option value empirical evidence from a case study of recreation and water quality a procedure for measuring option value and other preservation values of water quality is developed and applied to a case study area in the south platte river basin colorado benefits from water based recreation activities are the focus of the study the results provide an empirical test and confirmation of weisbrod s proposal that option value and other preservation values represent important social benefits and should be added to the aggregate consumer surplus of recreation activities to determine the total benefit of environmental amenities to society in the absence of such an estimate insufficient resources would be allocated by society to preservation of unique environments such as pristine mountain streams where mineral and energy development may irreversibly degrade water quality

the relative unimportance of a nonmarket willingness to pay for timber harvesting abstract the magnitude of a nonmarket willingness to pay for logging of native forests in southeastern australia is estimated using the contingent valuation method this willingness to pay is apparently motivated by both the monetary and social costs of unemployment and a nonmarket intrinsic production value we speculate that this nonmarket value for production may arise where a traditional land use is involved willingness to pay for intrinsic production value is small 4 in comparison to the nonmarket economic value of reserving the same forests in national parks whilst this result may not be transferable to resource allocation issues which involve significant traditional land use it does suggest that neglect of such a willingness to pay has not significantly prejudiced the results of past benefit cost analyses related to the preservation of natural environments

willingness to pay for borivli national park evidence from a contingent valuation a study was conducted to survey the residents of bombay and elicit their willingness to pay for the maintainance and preservation of borivli national park bnp using the contingent valuation cv method the cv method has come under considerable criticism on account of biases that are either inherent to or generated by the survey process the present study acknowledges those and adopts techniques to either circumvent or then minimise them the authors pay special attention to hypothetical bias starting point bias embedding effects and part whole biases the authors argue that indeed it is possible to improve the quality of a cv by using special survey as well as statistical techniques so that cv results can be used for the purposes of realistic decision making this validation of the cv becomes an important objective of the study despite india being a developing country with medium to low income levels the evidence suggested that people are willing to pay for preserving environmental amenities having statistically adjusted for embedding and anchoring effects households are willing to pay exclusively for bnp on average rs 7 5 per month for the next five years extrapolating to the city of bombay this amounts to a substantial rs 20 million each month for the next five years or a present discounted value of in excess of rs 1 billion suggesting a strong interest in environmental conservation

valuing option existence and bequest demands for wilderness to assess the relative importance of current costs and future benefits of nuclear waste storage we develop a simple model of bequest value the basic model of nonparternalistic altruism is extended to account for the uncertain nature of the externality

uncertainty and disagreement in economic prediction the bank of england survey of external forecasters this article introduces a new source of survey data namely the bank of england survey of external forecasters the survey collects point and density forecasts of inflation and gdp growth and hence offers the opportunity of constructing direct measures of uncertainty we present a simple statistical framework in which to define and interrelate measures of uncertainty and disagreement the resulting measures are compared with other direct measures of uncertainty nationally and internationally a significant sustained reduction in inflation uncertainty followed the 1997 granting of operational independence to the bank of england to pursue a monetary policy of inflation targeting

does no mean no a protest methodology in this paper we propose a method of identifying and truncating protesters in contingent valuation surveys we propose using a system of willingness to pay wtp questions that value multiple goods and that use both discrete choice and open ended questions coupled with multiple questions about protest beliefs administered to the entire sample protesters can then be identified because they reject all bids declare zero on all open ended questions and hold protest beliefs the proposed procedure has been empirically tested on an air pollution data set from poland where 27 of the sample was identified as protesters the adjustment for protesters increased the estimated wtp values by a factor of more than 3

spatial cost benefit thinking in multi functional forestry towards a framework for spatial targeting of policy interventions abstract many countries now actively encourage land use change for the provision of multiple benefits specifically including non market benefits often such policies have been poorly designed because of a lack of understanding of the spatial distribution of the potential costs and especially non market benefits from land use change as with market goods the potential yield of non market goods and services from land use can be highly spatially variable in recent years more and more studies on the economic aspects of natural resources have started to make use of geographical information systems gis what is yet lacking is the systematic adoption of a framework for the spatial targeting of policy interventions which can be used to improve decision making in terms of effectiveness efficiency equity or public acceptability this paper uses existing studies in forestry to present such a framework and discusses its potential uses and limitations as a new standard tool to inform multi functional land use decisions

