Robert P. Berrens

Information and effort in contingent valuation surveys: application to global climate change using national internet samples ☆

This contingent valuation study investigates the issues of information access and respondent effort, and is based on a series of national Internet samples. The focus is on a split-sample treatment, Basic Information (BI) versus Enhanced Information (EI). In the latter, significantly expanded information is provided about global climate change and the Kyoto Protocol. Using a referendum format, we compare the treatment effect (BI versus EI) on willingness to pay (WTP). We develop measures of respondent effort in accessing optional information, through the technology of Web-based surveys, and jointly model effort and WTP using a simultaneous estimation approach. Results support the use of the joint modeling approach for objective measures of respondent effort and WTP. Respondent effort is shown to be positively and significantly related to WTP. However, use of the optional menu is rather modest (counts of pages and time spent), and is highly variable (both across pages and respondents).

Examining the Role of Social Isolation on Stated Preferences

Benefit-cost analysis remains the central paradigm used throughout the public sector. A necessary condition underlying efficient benefitcost analysis is an accurate estimate of the total value of the nonmarketed good or service in question. While economists have long measured the benefits of private goods routinely bought and sold in the marketplace, a much more difficult task faces the practitioner interested in estimating the total benefits of increased air and water quality, for example. In such cases, policy makers rely on stated preference methods (contingent markets) to provide signals of value. Recently there has been a lively debate about whether, and to what extent, “hypothetical bias” permeates benefit estimation in contingent markets. This debate has proliferated among academics and practitioners over the past several decades, and continues to find its way into public disputes of damage assessment, development decisions, and discussions of optimal regulatory standards. This study extends the debate in a new direction by taking advantage of a unique opportunity we were provided at the University of Central Florida (UCF), where we were approached to spearhead a capital campaign at UCF to fund a new Center for Environmental Policy Analysis (CEPA). The experimental design, which includes valuation decisions from nearly 300 subjects randomly placed into one of six treatment cells, permits an examination of the comparative static effects of varying social isolation while holding the other important facets of the valuation instrument constant. Our baseline treatments ask two different groups of respondents to vote Yes or No on contributing

A META-ANALYSIS OF ENVIRONMENTAL KUZNETS CURVE STUDIES

20 to provide start-up capital for CEPA (one treatment hypothetical and one treatment actual). In these two baseline treatments, similar to many practical methods of contingent valuation (CV) exercises that are carried out in practice (e.g., in-person, mail, or telephone), it is important to recognize that only the experimenter can observe each individual’s response. In the third and fourth treatments, denoted Randomized Response, we again ask a hypothetical or actual question concerning a

Testing the Validity of Contingent Behavior Trip Responses

20 contribution, but we relax the degree of social pressure by using a randomized response format, which via delinking the observed and voting response ensures the subject that her stated preferences are unidentifiable. These particular treatments resemble use of an anonymous ballot box approach to obtain individual values. Our final two treatments, labeled Peer Group, considerably decrease subject anonymity by randomly choosing 10 people to stand up and inform the group of their voting decision. These treatments bear resemblance to contingent surveys performed with small groups (or poorly controlled Web-based surveys). The experimental results are interesting. Consonant with some previous studies, we observe signs of hypothetical bias. More importantly, we find that the difference between hypothetical and actual voting decisions is of roughly the same magnitude as the difference between actual voting decisions across treatments that vary * List: AREC and Department of Economics, 2200 Symons Hall, University of Maryland, College Park, MD 20742, and National Bureau of Economic Research (e-mail: jlist@arec.umd.edu); Berrens and Bohara: Department of Economics, University of New Mexico, 1915 Roma NE, Albuquerque, NM 87131 (e-mail: rberrens@unm.edu; bohara@unm.edu); Kerkvliet: Department of Economics, 303 Ballard Extension Hall, Oregon State University, Corvallis, OR 97331 (e-mail: joe.kerkvliet@orst.edu). Three anonymous reviewers provided comments that improved the manuscript. Seminar participants at Cornell University, Harvard University, University of Arizona, University of Maryland, University of New Mexico, University of Pennsylvania, and the University of Colorado’s Environmental Economics Workshop also provided useful suggestions. Richard Carson, Nick Flores, Glenn Harrison, Michael McKee, Kerry Smith, and Laura Taylor provided important insights on earlier drafts of this manuscript. We thank Apinya Thumaphipol for research assistance and Dean Thomas Keon for allowing us to use CEPA as a public good in our experiment. Any errors remain our own. 1 We provide a more patient review of the various terms and the background of the debate in the next section. 2 The randomized response approach to asking sensitive survey questions was introduced by Stanley Warner (1965).

