Richard C. Ready

Environmental Value Transfer: Issues and Methods

Preface S. Navrud and R. Ready.- Foreward A.C. Fisher.- 1. REVIEW OF METHODS FOR VALUE TRANSFER S. Navrud and R. Ready.- 2. BENEFIT AND INFORMATIONAL TRANSFERS D. Brookshire and J. Chermak.- 3. CORRESPONDENCE AND CONVERGENCE IN BENEFIT TRANSFER ACCURACY: META-ANALYTIC REVIEW OF THE LITERATURE R. Rosenberger and T. Phipps.- 4. TRANSFERRING LANDSCAPE VALUES: HOW AND HOW ACCURATELY? J.M.L. Santos.- 5. MORBIDITY VALUE TRANSFER R. Ready and S. Navrud.- 6. UNCERTAINTY, BENEFIT TRANSFERS, AND PHYSICAL MODELS: A MIDDLE RIO GRANDE VALLEY FOCUS D. Brookshire, J. Chermak and R. DeSimone.- 7. ESTIMATING THE ECONOMIC VALUE OF IMPROVEMENTS IN RIVER ECOLOGY USING CHOICE EXPERIMENTS: AN APPLICATION TO THE WATER FRAMEWORK DIRECTIVE N. Hanley, R.E. Wright, and B. Alvarez-Farizo.- 8. CONTRASTING CONVENTIONAL WITH MULTI-LEVEL MODELING APPROACHES TO META-ANALYSIS: EXPECTATION CONSISTENCY IN UK WOODLAND RECREATION VALUES I.J. Bateman and A.P. Jones.- 9. BENEFIT TRANSFER USING META-ANALYSIS IN RECREATION ECONOMIC VALUATION R. Shrestha, R Rosenberger, and J. Loomis.- 10. BENEFIT VALUE TRANSFERS CONDITIONAL ON SITE ATTRIBUTES: SOME EVIDENCE OF RELIABILITY FROM FOREST RECREATION IN IRELAND R. Scarpa, W.G. Hutchinson, S.M. Chilton, and J. Buongiorno.- 11. CAN USE AND NON-USE VALUES BE TRANSFERRED ACROSS COUNTRIES? D. Kristofersson and S. Navrud.- 12. THE APPLICATION OF BAYESIAN METHODS IN BENEFIT TRANSFER C. Leon, R. Leon, and F. Vazquez-Polo.-13. IMPROVING THE PRACTICE OF BENEFITS TRANSFER: A PREFERENCE CALIBRATION APPROACH S. Pattanayak, V. K. Smith, and G. Van Houtven.- 14. HOW MUCH IS ENOUGH? THE VALUE OF INFORMATION FROM BENEFIT TRANSFERS INA POLICY CONTEXT D. Barton.- 15. LESSONS LEARNED FOR ENVIRONMENTAL VALUE TRANSFER S. Navrud and R. Ready.

How Do Respondents with Uncertain Willingness to Pay Answer Contingent Valuation Questions

Four elicitation methods are compared in a split-sample, contingent-valuation study valuing avoidance of episodes of ill health linked to air pollution: two discrete methods and two more-continuous methods. Respondents to a traditional payment card (PC) question gave willingness-to-pay values that were lower than those implied by dichotomous-choice (DC) responses. However, follow up questions showed that DC respondents were less certain of their stated behavior than were PC respondents. When respondents were told to be “almost certain” of their responses, responses to the DC and the PC formats converged. (JEL Q21)

The Amenity and Disamenity Impacts of Agriculture: Estimates from a Hedonic Pricing Model

The positive and negative externalities from farmland are increasingly a focus of public policy discussion about agriculture and land use. A GIS-based hedonic pricing model shows that agricultural open space increases nearby residential property values, but larger-scale animal operations and mushroom production have negative impacts. Animal production facilities with as few as 200 animal equivalent units reduce nearby property values, but larger facilities do not necessarily generate larger impacts. Because they tend to occur together, the negative impacts of animal agriculture and the positive impacts of open space must be simultaneously modeled to avoid omitted variable bias.

Measuring Amenity Benefits from Farmland: Hedonic Pricing vs. Contingent Valuation

The amenity value to Kentucky residents from horse farm land was estimated using both the contingent valuation method and the hedonic pricing method. The hedonic pricing model included both the housing and labor markets. A value function estimated from dichotomous choice contingent valuation responses showed that the value of a change in the level of the horse farm amenity was sensitive to the size of the change, with no evidence of value that is independent of the size of the change. The two methods generated estimates of the external benefits from horse farm land that were within 20 percent of each other.