empirical measures of inflation uncertainty a cautionary note a direct ex ante measure of inflation uncertainty in the us is compared with a number of proxies used in empirical studies the direct estimate is the root mean subjective variance of the probability distributions for inflation reported by respondents to the asa nber survey the proxies include forecast standard deviations from arima arch and structural models of inflation these proxies are not significantly correlated with the direct measure nor with one another use of the proxies leads to incorrect inferences about the correlation between inflation and inflation uncertainty and between inflation uncertainty and the real interest rate

contingent valuation and actual behavior predicting connections to new water systems in the state of kerala india in 1988 families in kerala state in india were surveyed to ascertain their willingness to pay for household connections to a piped water supply system in 1991 the families in these communities were surveyed again and their actual decisions recorded this article explores the validity of the findings of the 1988 study on the basis of actual behavior it looks at the question of benefit revelation did people behave as they said they would and it looks at the question of benefit transfer did people in one site behave as they were predicted to behave on the basis of the predictions of a behavioral model for a different site the data were also used to analyze the policy relevance of behavioral modeling coauthors are john briscoe bhanwar singh radhika ramasubban and ramesh bhatia copyright 1995 by oxford university press

valuing environmental commodities some recent experiments a general model of consumer behavior is proposed to assess six recent experiments that have attempted to reveal preferences for environmental goals each experiment used a mix of both the techniques and the theory of demand for non market commodities and each was designed to estimate a non market attitude associated with the environment and to analyze potential biases in the techniques the six cases show some consistency in results the linkage within the contingent market between the environmental attribute institutional setting and the bidding instrument must be realistic and accepted by the respondent to avoid biased results possibly the most important result is the replication of results using a traditional property value study and a contingent bidding approach all evidence obtained to date suggests that hedonic studies of property values or wages travel costs and survey techniques all yield values well one order of magnitude in accuracy 41 references 2 tables

preservation or use a contingent valuation study of wilderness designation in utah evidence of strong opposition to wilderness proposals in utah suggested that the non market value of retaining those areas in multiple use management might be significant a contingent value analysis of both supporters and opponents of the two major proposals for wilderness designation in utah indicated that there existed significant non market willingness to pay on the part of opponents and that standard contingent valuation practice which does not explicitly consider these values could lead to a mis estimation of aggregate willingness to pay

estimation of distance decay functions to account for substitution and spatial heterogeneity in stated preference research in a site selection choice experiment various hypotheses are tested related to spatial heterogeneity in willingness to pay wtp for environmental improvements spatial heterogeneity is measured through distance decay effects substitute sites inside and outside the experiment s choice set and spatial trend variables we demonstrate that distance decay functions differ between users and nonusers and across study sites also the distance to substitutes outside the choice set explains spatial variation in wtp we show that further extending the model with spatial trend variables reveals additional spatial heterogeneity in choices accounting for spatial heterogeneity patterns results in significantly different wtp estimates for environmental improvements jel q25 q51

nonmarket values of major resources in the korean dmz areas a test of distance decay the demilitarised zone dmz and its adjoining areas serve not only as a geopolitical buffering zone between north and south korea but also as rare refuges for various animals and plants this paper investigates conservation values of major dmz resources and comparatively tests distance decay between contingent valuation and choice modelling the overall conservation value for the dmz resources per person as one off payments was 9 06 or 34 97 respectively from the cvm and cm datasets research findings deny distance decay regardless of elicitation methods when the distance variable is parameterised as part of utility functions conversely a segmentation valuation approach demonstrates conflicting conclusions on distance decay and the wtp anomaly between users and non users depending on elicitation methods the cm results demonstrate that protection of the dmz resources might be less important and attractive to local populations than to those in the distant regions a direct cross method transfer of any distance effect might not be granted

conjoint effect of environmental labeling disclosure of forest of origin and price on consumer preferences for wood products in the us and uk abstract a study that conjointly analyzed the effects of environmental labeling disclosure of forest of origin and price on consumer preferences for wood products was conducted in the us and the uk a choice based elicitation tool was used to mimic a real life situation where a single product was selected over a set of options data collected were analyzed using a conditional logit model certification issued by a government agency or an environmental non government organization both had a favorable effect on consumer preference over a non certified option the most relevant implication of our findings was the negative effect that disclosing information about a product coming from tropical forests had on consumer preferences even compared to a product of unknown origin a decline in product preference was observed along higher price premiums as expected the degree of sensitivity to price changes was affected by demographic characteristics model coefficients were used to estimate market shares of tropical wood products under different scenarios in both countries scenarios explored the effect of environmental certification and price premiums on product market shares

