Michael Hanemann

Contingent Valuation and Lost Passive Use: Damages from the Exxon Valdez Oil Spill

We report on the results of a large-scale contingent valuation (CV) study conducted after the Exxon Valdez oil spill to assess the harm caused by it. Among the issues considered are the design features of the CV survey, its administration to a national sample of U.S. households, estimation of household willingness to pay to prevent another Exxon Valdez type oil spill, and issues related to reliability and validity of the estimates obtained. Events influenced by the studys release are also briefly discussed.

Context Dependence and Aggregation in Disaggregate Choice Analysis

There is an emerging consensus among disciplines dealing with human decision making that the context in which a decision is made is an important determinant of outcomes. This consensus has been slow in the making because much of what is known about context effects has evolved from a desire to demonstrate the untenability of certain common assumptions upon which tractable models of behavior have generally been built. This paper seeks to␣bring disparate disciplinary perspectives to bear on the relation between context and choice, to formulate (1) recommendations for improvements to the state-of-the-practice of Random Utility Models (RUMs) of choice behavior, and (2) a future research agenda to guide the further incorporation of context into these models of choice behavior.

Emotions and decision rules in discrete choice experiments for valuing health care programmes for the elderly

The evaluation of health care programmes is commonly approached with stated preference methods such as contingent valuation or discrete choice experiments. These methods provide useful information for policy decisions involving health regulations and infrastructures for health care. However, econometric modelling of these data usually relies on a number of maintained assumptions, such as the use of the compensatory or random utility maximization rule. On the other hand, health policy issues can raise emotional concerns among individuals, which might induce other types of choice behaviour. In this paper we consider potential deviations from the general compensatory rule, and how these deviations might be explained by the emotional state of the subject. We utilized a mixture econometric model which allows for various potential decisions rules within the sample, such as the complete ignorance, conjunctive rule and satisfactory rules. The results show that deviations from the full linear compensatory decision rule are predominant, but they are significantly less observed for those subjects with a medium emotional state about the issue of caring for the health state of the elderly. The implication is that the emotional impact of health policy issues should be taken into account when making assumptions of individual choice behaviour in health valuation methods.

A discrete choice contingent valuation estimate of the value of Kenai King salmon

Abstract A new method for estimating the demand curve for publicly supplied goods when quantities are restricted to a few discrete levels is introduced. The method involves fitting a conditional logit model to choices from a set of survey options in which price and quantity are both varied and consumer attitudes are explicitly controlled. The estimated parameters of the valuation function serve to trace the marginal value of the good at each level of hypothetical consumption in survey data. We apply the method to the valuation of salmon on Alaskas Kenai River. We find that there is a distinct kink in the marginal valuation function and that sport fishermen may place a negative marginal value on fish permits exceeding their desired catch levels.

Separability, partial demand systems, and consumer's surplus measures

Abstract In practice, complete demand systems are not estimated. Rather, either an incomplete demand system is estimated, or separability is invoked and a partial demand system is estimated. This paper considers the relationship between the conventional compensating variation (equivalent variation) and the corresponding welfare measure that can be derived from a partial demand system and the current budget allocation to the separable group. Even assuming the separability assumption invoked is appropriate, these partial measures provide, in general, only a limited amount of information about the compensating variation and no information about the equivalent variation. Great care is therefore needed when using partial welfare measures to evaluate policy.

California's New Greenhouse Gas Laws

Since 2004, California has taken a variety of measures to control greenhouse gas emissions. This culminated in August 2006 with the passage of AB 32, which requires that overall GHG emissions in California be reduced to their 1990 levels by 2020; SB 1368, which prohibits California utilities from signing new long-term baseload power contracts with emissions higher than those from combined-cycle natural gas; and SB 107, which requires 20 percent of Californias electricity to come from renewables by 2010. This article describes how Californias GHG laws came to be enacted, why they took the form that they did, and how they differ from the approaches to pollution control adopted by the federal government in the 1990 Clean Air Act and the northeastern states in the Regional Greenhouse Gas Initiative. Californias approach grows directly out of its prior, and rather unique, history in controlling automobile emissions and in regulating energy efficiency. Moreover, its approach reflects an awareness of some differences between GHG emissions and SO2 and NOx emissions, which are important for the design of a GHG control policy.

Willingness to Pay to Protect Wetlands and Reduce Wildlife Contamination from Agricultural Drainage

This chapter presents the results of a survey of the general population in California regarding their willingness to pay for alternative programs to protect and expand wetlands as well as reduce wildlife contamination in the San Joaquin Valley (Valley). The results of 803 completed interviews from 1,573 successfully contacted households indicate that Californians would pay

Climate change, buildings and energy prices

154 each year in higher taxes to purchase water to prevent a decrease in wetland acreage from 85,000 acres to 27,000 acres. This value rose to

The downside risk of climate change in California’s Central Valley agricultural sector

254 to provide foran increase in wetland acreage to 125,000 acres with an associated 40 percent increase of bird populations. California households would pay

Climate Change Policy in California: Balancing Markets versus Regulation

313 each year in additional taxes to implement agricultural drainage programs that would reduce waterbirds exposure to contamination from 70 percent to 20 percent exposure. The water management implication of these results is that Californians value clean water supplies for refuges at over