MEASURING CONSUMER BENEFITS OF FOOD SAFETY RISK REDUCTIONS

Microbial pathogens and pesticide residues in food pose a financial burden to society which can be reduced by incurring costs to reduce these food safety risks. We explore three valuation techniques that place a monetary value on food safety risk reductions, and we present a case study for each: a contingent valuation survey on pesticide residues, an experimental auction market for a chicken sandwich with reduced risk of Salmonella, and a cost-of-illness analysis for seven foodborne pathogens. Estimates from these techniques can be used in cost/benefit analyses for policies that reduce food safety risks.

Testing Transferability of Recreation Demand Models Across Regions: A Study of Corps of Engineer Reservoirs

This research tests the interchangeability of two specifications of travel cost demand models for recreation at U.S. Army Corps of Engineer reservoirs in Arkansas, California, and Tennessee/Kentucky. Statistical tests of coefficient equality for both nonlinear least squares and Heckman sample selection models suggest rejecting a transferable model among all three regions. However, the nonlinear least squares models in Arkansas and Tennessee were similar enough to fail to reject the hypothesis of equal coefficients at the 0.01 significance level. Even so, interchanging the Arkansas and Tennessee nonlinear least squares coefficients produces visitor use and total benefit estimates that are more than 100% too high. However, interchanging coefficients does provide reasonably close estimates of the average consumer surplus per trip for both states using the nonlinear least squares model (±5% to 10%). This is due to similarity of the price coefficients in the two models. Thus a more limited form of transferability which focuses on average benefit per day, rather than on predicting total use and total benefits, appears promising.

Using Respondent Uncertainty to Mitigate Hypothetical Bias in a Stated Choice Experiment

In a choice experiment study, willingness to pay for a public good estimated from hypothetical choices was three times as large as willingness to pay estimated from choices requiring actual payment. This hypothetical bias was related to the stated level of certainty of respondents. We develop protocols to measure respondent certainty in the context of a choice experiment, and to calibrate hypothetical choices using these certainty measures. While both the measurement of respondent certainty and the use of certainty measures to calibrate responses are complicated by the multiple-choice nature of choice experiments, calibration successfully mitigated hypothetical bias in this application. (JEL Q51)

Endangered Species and the Safe Minimum Standard

The safe minimum standard of conservation is a decision rule for problems like endangered species preservation that involve irreversibility and uncertainty. It has been motivated as the minimax-loss solution to a two-person game against nature. However, two equally plausible games can be used to model decisions involving endangered species. For one game, the safe minimum standard, and therefore preservation, is preferred. For the other game, extinction is preferred. Although the safe minimum standard is intuitively appealing, it cannot be motivated by game theory.

Economic valuation of policies for managing acidity in remote mountain lakes: examining validity through scope sensitivity testing

Abstract.The paper introduces the reader to the contingent valuation method for monetary valuation of individuals’ preferences regarding changes to environmental goods. Approaches to the validity testing of results from such studies are discussed. These focus upon whether findings conform with economic-theoretic expectations, in particular regarding whether valuations are sensitive to the size (or ‘scope’) of environmental change being considered, and whether they are invariant to alterations in study design which are irrelevant from the perspective of economic theory. We apply such tests to a large sample study of schemes to alter the acidity levels of remote mountain lakes. Results suggest that, when presented with environmental changes which respondents are concerned about, their values exhibit scope sensitivity and conform to theoretical expectations, and therefore could be used for formulating policy. However, when presented with changes which respondents feel are trivial, their values fail tests of theoretical consistency and are not scope sensitive, and therefore cannot be used within economic appraisals. Interestingly we find that qualitative focus group analyses are good indicators of whether a given change is likely to be considered trivial or not and therefore whether scope sensitivity tests are likely to be satisfied.

The relationship between environmental values and income in a transition economy: surface water quality in Latvia

A contingent valuation study measured citizen willingness to pay (WTP) for an improvement in surface water quality in Latvia. The average respondent was willing to pay 0.7 per cent of household income for the environmental improvement, but that amount was much less than needed to finance the required investments in treatment facilities. While the income elasticity of WTP for the average resident was low (0.56), it increases as income increases, reaching 0.9 at an income level double the current average. As real incomes increase in Latvia, the demand for environmental quality by citizens can be expected to increase substantially.