optimized quantity within distance models of spatial welfare heterogeneity abstract spatial welfare heterogeneity is frequently modeled within stated preference analysis as a function of discrete or continuous distance between households and affected resources a common example is distance decay analysis although distance based models such as these are easily estimated the ubiquity of this paradigm can lead to analyses that overlook other forms of analysis with equal or greater relevance this paper develops an alternative approach to spatial heterogeneity in stated preference willingness to pay wtp based on the quantity or area of an affected resource surrounding each respondent at an optimized distance band or radius with distance bands optimized using a grid search algorithm that maximizes model likelihood methods and results are illustrated using a choice experiment on riparian land restoration in maine usa the resulting quantity within distance model identifies systematic spatial patterns that are undetectable using distance based analysis and directly relevant for welfare analysis

individualized geocoding in stated preference questionnaires implications for survey design and welfare estimation this paper evaluates the common practice of generic mapping in stated preference valuation in which identical policy area maps are shown to all respondents this is compared to a more information intensive alternative in which individualized maps identify the location of each respondent s home relative to policy effects the evaluation is grounded in a theoretical model clarifying the impact of individualized spatial information on preferences for non market outcomes the model is illustrated using an application of choice experiments to riparian restoration in coastal maine results characterize valuation contexts for which valid preference elicitation likely requires the provision of individualized spatial information

toward equitable and sustainable rural water supplies a contingent valuation study in brazil because many rural people are poor it is usually assumed that rural water supplies must be financed by government agencies it is now widely recognized however that many rural people can and will pay for improved water supplies and that sustaining and extending services depends on mobilizing this willingness to pay this article describes a study of willingness to pay for water in brazil the study shows that surveys of actual and hypothetical water use practices can provide policy relevant information on willingness to pay which is shown to vary according to household socioeconomic characteristics and the characteristics of the existing and new supplies of water in rural brazil tariffs for yard taps can be increased substantially before significant numbers of housebolds would choose not to connect to an improved system whereas provision of free water at public taps can protect the poor without jeopardizing the financial viability of the scheme billions of people in developing countries face daily problems in obtaining water for drinking cooking bathing and washing more than 1 500 million people 30 percent of the world s population are estimated to be without access to uncontaminated water and an unknown but large proportion have to spend hours daily to collect water briscoe and de ferranti 1988 churchill 1987 because the adverse consequences for productivity health and quality

measuring forecast uncertainty by disagreement the missing link using a standard decomposition of forecast errors into common and idiosyncratic shocks we show that aggregate forecast uncertainty can be expressed as the disagreement among the forecasters plus the perceived variability of future aggregate shocks thus the reliability of disagreement as a proxy for uncertainty will be determined by the stability of the forecasting environment and the length of the forecast horizon using density forecasts from the survey of professional forecasters we find direct evidence in support of our hypothesis our results support the use of garch type models rather than the ex post squared errors in consensus forecasts to estimate the ex ante variability of aggregate shocks as a component of aggregate uncertainty copyright 2010 john wiley sons ltd

willingness to pay for improved water service in manaus amazonas brazil the 1 5 million residents of the city of manaus form the epicenter for economic activity and development in the amazon basin the current water treatment facilities were built when there were a mere 100 000 people living here the fifteen fold increase in population has made access to water a major public health concern families that can afford to buy bottled water do and those that can not are susceptible to water borne disease and illness at an ever increasing rate in order to determine how much citizens are willing to pay for universal access to water service in the home the university of amazonas center for environmental sciences has conducted a survey of over 1600 residents collecting information on current water needs health concerns household socioeconomic characteristics and from a contingent valuation cv experiment how much they would pay for access to improve water service in the home this paper makes use of the 1479 observations from four elicitation formats 1 open ended 2 open ended with a bpre qualifyingq statement 3 descending bid dichotomous choice and 4 ascending bid dichotomous choice results suggest that residents are willing to pay wtp more than r 12 us 6 12 per month

