economic valuation of the threat posed by the establishment of the asian tiger mosquito in australia invasive species policy could be better informed if we understood how much people value reductions in the risks posed by these organisms this study investigates the public s willingness to pay wtp for additional measures to reduce the risk of invasion of the australian mainland by the asian tiger mosquito atm the study contributes to the literature by applying a stated preference method to estimate the public s wtp to reduce the risk of an atm invasion expressed as a change in probability it is the first ex ante invasive species analysis to test over two discrete invasion reduction probabilities based on management effort further to overcome the challenges in valuing changes in probabilities the study presented respondents with a well defined discrete difference in the final probability with one scenario reducing risk from 50 to 25 and the other from 50 to 5 we find a significant difference in the mean wtp values between these two scenarios a 67 vs a 90 the overall conclusion is that estimated benefits of reducing the probability of an atm incursion outweigh the costs

statistical efficiency of double bounded dichotomous choice contingent valuation the statistical efficiency of conventional dichotomous choice contingent valuation surveys can be improved by asking each respondent a second dichotomous choice question which depends on the response to the first question if the first response is yes the second bid is some amount greater than the first bid while if the first response is no the second bid is some amount smaller this double bounded approach is shown to be asymptotically more efficient than the conventional singlebounded approach using data from a survey of californians regarding their willingness to pay for wetlands in the san joaquin valley we show that in a finite sample the gain in efficiency can be very substantial

sensitivity to scale in contingent valuation the importance of the budget constraint the possible insensitivity of willingness to pay wtp values to changes in scale continues to cause concern within the contingent valuation cv literature although several reasons for this phenomenon have been suggested empirical evidence both supports and refutes insensitivity this paper presents data that suggest that insensitivity may be significantly determined by the individual s budget constraint the higher the proportion of income the expressed wtp represents the greater the insensitivity of that wtp to changes in the scale of the good irrespective of changes in underlying marginal utility the methodological implication for cv studies in health care is outlined

estimation using contingent valuation data from a dichotomous choice with follow up questionnaire reply abstract our original article proposed that the two yes no willingness to pay wtp responses produced by this survey format should be viewed as a pair of jointly distributed correlated discrete random variables the comparison model the conventional approach to estimation using these types of data contained a programming error correction alters the results from the comparison model but our original claim that estimation by conventional methods can produce misleading inferences if ours is the appropriate specification still stands this is especially true if negative wtp is precluded when e wtp is calculated

interest rates and currency prices in a two country world abstract this paper is a theoretical study of the determination of prices interest rates and currency exchange rates set in an infinitely lived two country world which is subject both to stochastic endowment shocks and to monetary instability formulas are obtained for pricing all equity claims nominally denominated bonds and currencies and these formulas are related to earlier closely related results in the theories of money finance international trade

do contingent valuation estimates pass a scope test a meta analysis abstract this paper considers the scope test proposed to judge the internal consistency of contingent valuation estimates the test is shown to be quite sensitive to the maintained hypotheses required to derive fairly precise expectations for the properties of wtp functions and therefore a different approach may be needed in gauging the reliability of cv this paper describes an approach that relies on a weight of the evidence criterion and uses meta analysis to develop a systematic appraisal of what the economic values of changes in amenity resources are the approach is illustrated for the case of estimating people s willingness to pay for improving or maintaining visibility at the national parks

contingent valuation a practical alternative when prices aren t available a person may be willing to make an economic tradeoff to assure that a wilderness area or scenic resource is protected even if neither that person nor perhaps anyone else will actually visit this area this tradeoff is commonly labeled passive use value contingent valuation studies ask questions that help to reveal the monetary tradeoff each person would make concerning the value of goods or services such surveys are a practical alternative approach for eliciting the value of public goods including those with passive use considerations first i discuss the exxon valdez oil spill of march 1989 focusing on why it is important to measure monetary tradeoffs for goods where passive use considerations loom large although discussions of contingent valuation often focus on whether the method is sufficiently reliable for use in assessing natural resource damages in lawsuits it is important to remember that most estimates from contingent valuation studies are used in benefit cost assessments not natural resource damage assessments those working on benefit cost analysis have long recognized that goods and impacts that cannot be quantified are valued implicitly by giving them a limitless value when government regulations preclude certain activities or giving them a value of zero by leaving certain consequences out of the analysis contingent valuation offers a practical alternative for reducing the use of either of these extreme choices i put forward an affirmative case for contingent valuation and address a number of the concerns that have arisen