Willingness to pay for safe drinking water: evidence from Parral, Mexico.

An understanding of the empirical relationship between income and environmental quality is evolving through recent studies investigating the Environmental Kuznets Curve (EKC). The EKC represents an inverted-U relationship between income and environmental degradation. However, studies may employ different methods, evaluate different environmental indicators, and use different data, resulting in a broad spectrum of findings and leading to sometimes conflicting interpretations. The purpose of this paper is to synthesize the results of existing EKC findings by conducting a statistical meta-analysis, and to predict new income turning points (ITP). Results indicate how both methodological choices and pollutant types affect ITPs. (JEL Q20).

A consumption-based theory of the environmental Kuznets curve

While a number of validity tests exist for contingent valuation data, to date there are very few literature examples for contingent behavior (CB) data. The objective of this study is to test the validity of CB trip data for different levels of rock climbing access using data from surveys implemented before and after a policy restricting recreational access was imposed. Results from generalized Negative Binomial and seemingly unrelated Poisson regression models show significant sensitivity to scope, and suggest that CB data may be a valuable supplement to revealed preference data when policy proposals are outside the range of historical conditions. Copyright 2002, Oxford University Press.

A risk-based environmental Kuznets curve for US hazardous waste sites

A referendum-format contingent valuation (CV) survey is used to elicit household willingness to pay responses for safe and reliable drinking water in Parral, Mexico. Households currently adopt a variety of averting and private investment choices (e.g., bottled water consumption, home-based water treatment, and installation of water storage facilities) to adapt to the existing water supply system. These revealed behaviors indicate the latent demand for safer and more reliable water services, which is corroborated by the CV survey evidence. Validity findings include significant scope sensitivity in WTP for water services. Further, results indicate that households are willing to pay from 1.8% to 7.55% of reported household income above their current water bill for safe and reliable drinking water services, depending upon the assumptions about response uncertainty.

Valuing the Loss of Rock Climbing Access in Wilderness Areas: A National-Level, Random-Utility Model

Abstract Most theories about the inverted-U relationship between pollution and income, termed the environmental Kuznets curve (EKC), are production-side theories emphasizing pollution and abatement technologies. Production-side theories are implicitly based on the assumption of low factor mobility, and the absence of pollution as a variable in the utility function. Both assumptions are called into question by the empirical evidence of EKCs for (i) pollutants that are long-lived and not easily shiftable and (ii) regional cross-sections with free labor mobility. Hazardous waste sites are a prime example. This paper develops a stylized model of the EKC based on perfect mobility of households and labor. It represents the first attempt at developing a consumption-side model of the EKC.

Testing the inverted-U hypothesis for US hazardous waste: An application of the generalized gamma model

The Environmental Kuznets Curve (EKC) hypothesis is investigated for US hazardous waste sites. Where past studies have typically focused on cross-country analyses of conventional air and water pollutants, here, US county level data and assessed risk is used as the measure of environmental degradation.

Internal migration and the environmental Kuznets curve for US hazardous waste sites

Given potential growth in outdoor rock climbing and its concentration on public lands, the management of climbing access in wilderness areas is an issue of considerable national controversy in the United States. A proposed rule change by the U.S. Forest Service (USFS) would prohibit the use of fixed climbing protection in wilderness areas—effectively eliminating safe access to many sites. Using a unique data set on rock climbing trips, a repeated-nested logit, random-utility model is used to analyze economic losses to climbers resulting from the USFS proposal. Results indicate that the USFS proposal may constitute a major regulatory change. (JEL Q26)