interest rates and the subjective probability distribution of inflation forecasts the interst rate effects of the first four moments of the subjective probability distribution of inflation forecasts from the asa nber survey are examined over the period 1968 4 1985 4 using tre asury bill yields as the nominal rate variable in the context of a re duced form fisher equation the authors find that inflation uncertain ty as measured by the average variance of the probability distributi ons of inflation forecasts to be insignificant however the average skewness and kurtosis variables which result from these probability distributions do significantly affect interest rates they interpret these effects as accounting for the level of risk or uncertainty abou t future inflation copyright 1988 by ohio state university press

effect of distance on the preservation value of water quality in the past dozen years an extensive body of literature has developed on the willingness to pay for water quality in particular its recreation use and nonuse preservation values this paper illustrates a procedure for estimating the effect of distance on the preservation value of environmental quality using the contingent valuation approach the case considered is the potential degradation of water quality due to coal mining activity in the flathead river drainage system montana the analysis supports a negative association for this particular study area the effect of distance on preservation value was considered both directly and indirectly through its effect on visits 36 references 2 tables

characterizing the effects of valuation methodology in function based benefits transfer abstract meta analyses have demonstrated that willingness to pay wtp estimates vary systematically according to methodological factors the benefits transfer literature provides little guidance with regard to the treatment of such effects transfers are typically conducted by ignoring such effects using ad hoc adjustments or otherwise suppressing information regarding the sensitivity of wtp to methodological attributes this paper illustrates a means to characterize methodological effects within benefits transfer based on an application of the common bootstrap drawing from meta analysis the approach characterizes the sampling distribution of wtp with respect to patterns of methodological variation present in underlying studies results provide a means to characterize the extent of variation associated with predefined groups of methodological attributes providing transparent information on the sensitivity of wtp not typically available in benefits transfer

modeling spatial patchiness and hot spots in stated preference willingness to pay stated preference analyses often impose strong assumptions regarding spatial welfare distributions that can influence the validity of welfare analysis and aggregation these include spatial homogeneity and continuous distance decay global assumptions such as these are increasingly questioned by non economics disciplines in favor of approaches that allow for local patchiness drawing from this literature this article proposes methods to identify and evaluate hot spots in stated preference welfare estimates using local indicators of spatial association methods are illustrated using geocoded choice experiment data addressing river restoration results suggest the presence of statistically significant non continuous patterns overlooked by current approaches

the effect of distance on willingness to pay values a case study of wetlands and salmon in california most contingent valuation studies in the literature utilized a pre determined geographic market area for their sample frame in other words they did not include variables that would measure the extent of the geographic areas over which to aggregate willingness to pay these studies implicitly assumed that the effects of geographic distance were moot an assumption that could have led to an understatement of the aggregate benefit values computed in these studies the overall goal of this study was to determine if distance affects willingness to pay for public goods with large non use values the data used came from a contingent valuation study regarding the san joaquin valley ca respondents were asked about their willingness to pay wtp for three proposed programs designed to reduce various environmental problems in the valley a logit model was used to examine the effects of geographic distance on respondents willingness to pay for each of the three programs results indicate that distance affected wtp for two of the three programs wetlands habitat and wildlife and the wildlife contamination control programs we calculate the underestimate in benefits if the geographic extent of the public good market is arbitrarily limited to one political jurisdiction

the aggregation of environmental benefit values welfare measures distance decay and total wtp abstract we review the literature regarding the aggregation of benefit value estimates for non market goods two case studies are presented through which we develop an approach to aggregation which applies the spatial analytic capabilities of a geographical information system to combine geo referenced physical census and survey data to estimate a spatially sensitive valuation function these case studies show that the common reliance upon political rather than economic jurisdictions and the use of sample mean values within the aggregation process are liable to lead to significant errors in resultant values we also highlight the fact that for resources with use values then we should expect overall values to reduce with increasing distance from such sites but that changes in the choice of welfare measure will determine whether such distance decay is to be expected within values stated by those who are presently non users the paper concludes by providing recommendations for future improvements to the methodology

multimodality and mixture distributions an application to a survey of economic expectations in this article we present the silverman multimodality test and mixture distributions methodology applying both approaches to the survey of economic expectations of the central bank of chile the main results reflect the importance of a permanent monitoring of the complete distributions and not just central tendency meausures as is the practice in many central banks currently we find that the forecasts of the private professional forecasters have systematically been in line with the inflation targeting range although during episodes where the effective inflation proved to be outside the target range

