VSLs are somewhat lower (103 to 344 million yen) than those found in a virtually identical survey applied in some developed countries. These values were subject to a variety of validity tests, which they generally passed. We find that the WTP for those over age 70 is lower than that for younger adults, but that this effect is eliminated in multiple regressions. Rather, when accounting for other covariates, we find that WTP generally increases with age throughout the ages in our sample (age 40 and over). The effect of health status on WTP is mixed, with WTP of those with cancer being lower than that of healthy respondents, while the WTP of those with heart disease is greater. The VSLs for future risk changes are lower than those for contemporaneous risk reductions. The implicit discount rates of 5.8%–8.0% are relatively larger than the discount rate regularly used in environmental policy analyses. This survey is the first of its kind in Japan, and provides information that is directly useful for estimating the benefits of environmental and other policies that lower mortality risks to the general population and subgroups with a variety of specific traits.

Willingness to Pay for Mortality Risk Reductions: Does Latency Matter?

Using results from two contingent valuation surveys conducted in Canada and the U.S., we explore the effect of a latency period on willingness to pay (WTP) for reduced mortality risk using both structural and reduced form approaches. We find that delaying the time at which the risk reduction occurs by 10 to 30 years reduces WTP by more than half for respondents in both samples aged 40 to 60 years. Additionally, we estimate implicit discount rates equal to 8% for Canada and 4.5% for the U.S. – both well within the range established previously in the literature.

The Health Benefits of Air Pollution Control in Delhi

An important reason for controlling air pollutants such as particulate matter or sulfur dioxide is the damaging effects they have on human health. These effects include premature death as well as increases in the incidence of chronic heart and lung disease. Estimates of the health damages associated with air pollution are important because they can provide both an impetus for environmental controls and a means of evaluating the benefits of specific pollution control policies. To estimate the health damages associated with air pollution in developing countries, policy makers are often forced to extrapolate results from studies conducted in industrialized countries. These extrapolations, however, may be inappropriate for two reasons. First, it is not clear that the relationships found between pollution and health at the relatively low levels of pollution experienced in industrialized countries hold for the extremely high pollution levels witnessed in developing countries. Levels of particulate matter, for instance, are often three to four times higher in developing countries than in industrialized ones. Second, in developing countries, people die at younger ages and from different causes than do people in industrialized countries, implying that extrapolations of the impacts of air pollution on mortality may be especially misleading. This paper reports the results of a study relating levels of particulate matter to daily deaths in Delhi, India, between 1991 and 1994. We focus on Delhi, the capital of India, because it is one of the worlds most polluted cities. Between 1991 and 1994, the average total suspended particulate (TSP) level in Delhi was 375 micrograms per cubic meter-approximately five times the annual average standard of the World Health Organization (WHO). Levels of TSP in Delhi during this time period exceeded WHOs twenty-four-hour standard on 97% of all days on which readings were taken. Although particulate matter-produced by motor vehicles, smelters, the burning of refuse, and two coal-fired power plants-is Delhis main air pollution problem, levels of sulfur dioxide (SO2) and oxides of nitrogen (NOx) are below U.S. limits.

Urban Environmental Health and Sensitive Populations: How Much are the Italians Willing to Pay to Reduce Their Risks?

We use contingent valuation to elicit WTP for a reduction in the risk of dying for cardiovascular and respiratory causes, the most important causes of premature mortality associated with heat wave and air pollution, among the Italian public. The purpose of this study is three-fold. First, we obtain WTP and VSL figures that can be applied when estimating the benefits of heat advisories, other policies that reduce the mortality effects of extreme heat, and environmental policies that reduce the risk of dying for cardiovascular and respiratory causes. Second, our experimental study design allows us to examine the sensitivity of WTP to the size of the risk reduction. Third, we examine whether the WTP of populations that are especially sensitive to extreme heat and air pollution - such as the elderly, those in compromised health, and those living alone and/or physically impaired - is different from that of other individuals. We find that WTP, and hence the VSL, depends on the risk reduction, respondent age (via the baseline risk), and respondent health status. WTP increases with the size of the risk reduction, but is not strictly proportional to it. All else the same, older individuals are willing to pay less for a given risk reduction than younger individuals of comparable characteristics. Poor health, however, tends to raise WTP, so that the appropriate VSL of elderly individuals in poor health may be quite large. Our results support the notion that the VSL is “individuated.â€