Bill Provencher

A Finite Mixture Logit Model of Recreational Angling with Serially Correlated Random Utility

This article examines two issues concerning the trip-taking behavior of recreational anglers over the course of a season. The first is whether the random component of trip utility is serially correlated across trip occasions. The second is the heterogeneity of preferences among anglers. Recent research has examined heterogeneity among recreational trip-takers using random parameters models. In this article, the population of anglers is, instead, cast as a collection of several subpopulations distinguished by angler preferences, and the method of finite mixtures is used to identify these subpopulations. Copyright 2002, Oxford University Press.

Understanding Regional Change: A Comparison of Two Lake Districts

ABSTRACT We compared long-term change in two lake districts, one in a forested rural setting and the other in an urbanizing agricultural region, using lakes as sentinel ecosystems. Human population growth and land-use change are important drivers of ecosystem change in both regions. Biotic changes such as habitat loss, species invasions, and poorer fishing were prevalent in the rural region, and lake hydrology and biogeochemistry responded to climate trends and landscape position. Similar biotic changes occurred in the urbanizing agricultural region, where human-caused changes in hydrology and biogeochemistry had conspicuous effects. Feedbacks among ecosystem dynamics, human uses, economics, social dynamics, and policy and practice are fundamental to understanding change in these lake districts. Sustained support for interdisciplinary collaboration is essential to build understanding of regional change.

A Private Property Rights Regime for the Commons: The Case for Groundwater

We compare the social welfare of pumping groundwater under central (optimal) control to that obtained under a private property rights regime in which firms are granted tradeable permits to the in situ groundwater stock. When firms are risk averse, both regimes are suboptimal, and the matter of which regime yields greater welfare is an empirical one. When firms are risk neutral, central control dominates the private property rights regime. Still, a stochastic dynamic programming model of Madera County, California, demonstrates that even in this case, the private property rights regime is a promising alternative to central control.

An Analysis of Minimum Frontage Zoning to Preserve Lakefront Amenities

The development of lakefront property in northern Wisconsin has prompted, in several towns, minimum frontage zoning stricter than the state standard. Such zoning generates an economic loss by constraining development (development effect), and an economic gain by preserving environmental amenities (amenity effect). Estimation of a hedonic price function for lakefront property in northern Wisconsin quantifies these competing effects. The estimation indicates that at the current margin the economic loss from the development effect is negligible, and the economic gain from the amenity effect may be considerable, raising frontage prices by an average of 21.5%. (JEL Q25, R52)

Approximating the optimal groundwater pumping policy in a multiaquifer stochastic conjunctive use setting

This paper presents two methods for approximating the optimal groundwater pumping policy for several interrelated aquifers in a stochastic setting that also involves conjunctive use of surface water. The first method employs a policy iteration dynamic programming (DP) algorithm where the value function is estimated by Monte Carlo simulation combined with curve-fitting techniques. The second method uses a Taylor series approximation to the functional equation of DP which reduces the problem, for a given observed state, to solving a system of equations equal in number to the aquifers. The methods are compared using a four-state variable, stochastic dynamic programming model of Madera County, California. The two methods yield nearly identical estimates of the optimal pumping policy, as well as the steady state pumping depth, suggesting that either method can be used in similar applications.

Structural Versus Reduced-Form Estimation of Optimal Stopping Problems

In this paper I examine several statistical, interpretive, and policy implications of reduced-form (probit or logit) estimation of optimal stopping problems. The discussion proceeds in the context of an examination of the timber harvest decision of nonindustrial private forest (NIPF) owners. For a large class of optimal stopping problems a reduced-form model which closely approximates the statistical performance of its structural counterpart is readily found. Still, failure to properly interpret the relationship between the reduced-form model and the underlying optimal stopping problem invites flawed econometric analysis and inappropriate interpretation of reduced-form coefficients. Copyright 1997, Oxford University Press.

Valuing a Spatially Variable Environmental Resource: Reducing Non-Point-Source Pollution in Green Bay, Wisconsin

This article investigates the value of reducing non-point-source pollution in Green Bay, Wisconsin. Using stated preference methods, we find the lower bound on the benefits of reducing runoff enough to universally increase water clarity by 4 ft is greater than

The Dynamic Behavior of Efficient Timber Prices

10 million annually. Using a unique survey design, we show that because current water clarity in Green Bay is spatially variable, the value that a household places on this universal improvement depends on the distance of the household’s residence from the bay and on the particular geospatial location of the residence. This has important implications for estimating aggregate benefits. (JEL Q51, Q53)

Ecosystem services in the Great Lakes

A simple theoretical model of a timber market finds that there exists a rational expectations equilibrium in which prices evolve according to a stationary A R (1) process. Simulations analyze a model with a more general representation of timber stock dynamics. Implications for the optimal harvesting literature are: 1) market efficiency provides little justification for random walk prices; 2) unit root tests, used in previous studies to analyze the informational efficiency of timber markets, do not distinguish between efficient and inefficient markets; and 3) failure to recognize asymmetric disturbances in time-series analyses of historical timber prices can lead to sub-optimal harvesting rules. (JEL Q23)

An Exposition of Structural Estimation of Discrete Dynamic Decision Processes

A comprehensive inventory of ecosystem services across the entire Great Lakes basin is currently lacking and is needed to make informed management decisions. A greater appreciation and understanding of ecosystem services, including both use and non-use services, may have avoided misguided resource management decisions in the past that have resulted in legacies inherited by future generations. Given the interest in ecosystem services and lack of a coherent approach to addressing this topic in the Great Lakes, a summit was convened involving 28 experts working on various aspects of ecosystem services in the Great Lakes. The invited attendees spanned a variety of social and natural sciences. Given the unique status of the Great Lakes as the worlds largest collective repository of surface freshwater, and the numerous stressors threatening this valuable resource, timing was propitious to examine ecosystem services. Several themes and recommendations emerged from the summit. There was general consensus that 1) a comprehensive inventory of ecosystem services throughout the Great Lakes is a desirable goal but would require considerable resources; 2) more spatially and temporally intensive data are needed to overcome our data gaps, but the arrangement of data networks and observatories must be well-coordinated; 3) trade-offs must be considered as part of ecosystem services analyses; and 4) formation of a Great Lakes Institute for Ecosystem Services, to provide a hub for research, meetings, and training is desirable. Several challenges also emerged during the summit, which are discussed in the paper.