nimby or not exploring the relevance of location and the politics of voiced opinions in renewable energy siting controversies local protests against renewable energy facilities have added fuel to the debate about the so called nimby not in my back yard effect this paper identifies six variables that can hamper the comparison between different public perception studies and offers two broad conclusions on aggregate proximity does have strong influence on public attitudes to proposed projects but the nature strength and spatial scale of this effect may vary according to local context and value of the land residents of stigmatised places are more likely to welcome facilities that are relatively green while people who derive a more positive sense of identity from particular rural landscapes are likely to resist such potential developments especially if they also live there secondly the fear of being branded a nimby and the positive ethics associated with the notion of renewable are both likely to colour the responses of many interviewees these aspects need to be clarified and accounted for in analyses of elicited responses both quantitative and qualitative if we are to improve our understanding of the social construction of individual attitudes in siting conflicts

valuing non market wildlife commodities an evaluation and comparison of benefits and costs this paper compares the benefits and costs of nature conversation at three sites of special scientific interest benefits are estimated by contigent valuation expressed preferences and also the travel cost method revealed preferences oppurtunity costs are assessed from a financial cost viewpoint and also in terms of shadow prices or social costs results indicate that the valuation of wildlife and nature conservation largely depends upon the frame of reference adopted that social costs are considerably less than financial costs due to the effect of the common agricultural policy that user benefits are considerably less than financial costs and non user benefits must be included to cover even the social costs of nature conservation

differentiating use and nonuse values for coastal pond water quality improvements this paper measures the benefits of water quality improvements in three coastal ponds on the island of martha s vineyard massachusetts u s a use option and existence values were elicited from martha s vineyard property owners by the contingent valuation method on average more than half of the total benefits are attributed to existence value results from the heckman selection model show that the exclusion of protest as well as missing bids does not cause significant bias in estimating respondents willingness to pay socioeconomic characteristics are found to have distinctively different influences on use option and existence values different model parameters are likely to be estimated depending on which value categories are measured by a selected valuation technique these findings emphasize the importance of nonuse values from water quality improvements and of socioeconomic characteristics for measuring different categories of values

consumer s willingness to pay more for municipal supplied water a case study abstract water supply in rural and urban settlements is an issue of prime concern especially in developing countries large financial inputs are being devoted to new projects and improvement of supply conditions in turn authorities have to look for sources of generating revenue to meet the expenditure and the one major source is the consumer this gives rise to an issue of consumers willingness to pay wtp for water supply service the present study aims at determining consumers wtp more for improvements and identifying the factors affecting wtp it was hypothesized that the satisfaction of consumers about water supply service their beliefs in the water management system and affordability might influence wtp more for water accordingly a sample study was planned in one of the mega cities in india the paper presents an approach to quantify the satisfaction level of consumers relating to water supply service and describes the impact of various factors on wtp through logistic regression analysis also the analysis of percentage increase in wtp is presented in the latter part of the paper

inflation uncertainties and returns on bonds the new wave of research on the effect of inflation on interest rates revolves around the incorporation of inflation uncertainty into the analysis 1 in a recent paper liviatan and levhari 1977 examine in a single period model the market risk premium on nominal bonds awarded as compensation for inflation related uncertainty where this premium is determined by attitudes of investors towards risk and the risk of inflation the hypothesis that nominal bonds carry an inflation uncertainty premium could be extended to multi period bonds this is also consistent with hick s 1946 liquidity premium which was estimated by kessel 1965 and mccullough 1975 who found systematic premia on the average returns of multi period bonds 2 this study too is concerned with the possible relationships between inflation uncertainties and the returns on multi period bonds we are examining the hypotheses using ex ante data and measures of inflation uncertainty based on these data the two sources of inflation uncertainty that may be associated with the returns on multi period bonds are the uncertainty about the rate of inflation in the next period and the uncertainty about expectations of inflation in future periods for a bond with two periods to maturity the holding period return is

