Richard C. Bishop

Endangered Species and Uncertainty: The Economics of a Safe Minimum Standard

Species extinction irreversibly narrows the reservoir of potential resources. The future repercussions of this narrowing are uncertain. This paper develops the safe minimum standard (SMS) approach to public decisions involving endangered species. The SMS approach is based on game theory and calls for avoidance of extinction unless the social costs are unacceptably large. The level at which costs become excessive is a matter of intergenerational distribution. The paper also explores important linkages between the SMS approach and recent literature on preservation of natural environments.

Which response format reveals the truth about donations to a public good

Several contingent valuation studies have found that the open-ended format yields lower estimates of willingness to pay (WTP) than does the closed-ended, or dichotomous choice, format. In this study, WTP for a public environmental good was estimated under four conditions: actual payment in response to open-ended and closed-ended requests, and hypothetical payment in response to open-ended and closed-ended requests. The experimental results, showing that the response format mattered far more for hypothetical than for actual payments, support conclusions about the reasons that the dichotomous choice format yields larger estimates of hypothetical WTP, conclusions that hinge on the hypothetical nature of contingent valuation.

Donation Payment Mechanisms and Contingent Valuation: An Empirical Study of Hypothetical Bias

Donation payment mechanisms are well suited forsome contingent valuation studies. In aneffort to better understand the discrepancythat has been consistently found between actualand hypothetical donations, we investigate anapproach to estimating actual willingness todonate using contingent donations with afollow-up question in which respondents ratethe level of certainty about their response tothe contingent donation question. The approachallows us to estimate the magnitude of thehypothetical bias and identify the respondentsresponsible for the bias. Identification ofthe respondents responsible for thehypothetical bias is the first step towarddeveloping an understanding of the causes andpossible remedies. In this study we find thatmost of the respondents (80%) to thecontingent donation question provide a responseconsistent with how we predict they wouldrespond in an actual donation situation.

Welfare Measurements Using Contingent Valuation: A Comparison of Techniques

Three commonly used techniques of asking contingent valuation questions are compared: iterative bidding, payment cards, and dichotomous choice. The results reveal that no single contingent valuation technique is neutral in the elicitation of hicksian surplus and each technique has its strengths and weaknesses. The iterative bidding estimates contain a starting point bias, while the payment card and dichotomous choice estimates were influenced by the interviewers soliciting the contingent values. Finally, the analysis of dichotomous choice responses involves unresolved issues that warrant further investigation. On the other hand, dichotomous choice is the easiest technique to administer in a survey setting.

Option Value: An Exposition and Extension

This article examines the role of the discount rate in making decisions that will have significant implications for the environment. The authors begin by providing a rationale for discounting in general and by describing the main factors that determine ...

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.

Assessing natural resource damages using environmental annuities

Abstract Although research methods exist to place economic values on lost wetland service flows, in many circumtances the cost of conducting such research exceeds the expected value of damages. In some cases sufficient time may not be available to undertake primary research. In addition, the existing wetland valuation research base is often inadequate to support defensible benefits transfer. As an alternative to more traditional valuation techniques, we propose a simplified approach based on environmental annuities. The principal assumption behind this approach is that the public can be compensated for past losses in environmental services through the provision of additional services of the same type in the future. An application of this approach as the basis of a recent natural resource damage claim is described.

Theoretical and Empirical Specifications Issues in Travel Cost Demand Studies

A travel cost demand model is derived from a utility function which postulates that individuals choose the optimal total number of site recreation days given by the product of the number and length of their recreation trips. By relaxing the assumption that on-site time is constant across recreationists, the applicability of the travel cost method is extended. The model is estimated using a maximum likelihood procedure appropriate for the truncated sample data which is characteristic of most user-specific recreation data. Failure to do so would result in overestimating the value of Great Lakes fishing by 3.5 times.

Is Willingness to Pay for a Public Good Sensitive to the Elicitation Format

This study uses actual payments toward the provision of a public good to compare dichotomous choice and payment card formats. The public good in question is the environmental improvement from wind generation of electric power. We find that willingness-to-pay estimates vary with the elicitation format. Based on this result, we argue that elicitation effects found in contingent valuation studies may not be due the hypothetical nature of decision-making, as has been suggested in previous studies. (JEL H41, Q51)

Where to from Here

While our editors were too polite to call it that, I was assigned to write the Old Professor’s chapter. It’s up to me to wrap up this volume by taking stock and looking into the future. Actually, being 30 years past the Ph.D., I rather like this role. Taking the long view suits me fine.