environmental and resource economics a canadian retrospective the paper reviews research contributions to environmental and resource economics by scholars in canada we focus mainly on work from the past 25 years but also highlight earlier pathbreaking work we begin by looking at broad trends in research both internationally and within canada we then review canadian contributions to various topics in the field canadians have played a leading role in the development of the field especially in resource economics international environmental economics and the valuation of environmental amenities

preferences in the future environmental economics has been much occupied with the discount rate which is the value of future costs and benefits relative to present costsor benefits but at least as important is the question of whatshould be discounted that is what the value of those future environmentalbenefits is to future generations this paper analyzes the role for futurepreferences and discusses the state of knowledge i argue that theappropriate discount rate is the market one and that the real problemis determining future willingness to pay this approach makes clearerthe connection between discounting and the valuation debate this paper focuses on two features that have been prominent in that debate existence value and reference dependence i argue that thereis a vital connection between the two constructs and that this link yieldsimportant implications for future willingness to pay

the social role of not for profit organizations hospital provision of charity care during the 1980s the state of new york shifted from a straight block grant to a matching grant method for reimbursing hospitals with the matching rate varying from 0 to 75 percent across years these changes allow estimation of pure income and price effects for hospitals supply of uncompensated care charity and bad debts the price efrect is positive and significant but no income effect was found hospitals in more concentrated markets provide more charity care as do teaching hospitals and the presence of public hospitals in a market reduces private hospitals provision of charity care

diagnosing insensitivity to scope in contingent valuation sensitivity to scope is considered a desirable property of contingent valuation studies and often treated as a necessary condition for validity we first provide an overview of scope insensitivity explanations put forth in the environmental valuation literature then we analyze data from a contingent valuation survey eliciting willingness to pay to prevent oil spills of four different magnitudes in arctic norway in the baseline analysis the scope inference is ambiguous there is only statistical difference in willingness to pay to avoid a very large versus small oil spill nok 1869 and nok 1086 respectively however further explorations show that several confounding factors suggested in the literature influence the scope inference the scope sensitivity improves when we control for subjective probabilities of amenity provision exclude respondents based on the debriefing questions take into consideration the sample sizes and impose diminishing marginal utility overall the analysis supports an emerging view in the contingent valuation literature suggesting that statistical scope insensitivity is not a sufficient reason for deeming a study invalid

international capital mobility shadow prices and the cost of protection this paper studies the welfare losses from tariff protection in a small open economy when some factors are internationally mobile our principal result is that international fictor mobility must raise the cost of protection more specifically the welfare loss resulting from a uniform increase in tariffs in a competitive small open economy is greater when tariff induced international factor movements take place than when factors are internationally immobile by contrast an exogen1ous inflow of factors in the presence of tariffs may increase or reduce the welfare loss associated with protection depending on whether or not the protected commodities use the foreign owned factors intensively relative to domestically owned factors these results are proven for a very general specification of the economy s technology in particular no restrictions are placed on the degree of vertical integration in production on the sectors into which factors are internationally mobile or on the number of goods and factors our main result holds whether or not an increase in tariff rates leads the economy to specialise in addition we show how our results relate to earlier work on immiserising capital inflows and on negative shadow prices for factors of production thus synthesizing a number of recent results within a common framework the paper is organised as follows in section 2 we explain our framework and derive expressions for the welfare effects of tariffs when all factors are domestically owned and when some factors are foreign owned but not internationally

a dynamic specific factors model with money when the capital stock is endogenously chosen by optimizing households the predictions of the static specific factors model are modified an increase in tariffs unambiguously increases real wages whereas an expansion of the labor force does not reduce wages capital and land are not only factors of production but also assets and their shares in the household s portfolio are determined by features of the supply side time preference and inflation an increase in inflation reduces the capital stock but its impact on the price of land is ambiguous because of opposite movements in the inflation tax and in land rents