how large is the extent of the market for public goods evidence from a nationwide contingent valuation survey to assess the extent of the geographic area over which to sum vertically the public good benefits of removing two dams and restoring salmon populations households were surveyed throughout the us households were asked a dichotomouschoice contingent valuation question regarding their willingness to pay higher federal taxes for ten years to remove the dams and restore salmon populations while the distance from the site of the dam removal is statistically significant and negative in the logit willingness to pay equation benefits per household fall off slowly and the extent of the market is nationwide with a majority of households living outside the immediate area of the dam the rest of the us households reflect 97 of the national benefits for dam removal and salmon restoration this example suggests that failure to account for the national public good market can result in a serious underestimate of the value of public goods

ex ante willingness to pay with supply and demand uncertainty implications for valuing a sea turtle protection programme it is argued that ex antewillingness to pay is appropriately measured as a function of subjective supply and demand probabilities an exploratory case study of a loggerhead sea turtle protection programme is used to show how estimates of these probabilities can be obtained from a sample survey and how a change in probabilities determines contingent choice empirical results confirm that subjective probabilities are important when explaining ex antewillingness to pay attempts to estimate the determinants of ex antewillingness to pay without controlling for subjective probabilities will result in specification bias it is important that subjective probability information is gleaned from contingent valuation survey respondents and included in empirical models of contingent choice

interest rates income taxes and anticipated inflation some new evidence abstract this paper re examines the effect of taxes on the fisher hypothesis using a procedure first proposed by peek and using data through the 1980s and a new data set on expected inflation for the us the tax adjusted hypothesis is rejected in favor of the no tax adjusted hypothesis for the period 1968 iv to 1979 iv for the full sample both hypotheses are accepted these results are thus quite different from those reported by peek a brief discussion of the factors responsible for these differences is provided

enhanced geospatial validity for meta analysis and environmental benefit transfer an application to water quality improvements meta regression models are commonly used within benefit transfer to estimate willingness to pay wtp for environmental quality improvements theory suggests that these estimates should be sensitive to geospatial factors including resource scale market extent and the availability of substitutes and complements valuation meta regression models addressing the quantity of non market commodities sometimes incorporate spatial variables that proxy for a subset of these effects however meta analyses of wtp for environmental quality generally omit geospatial factors such as these leading to benefit transfers that are invariant to these factors this paper reports on a meta regression model for water quality benefit transfer that incorporates spatially explicit factors predicted by theory to influence wtp the metadata are drawn from stated preference studies that estimate per household wtp for water quality changes in united states water bodies and combine primary study information with extensive geospatial data from external sources results find that geospatial variables are associated with significant wtp variations as predicted by theory and that inclusion of these variables reduces transfer errors

measuring the effect of disability on labor force participation this paper estimates the effect of disability on labor force participation by using symptoms or diseases as instruments in a simultaneous equations model of endogenous reported disability and labor force participation the results show that each measure of disability explains a significant amount of variation in labor force participation though the two are not perfect substitutes there is only weak evidence of endogeneity of the disability variables for cases where there is evidence of endogeneity the bias it causes has the opposite effect of that hypothesized in the literatute i e stress causes health to deteriorate with labor force participation furthermore it has only insignificant effects on the coefficients for other variables

fisher phillips friedman and the measured impact of inflation on interest a reply the purpose of this paper is to demonstrate that empirical findings which persistently appear to contradict the fisher hypothesis that the nominal rate of interest should rise by the full amount of an increase in anticipated inflation are due basically to a failure to control for changes in the real rate of interest that are associated with changes in anticipated inflation we are guided in our search for proper specification of a fisher equation by a simple general equilibrium model which is employed to derive the impact of a change in anticipated inflation upon nominal interest given the requirement that commodity money and labor markets remain in equilibrium in effect we depart from the empirical tradition which has grown up around testing of the fisher hypothesis that takes the real interest rate to be independent of anticipated inflation and argues that for anticipated inflation properly measured the data ought to support the fisher hypothesis 1

