Richard T. Woodward

The economic value of wetland services: a meta-analysis

Abstract The number of studies quantify the value of wetlands and the services provided by these ecosystems is rapidly expanding. The time is ripe for an assessment of what has been learned from this literature. Using results from 39 studies, we evaluate the relative value of different wetland services, the sources of bias in wetland valuation and the returns to scale exhibited in wetland values. While some general trends are beginning to emerge, the prediction of a wetlands value based on previous studies remains highly uncertain and the need for site-specific valuation efforts remains large.

Market Structures for U.S. Water Quality Trading

The use of transferable discharge permits as a water pollution control policy is rapidly increasing in the United States. Drawing on evidence from existing water quality trading programs, this paper provides a taxonomy of the forms that such markets take. Four main structures are identified: exchanges, bilateral negotiations, clearinghouses, and sole-source offsets. Each of these structures has its own strengths and weaknesses; none is optimal for all scenarios. Since market structure is largely determined by a programs rules, policy makers should be aware of the differences between these structures and the conditions under which each comes to be.

User Financing in a National Payments for Environmental Services Program: Costa Rican Hydropower

National government-funded payments for environmental services (PES) programs often lack sustainable financing and fail to target payments to providers of important environmental services. In principle, these problems can be mitigated by supplementing government financing with contributions from leading environmental service users. We use original survey data and official statistics to analyze user financing in Costa Rica’s renowned national PES program, focusing on the amounts and sources of user financing, the drivers of contributions, and contributors’ perceptions of the PES program. We find that user financing has supported less than three percent of the acres enrolled in the program and that hydroelectric plants are the largest private sector contributors. Large hydroelectric plants tend to contribute while small ones do not. The weight of evidence suggests that in addition to ensuring the provision of forest environmental services, hydroelectric plants’ motives for contributing to the PES program include improving relations with local communities and government regulators—common drivers of participation in all manner of voluntary environmental programs. These findings raise questions about the potential of user financing to improve the efficiency and financial sustainability of national PES programs.

Lessons about Effluent Trading from a Single Trade

Despite many years of existence, programs that allow transferable discharge permits to control water pollution have had quite limited success. This paper discusses a single trade that recently took place in the Lake Dillon drainage basin between point and nonpoint pollution sources. This trade demonstrates many of the challenges that are faced in effluent trading but also highlights the potential efficiency gains that can be achieved through such programs.

Additionality and the Adoption of Farm Conservation Practices

We use propensity score matching to estimate additionality from enrollment in federal costshare programs for six practices. We analyze farmer adoption decisions based on farmer survey data in Ohio. We develop a new methodological approach to decompose the average treatment effect on the treated according to relative contributions of voluntary adopters and new adopters. Our results indicate that cost-share programs achieve positive levels of additionality for each practice. But percent additionality varies dramatically between practices. Specifically, percent additionality is highest for hayfield establishment (93.3%), cover crops (90.6%), and filter strips (88.9%), while it is lowest for conservation tillage (19.3%). (JEL Q24, Q28)

Efficiency, sustainability and global warming

Abstract Economic analyses of global warming have typically been grounded in the theory of economic efficiency. Such analyses may be inappropriate because many of the underlying concerns about climate change are rooted not in efficiency, but in the intergenerational allocation of economic endowments. A simple economic model is developed which demonstrates that an efficient economy is not necessarily a sustainable economy. This result leads directly to questions about the policy relevance of several economic studies of the issue. We then consider policy alternatives to address global warming in the context of economies with the dual objectives of efficiency and sustainability, with particular attention to carbon-based taxes.

Sustainability as Intergenerational Fairness: Efficiency, Uncertainty, and Numerical Methods

This paper presents an economic model of sustainability defined as intergenerational fairness. Assuming that intergenerational fairness is an obligation of each generation, a recursive optimization problem is obtained. The problem has the advantage that uncertainty can readily be incorporated in the model and it can be solved numerically for a wide range of specifications. The possibility of trade-offs between efficiency and sustainability are discussed. Under plausible conditions, it is shown that a sustainability obligation is met only if there is the expectation of economic growth.

Size and bag limits in recreational fisheries: theoretical and empirical analysis.

Size and bag limits are among the most common forms of regulations for recreational fisheries. In this paper, we theoretically study and compare the short- and long-term impacts of these policies on individual anglers and fish stocks. Particular attention is paid to the issue of release mortality, which can have important consequences for policy effectiveness. Theoretically, we show the conditions under which these policies will be successful in achieving biological objectives. Implications for recreation demand analysis are discussed. We also study these policies using a simulation model of various policy combinations for the Gulf of Mexico red snapper fishery.

Joint Estimation of Revealed and Stated Preference Data: An Application to Recreational Red Snapper Valuation

This study extends the joint estimation of revealed and stated preference data literature by accounting for truncation in the revealed preference data. The analytical model and estimation procedure are used to estimate the value of recreational red snapper fishing in the Gulf of Mexico. This recreational red snapper valuation is decomposed into its direct and indirect components. As expected, the value of recreational red snapper fishing using the joint revealed-stated preference model proposed in this analysis is bracketed on the upper limit by the value obtained using the contingent valuation method and on the lower limit by the travel cost method. The results also indicate that the joint model improves the precision of estimated recreational red snapper valuation.

The Distributional Impacts of Recreational Fees: A Discrete Choice Model with Incomplete Data

We explore the distributional consequences of various fee schemes and other policy programs to reduce overfishing in the gulf of Mexico recreational fishery. The econometric model allows the marginal utility of income to vary across three income groups. We find that flat fees have a strong proportional effect on the participation of shore fishermen, where low-income anglers predominate, and a relatively small impact on the expensive charter fishery. We also find that the welfare consequences of declining catch rates would fall disproportionately on low-income anglers. (JEL Q51, Q22)