plausible responsiveness to scope in contingent valuation plausible responsiveness to scope is a question of economic significance in addition to statistical significance of the scope test in contingent valuation we briefly review the history of the scope test in order to place the current issue in the context of the bp deepwater horizon oil spill as a result of the review we gain insights into how the issue of scope adequacy arose twenty years after it was first mentioned by the noaa panel on contingent valuation following the exxon valdez oil spill we then provide a review of desvousges mathews and train 2012 who promote the adding up test to identify inadequate responsiveness to scope adequacy the adding up test is a test of the construct validity of the contingent valuation method but is flawed as a measure of economic significance we propose scope elasticity of willingness to pay as a measure of economic significance a simulation suggests a likely range of elasticity estimates given linear and quadratic functional forms for the willingness to pay function in order to illustrate the ease of implementation of scope elasticity within the context of the standard scope test we calculate scope elasticity with willingness to pay estimates from several studies describe two studies that directly estimate scope elasticity and estimate scope elasticity with primary data from two studies all of these empirical estimates of scope elasticity fall within the range of scope elasticity suggested by the simulation scope elasticity provides a practical way forward relative to the adding up test on the issue of economic significance of scope effects

dynamic behavior of capital accumulation in a cash in advance model abstract this paper analyzes the dynamic behavior of capital accumulation in stockman s cash in advance model if the cash in advance constraint applies only to consumption then money is superneutral along the transition path as well as in the long run alternatively if the cash in advance constraint applies to gross investment as well as consumption then a permanent increase in the rate of monetary growth reduces the steady state capital stock the effect on the speed of adjustment depends on the sign of a certain simple function of the parameters of preferences and technology

an investigation of part whole biases in contingent valuation studies abstract part whole bias is a possible explanation for nonuse contingent valuation estimates that are insensitive to marginal changes in environmental commodities our empirical analyses reveal no statistically significant differences in willingness to pay of independent samples of nonusers to prevent 2000 20 000 or 200 000 migratory waterfowl deaths in the central flyway all numbers less than 2 of the waterfowl population five alternative propositions for explaining this empirical findings do not provide a completely satisfactory explanation more research is necessary to investigate appropriate commodity metrics sample sizes for small changes in environmental commodities and consider how respondents evaluate small changes in environmental commodities

contingent valuation controversies and evidence contingent valuation cv has become one of the most widely used non market valuation techniques cv s prominence is due to its flexibility and ability to estimate total value including passive use value its use and the inclusion of passive use value in benefit cost analyses and environ mental litigation are the subject of a contentious debate this paper discusses key areas of the debate over cv and the validity of passive use value we conclude that many of the alleged problems with cv can be resolved by careful study design and implementation we further conclude that claims that empirical cv findings are theoretically inconsistent are not generally supported by the literature the debate over cv however has clarified several key issues related to nonmarket valuation and can provide useful guidance both to cv practitioners and the users of cv results

on visible choice sets and scope sensitivity abstract in this paper we argue that the burgeoning empirical debate over scope sensitivity within contingent valuation studies is fundamentally incomplete in that it has neglected a systematic examination of certain effects of study design upon observed scope sensitivity in particular we highlight the fact that in certain study designs the choice set initially offered or visible to respondents is changed in a stepwise manner as they progress through a valuation exercise while other designs involve advance disclosure regarding the full extent of the final visible choice set prior to any choices or values being elicited the issue of changes in the visible choice set is alluded to by smith j environ econom manage 22 1 71 who identifies this as a primary challenge to kahneman and knetsch s j environ econom manage 22 1 57 well known experimental results kahneman and knetsch contend that it seems highly implausible that this minor procedural change would significantly alter results p 61 but do not test this assertion we present experimental and field tests of the impact upon contingent values of varying the visible choice set through stepwise and advance disclosure these dimensions of design are interacted with changes in the order in which nested goods are presented bottom up versus top down when a stepwise disclosure procedure is adopted the observed scope sensitivity is substantially and significantly affected by the order in which goods are presented but such procedural variance is not observed within advance disclosure designs conjectures regarding the origin and implications of such findings are presented

adequate responsiveness to scope in contingent valuation the standard test for scope sensitivity in contingent valuation studies determines whether the response to changes in scope is statistically significant it does not address whether the magnitude of response is appropriate given the specified changes in scope we examine contingent valuation studies that implemented scope tests to determine what they imply about the adequacy of response to scope we find that in the vast majority of studies the magnitude of response cannot be assessed only three studies permit such an assessment samples and hollyer 1990 diamond et al 1993 and chapman et al 2009 the first two papers find that responses to their surveys did not vary adequately with scope the third study passed the standard scope test but we show that the magnitude of response in this study is inadequate by straightforward methods of assessment and cannot be explained by diminishing marginal utility or substitution more research is needed on this issue including wider application of adding up tests on incremental parts as well as the development of other methods that permit an assessment of the magnitude of response or other tests of rationality