valuing public goods a comparison of survey and hedonic approaches although the theory of public goods has progressed rapidly since paul samuelson s seminal article the empirical measurement of the value of demand for public goods only recently has received increased attention perhaps the best known and most widely accepted empirical approach has been the use of hedonic prices wherein for example it is assumed that either wages or housing values reflect spatial variation in public good characteristics of different communities this indirect approach based on theoretical work of charles tiebout kelvin lancaster sherwin rosen and others has proven quite successful among public goods or bads which have been valued using the hedonic approach are climate i hoch air pollution robert anderson and thomas crocker d harrison and d rubinfeld social infrastructure r cummings et al and other community characteristics such as noise level j nelson and ethnic composition ann schnare an alternative approach is to directly ask households or individuals to state their willingness to pay for public goods using survey techniques despite arguments that strategic bias will invalidate survey results there exists the need for an alternative to the hedonic approach as an example consider the case of a remote and unique scenic vista valuable to recreators which is threatened by air pollution from a proposed coal fired plant a typical situation in the western united states although it is possible in principle to impute the value of clean air and visibility from the relative decline in local visitation which might follow construction of a power plant information on the value of visibility at the site is needed prior to construction for socially optimal decision making on plant location and pollution control equipment the hedonic approach is unavailable both because the scarcity of local population as opposed to recreators makes use of wage or property value data impossible and because scenic vistas may themselves be unique for these reasons a randall et al first applied survey methods for valuing visibility and other environmental effects of large coal fired power plants in the four corners region of new mexico since this initial application the survey approach has been widely used to value environmental commodities where market data for hedonic analysis is difficult to acquire see for example brookshire ives and schulze rowe et al brookshire et al other early attempts to value public goods using the survey approach include r davis peter bohm and j hammack and g brown although results of using the survey approach for estimating the value of public goods appear to be internally consistent replicable and consistent with demand theory see schulze et al little work on external validation has been reported thus the purpose of this paper is to report on an experiment designed to validate the survey approach by direct comparison to a hedonic property value study the los angeles metropolitan area was chosen for the experiment because of the well defined air pollution problem and be assistant professor university of wyoming assistant professor university of missouri rolla associate professor university of wyoming and professor university of wyoming respectively the research reported here was funded under a grant methods development for assessing air pollution control benefits from the u s environmental protection agency we would like to give special thanks to alan carlin and shelby gerking for their helpful suggestions and contributions additional helpful comments were received from a myrick freeman iii john tschirhart and james murdoch all conclusions are of course our sole responsibility

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

the econometric analysis of models with risk terms summary in this paper we have attempted to provide an integrated approach to the estimation of models with risk terms it was argued that there exist orthogonality conditions between variables in the information set and higher order moments of the unanticipated variable density these could be exploited to provide consistent estimators of the parameters associated with the risk term specifically it was recommended that an iv estimator should be applied with instruments constructed from the information set four existing methods commonly used to estimate models with risk terms are examined and applications of the techniques are made to the estimation of the risk term in the us c exchange market and the effects of price uncertainty upon production

the economic benefits of reducing the environmental effects of landfills heterogeneous distance decay effects this paper estimates the economic benefits of different alternative policies considered for reducing the external effects caused by the utilization of landfills in solid waste management the preferences of the local population in the surrounding areas of a landfill are evaluated utilizing a discrete choice experiment in which subjects are presented with alternative policy decisions that involve reducing the material processed through the landfill various models were employed in order to capture heterogeneous preferences resulting in a mixture of normals modelling approach mn mnl outperforming other alternative models of heterogeneity the results show that the policy of moving the landfill away from the population does not provide the most benefits when compared to a policy of increasing recycling in the household the economic benefits of the waste management policies are heterogeneous across the population surrounding the landfill and so the distance decay functions thus the economic benefits for most waste management policies can increase or decrease the further away the subject lives from the landfill depending on the preferences of his her segment and the type of policy employed

work limiting health earnings and employment an analysis with sipp data abstractthis study examines the role of work limiting health conditions on employed people s earnings employment status and working hours and distinguishes between the different degree and sever

interest rates inflation expectations and the inverted fisher hypothesis abstract the purpose of this paper is to reexamine for the u s the statistical validity of the inverted fisher hypothesis as proposed by carmichael and stebbing 1983 this is done using a new data set on expected inflation reported by lahiri et al 1988 and by estimating augmented versions of the hypothesis by incorporating the role of uncertainty about expected inflation as measured by its variance and higher order moments our results support the hypothesis for the entire sample period 1968 iv 1985 iv as well as for the two sub periods this result sharply differs from that of barth and bradley 1988 who reported that the hypothesis did not hold for the second sub period further unlike them we do not find any evidence of a structural break between the two periods

