Jon Strand

Willingness to pay for environmental goods in Norway: A contingent valuation study with real payment

The study seeks to determine the maximum willingness to pay (MWTP) among a random sample of Norwegians, for membership in the largest environmentalist association in Norway, Norges Naturvernforbund (NNV). The study includes three stages: (1) a contingent valuation study, testing hypothetical MWTP; (2) those whose stated MWTP is at or above the current membership fee are then asked to pay this fee; (3) those individuals who do not pay in stage 2 are interviewed, and asked to consider revising their MWTP statement. The study is seemingly the first of its kind in comparing hypothetical and actual MWTP by typing valuation of a public good (the environment) to the value of a private good (membership of the NNV). The results show a rather poor correspondence between hypothetical and actual MWTP, since only 6 out of 64 who stated that they were willing to pay the membership fee in stage 1, actually paid this voluntarily in stage 2. Possible reasons for this discrepancy are discussed, on the basis of data from the telephone interview in stage 3, and on information gathered in stage 1. The data indicate that a substantial part of this discrepancy is due to MWTP being overstated in stage 1, but that other reasons also are important.

Water markets and demand in Central American cities

We analyse data from sample surveys of water use and prices for households in 17 cities in Central America and Venezuela. In some of the cities, almost all sampled households have tap water, but in others many rely on nontap (‘coping’) sources. Coping households use less than one-fifth as much water as metered tap households do, face average water prices ten times as high, are much poorer, and face substantial water hauling costs. Water demand functions are estimated for metered tap households and coping households separately and jointly. Increasing block rates complicate estimation on metered tap households. Using 2SLS, we find price elasticities of water demand, with respect to both average and marginal water price, of about −0.3, with average price giving the greater partial effect. Coping demand has price elasticity closer to −0.1, and is also negatively affected by increased hauling costs. Estimations on the joint data indicate that the water connection itself explains most of the difference between tap and coping consumption and indicate serious problems in such data pooling.

Indirect Taxes on International Aviation

This paper examines the case for internationally coordinated indirect taxes on aviation (as a source of general revenue-not (necessarily) as a source of development finance). The case for such taxes is strong: the tax burden on international aviation is currently limited, yet it contributes significantly to border-crossing environmental damage. A tax on aviation fuel would address the key border-crossing externalities most directly; a ticket tax could raise more revenue; departure taxes face the least legal obstacles. Optimal policy requires deploying both fuel and ticket taxes. A fuel tax of 20 U.S. cents per gallon (10 percent, at todays fuel prices, corresponding to assessed environmental damage), or alternatively ticket taxes of 2.5 percent, would raise about US

The Value of Water Connections in Central American Cities: A Revealed Preference Study

10 billion if imposed worldwide, and US

Business cycles with worker moral hazard

3 billion if applied only in Europe.

Monopoly unions versus efficient bargaining: A repeated game approach☆

We estimate annualized values of access to home tap water in three cities in El Salvador, and marginal ‘barrios’ in four Guatemalan cities, using a hedonic price method for studying changes in capitalized home values from obtaining a water connection. A tap water connection is found to add from 10 per cent to 52 per cent to sales values of homes in our sample. The estimated mean values of gaining tap water access represent 1–5 per cent of real household income, differing by city and with generally higher values in El Salvador. On average this gain eliminates between 1 per cent and 3 per cent of the initial difference in real incomes between the groups of connected and unconnected households. We also find large differences in the value of a tap connection depending on the main source of non-tap water, with lowest values when the source is a private well in El Salvador.

Planes, ships and taxes: charging for international aviation and maritime emissions

We consider an economy with unemployment, where firms pay efficiency wages due to effort enforcement problems, and face output prices that vary cyclically, between a high and a low level, pH and pL. We show that for a range of pL/pH<1, employment and the wage will be cylically rigid, and that this range is greater the shorter H periods are. For lower pL/pH employment will vary procyclically but then also the wage, and more so the more employment varies. This implies a limited role for efficiency wage theory in explaining employment variations over the business cycle, but a greater role for explaining productivity fluctuations according to ‘Okuns law’.

Wage bargaining and turnover costs with heterogenous labor and perfect history screening

Abstract The paper derives the class of most efficient subgame perfect equilibria to repeated games between a labor union and a firm, where the union sets the wage and the firm chooses employment in each period and either the union or the firm is responsible for ‘enforcement’ (the C and F case). In both cases the static monopoly solution entails when the discount factor δ for the game is zero, while employment increases in δ for δ>;0. In the C case the solution tends to the efficient bargaining solution with all bargaining power to the union, as δ → 1. In the F case the efficient bargaining solution, with all bargaining power to the firm, results when δ takes values on some strictly positive domain [ḡd, 1]. Certain efficiency gains, but rarely a fully optimal solution, are thus feasible within the repeated monopoly union model.

Long-term union-firm contracts

International aviation and maritime transport account for a significant and growing share of global carbon emissions. Yet they are not only excluded from the Kyoto agreement and all current carbon pricing schemes, but do not even pay fuel excises of the type standard for other transport activities. Moreover, each sector benefits from preferential tax treatment – failure to charge VAT on international aviation, and the application of tonnage tax regimes rather than the normal corporate tax in maritime. This paper considers the design of fuel charges in these sectors to address these distortions, and quantifies their impact on emissions, revenue and welfare – showing, amongst other things, that the gain from offsetting the pre‐existing tax distortions may be as significant as those from reducing emissions. It shows, too, how compensation schemes can be designed to protect the poorest countries – a key ingredient in the politics of the issue, given the practical need for wide applicability of such charges. The real challenge is to amass the degree of international cooperation required (especially strong for maritime), failure of which to some degree explains their current under‐taxation – and, unsurprisingly, to decide who gets the money. Technically, these charges should, if anything, be rather easy to implement.

Lending terms, debt concessions, and developing countries' resource extraction

Abstract We study effects of mobility costs in a model of (Nash) wage bargaining between workers and firms, with instantaneous matching, heterogeneous workers, identical firms and free firm entry, and where firms can screen workers perfectly according to their previous work history but not their actual productivity. We derive the employment level and the minimum worker quality standard, in the market solution, and in the efficient solution established by a social planner. When workers have positive bargaining power, there is always some inefficient unemployment among desired workers in the market solution. The lowest hiring standard chosen by firms is higher than the planners standard when firing costs are high relative to hiring costs, but may be lower in the opposite case. We show that any higher established hiring standard corresponds to a market equilibrium. The model explains a tendency for a high initial unemployment rate to remain high, particularly for low-skilled workers.