economies of scope in endangered species protection evidence from interest group behavior abstract this paper looks for positive spillovers from the legal protection of one species to the welfare of others and for evidence of economies of scope in the costs associated with protecting species under the endangered species act the analysis uses data on the intensity of interest group comment activity in response to proposals to protect new species the results suggest that these phenomena are significant strengthening arguments that wildlife protection policy should be shifted toward species groups or ecosystems however the findings are also consistent with diminishing public willingness to pay for protected species in a given area a pattern which also has public policy implications

an adding up test on contingent valuations of river and lake quality for a contingent valuation cv study of a bundle of water quality improvements this paper tests whether the sum of the estimated willingness to pay wtp for each individual part of the package evaluated incrementally equals the estimated wtp for the entire bundle as implied by standard utility theory this is the first application of the adding up test using incremental parts and carson and groves s 2007 procedures to induce truthful respondents answers the test is failed which implies that either the cv method did not elicit truthful answers or that respondents true preferences are inconsistent with standard utility theory

anticipated inflation and the capital stock in a cash in advance economy abstract an economy is constructed in which the steady state capital stock is inversely related to the rate of inflation as a result that is directly opposite the usual conclusion

a dynamic specific factors model of international trade in a dynamic economy land and capital serve not only as factors of production but as assets which individuals use to transfer income from working periods to retirement changes in the terms of trade and in the endowments of fixed factors do not necessarily have the same effects on factor prices and on the composition of output as they do in a static framework changes in these variables affect both total savings and the amount of savings that is diverted toward investment in capital results derived from the traditional specific factors model are more likely to emerge when the sector using land as a factor of production has a higher labor share than the sector using capital in this case the land using sector dominates factor markets more than asset markets once the roles for land and capital as assets are recognized the possibility of natural resource booms that reduce steady state welfare arises at the same time an increase in population can raise steady state welfare

existence values in benefit cost analysis and damage assessment existence values for obscure resources should not be ruled out a priori because consumers have limited time and resources for information gathering furthermore to the extent that environmental good things are highly substitutable existence values must be cautiously interpreted when evaluating public choice alternatives but similar concerns do not arise in damage assessments issues associated with adding up existence values across resources high per unit values and property rights in the existence of resources are also addressed

testing the internal consistency of contingent valuation surveys abstract for an internal consistency check one can examine wtp responses to different surveys holding an environmental problem constant concave preferences imply wtpconcavein the success of a remedy the same preferences imply wtpconvexin the magnitude of an environmental problem assuming a successful remedy having opposite signed curvature of these two wtp patterns is general not requiring concave preferences for an adding up test an environmental commodity can be divided then wtp for one part plus wtp for the second part conditional on already having the first part equals wtp for the whole adjusted by an income effect

the case for diminishing marginal existence values abstract this study addresses the debate over sensitivity of existence values measured by contingent valuation to scope tests we reconcile much of the debate within one theoretical model if marginal wtp for existence goods is diminishing then a study that tested for sensitivity to scope over a range for which marginal wtp is high would be more likely to detect sensitivity to scope than a study that focused on a range for which marginal wtp is much lower an empirical model demonstrates this point for existence value of remote wilderness parks these results have significant implications for future contingent valuation work

exploring welfare implications of resource equivalency analysis in natural resource damage assessments abstract resource equivalency analysis rea has become the dominant method for calculating natural resource damages for biological injuries from pollution incidents this methodology compares resources lost as a result of an incident to benefits that can be gained from a habitat or wildlife restoration project compensation is evaluated in terms of resource services instead of market currency recently this approach has been questioned regarding its ability to provide adequate compensation based on economic welfare principles the following paper examines these critiques and develops a model to quantify the welfare implications of using rea when some of its implicit assumptions are violated we focus on the situation where compensatory restoration projects provide services that are comparable to those lost as a result of an incident we examine simulation scenarios where the public has heterogeneous preferences for resources and where resource values change over time using the hicks kaldor criterion we find that the traditional rea provides an acceptable approximation of aggregate compensation for a reasonably wide range of economic and biological parameter combinations