Daniel Rondeau

Provision Point Mechanisms and Field Validity Tests of Contingent Valuation

Past field validity tests of contingent valuation have relied on voluntary contribution mechanisms to elicit actual willingness to pay, and may overestimate hypothetical bias because of free riding in the actual contributions. This paper argues that provision point mechanisms are a preferred alternative for field validity tests of contingent valuation because they increase the proportion of demand revealed in cases in which public goods can be provided in a step function. The results of a contingent valuation validity study of participation in a green electricity pricing program that uses a provision point mechanism are reported, and hypothetical open-ended and dichotomous choice responses are compared to actual participation. Calibration of hypothetical responses is also explored.

Voluntary revelation of the demand for public goods using a provision point mechanism

A one-shot provision point mechanism with money-back guarantee and proportional rebate of excess contributions is tested in an induced value framework and in experimental environments chosen to mimic field conditions. The results show that this relatively simple mechanism is empirically demand revealing in the aggregate when used with large groups of students who have heterogenous valuations for the public good. Approximately demand revealing behavior was obtained under three alternative information conditions. These results are an important step in the design of a mechanism simple enough to allow field applications, but capable of efficiently providing public goods through voluntary contributions.

The private provision of public goods: tests of a provision point mechanism for funding green power programs

This paper utilizes laboratory and field experiments to test the use of a provision point mechanism to finance renewable energy programs, commonly known as green pricing programs. The mechanism solicits discrete contributions towards a provision threshold using a money-back guarantee for insufficient contributions and extended benefits for contributions in excess of the threshold. In the laboratory, a single shot environment with a large group of potential participants produces contribution levels that are found to be partially demand revealing as well as motivated by altruism or wann-glow. Also, in contrast to most green pricing programs, relatively high participation is found in the field. Field participation is shown to be responsive to program goals and the provision point mechanism.

WHY COMPENSATING WILDLIFE DAMAGES MAY BE BAD FOR CONSERVATION

Abstract In an effort to attenuate human–wildlife conflict and promote conservation of charismatic megafauna, compensation programs for wildlife damages have been implemented in many countries. Compensating pastoralists and farmers for damage caused by wildlife reduces hunting pressure on wild animal populations. However, it can also lead to a decrease in efforts to prevent damage and exacerbate conflicts with wildlife. Furthermore, compensation programs increase the return to agriculture and can therefore be viewed as a subsidy toward crop and livestock production. Such subsidies can trigger agricultural expansion (and habitat conversion), an inflow of agriculture producers, and intensification of agricultural production. Each of these impacts is shown to have potentially adverse effects on the wildlife population that compensation intends to favor. In some circumstances, the net effect on the wildlife stock could be negative. This calls for a careful assessment of local ecological and economic conditions before compensation is implemented. Incentive mechanisms that are directly tied to conservation outcomes (e.g., payments to locals based on the size of the wildlife population) should be considered instead of compensation programs.

Detecting other-regarding behavior with virtual players

Humans display levels of cooperative behavior that contradict the predictions of theoretical models of rational self-interested individuals. We propose a novel technique to discriminate among other-regarding behavior, self-interested strategic play, and decision errors in laboratory experiments. We introduce “virtual players” in two public goods experiments to remove the concerns of human subjects for other players. Comparing contributions across treatments, we find that other-regarding behavior elevates contributions. The results also suggest that subjects are motivated by fairness considerations. We discuss ways in which the virtual-player technique can discriminate among competing explanations of behavior observed in other experiments.

Managing Urban Deer

Conflicts are emerging between humans and wildlife populations adaptable to the high density of humans found in urban and suburban areas. In response to these threats, animal control programs are typically designed with the objective of establishing and maintaining a stable population. This article challenges this view by studying the management of urban deer in Irondequoit, NY. Pulsing controls can be more efficient than steady-state regimes under a wide range of conditions in both deterministic and stochastic environments, but potential gains can be dissipated by management constraints. The effect of citizen opposition to lethal control methods is also investigated.

Wildlife Damage and Agriculture: A Dynamic Analysis of Compensation Schemes

We study the environmental and economic consequences of introducing a program to compensate peasants for damages caused by wildlife. We show that the widely held belief that compensation induces wildlife conservation may be erroneous. In a partially open economy, compensation can lower the wildlife stock and result in a net welfare loss for local people. In an open economy, compensation can trigger wildlife extinction and also reduce welfare. We identify the conditions leading to a reduction of the wildlife stock and discuss the implications for current and planned compensation programs in Africa and Asia. The two principal threats to African wildlife are agricultural expansion and hunting. Increasing human populations are associated with greater conversion and fragmentation of wild habitats, and more intense hunting pressure on remaining wildlife stocks. Increased human encroachment in formerly wild habitat also sets the stage for conflicts between humans and wildlife, with casualties on both sides. Perhaps the most common cost imposed on humans by wildlife is damage to agricultural output, where a significant share of agricultural production near the extensive margin of human-nature interface can be destroyed by wildlife (e.g., Deodatus 2000). Predator species routinely take local livestock, and various other species have made a habit out of invading fields. In many areas of the developing world the conflict between humans and wildlife is tense, and indeed growing tenser over time. The economic (and emotional) costs of this conflict can be quite substantial—from merely significant at the national or regional scale, to outright disastrous for individual house

Measuring the Local Costs of Conservation: A Provision Point Mechanism for Eliciting Willingness to Accept Compensation

Protected areas are employed worldwide as a means of conserving biodiversity. Unfortunately, restricting access to such areas imposes opportunity costs on local people who have traditionally relied on them to obtain resources such as fuelwood and bushmeat. We use contingent valuation to estimate the local benefits forgone from loss of access to a number of protected area types in Uganda. Methodologically, we innovate by implementing a “provision point” mechanism to estimate willingness to accept compensation (WTA) for loss of access to protected areas. We show that the provision point reduces mean WTA by a significant degree. (JEL Q51, Q56)

Simultaneous Allocation of Bundled Goods through Auctions: Assessing the Case for Joint Bidding

We use the experimental method to study the costs and benefits of allowing joint bidding in simultaneous multi-unit first price sealed bid auctions for bundled goods. The research has immediate applications to the sale of public forest stands that arbor a mixture of species. Joint bidding and communication raise the prospect of higher allocative efficiency, but also of collusive bidding through a reduction in the number of bidders and a greater scope for the formation of bidding rings. However, we find that allowing joint bidding has a significant positive impact on efficiency and reduces collusion significantly. We also explore the robustness of the results to characteristics of the auction environment that are relevant to timber auctions.

Bioeconomics of a Marine Disease

ABSTRACT We study the adaptive harvest of healthy stocks of shellfish that are faced with the risk of high natural mortality from a disease that is spreading along a coastline. This was the situation when Abalone Viral Ganglioneuritis (AVG) spread along the coast of Victoria, Australia in 2006. Abalone mortality on some reefs was thought to have been as high as 90%. In the face of an approaching virus, how should stocks at different reefs be managed? A stochastic, spatial bioeconomic model allows us to examine how optimal preemptive stock reductions are influenced by: (1) the probability of spread, (2) the mortality induced by AVG when it reaches a previously uninfected reef, (3) the form of the harvest cost function, and (4) a regime shift to lower biological productivity, post-AVG. JEL Codes: Q2, Q22.