directional heterogeneity in wtp models for environmental valuation many studies in the stated preference literature on environmental valuation do not include the effects of substitutes and distance in willingness to pay wtp models in spite of the relevance of these effects in aggregation and benefit transfer heterogeneity in the availability of substitutes over space may cause multidirectional distance effects in wtp as a result disregarding this spatial heterogeneity may lead to biased estimators of the distance effect and associated wtp values cameron 2006 in this paper we demonstrate that distance decay is subject to significant directional effects which tend to be related to differences in the availability of substitutes across the study area we apply a straightforward methodology to account for such spatial heterogeneity in choice experiments and assess the effect on wtp for improvements in ecosystem services in a lake district we model distance decay effects whilst controlling for heterogeneity between users and non users and non use related wtp reasons the directional effects result in significantly different wtp estimates different market sizes reflecting the population with positive wtp and differences in total wtp up to 32

difference in preferences or multiple preference orderings comparing choices of environmental bureaucrats recreational anglers and the public abstract do environmental protection agency epa bureaucrats represent the general public or are they more in line with an interest group we study preferences for environmental policy using a choice experiment ce on three populations the general public swedish epa bureaucrats and recreational anglers we also test for existence of multiple preference orderings half of the respondents were asked to choose the alternatives that best corresponded with their opinion and the other half was asked to take the role of a policy maker and make recommendations for environmental policy the sepa bureaucrats have the highest marginal willingness to pay mwtp to improve environmental quality differences in mwtp are robust and not due to differences in socio economic characteristics across the populations we only found weak evidence of multiple preference orderings

why real interest rates were so low in the 1970 s the economic turmoil of the 1970 s resulted in record postwar increases in inflation unemployment and nominal interest rates yet it was declines that were hardest to explain the average real value of a share of common stock plummeted productivity growth evaporated real interest rates measured as the spread between nominal interest rates and the inflation rate turned negative see table 1 over the past decade an explosion has occurred in the amount of attention paid to the relationship between nominal and thus real interest rates and expected inflation rates a good deal of this effort has been directed toward empirical analysis of the fisher neutrality hypothesis that nominal rates respond one for one with expected inflation rates most empirical tests of the fisher hypothesis have been bivariate interest rates were regressed on a constant and on actual or expected inflation measures estimates of the impact of inflation on interest rates in these and even in extended models are often significantly below one are often statistically imprecise and tend to be unstable over time the middle column of table i reflects this the coefficient of inflation on nominal interest rates there drops from 0 78 to 0 59 in the latter 1970 s another branch of work on nominal interest rates has concentrated on the institutional impediments to the fisher hypothesis robert mundell and james tobin demonstrate that nominal rates change by a smaller amount than the expected inflation rate does when a real balance effect exists and money pays no interest michael darby and martin feldstein on the other hand argue that nominal rates should exhibit a greater thanunity response to expected inflation due to the nature of u s income tax laws 2 here i estimate the relation between interest rates expected inflation and real forces such estimates are required for evaluating the effects of inflation on saving investment the distribution of income and the redistribution of wealth to generate estimates of the net impact of these various factors on interest rates and to avoid the identification and simultaneity problems masked but not often remedied by instrumental variables techniques i employ only exogenous regressors to buttress the argument i examine the individual links in the chain which are summarized in the reduced form the novel aspect of the model presented in section i is its addition of aggregate supply shocks to the determination of interest rates i trace the reduction in the supply of complementary factor inputs in the 1970 s to a decline in the demand for capital and therefore in real interest rates the inclusion of this supply force along with expected inflation allows one to distinguish between two offsetting effects on interest rates the depressing effect on real rates through lower investment demand and the elevating effect on nominal rates of higher expected inflation the results in section ii not only strongly support the economic and statistical importance of supply shocks on real interest rates but also resolve some longstanding interest rate puzzles allowing for the impact of factor supply produces a significant estimated response to expected inflation for a sample that ends prior to late 1960 s the magnitude assistant professor school of business administration university of california berkeley i would like to thank george akerlof robert j gordon robert a meyer joe peek janet yellen the members of the economic analysis and policy seminar at berkeley participants at the nber conference on inflation and financial markets and anonymous referees for helpful comments data resources supplied data and computational services financial support was provided by the berkeley program in finance and nsf grant ses8109093 linda pacheco supplied able research assistance errors of omission or commission are my responsibility see william gibson david pyle john carlson and thomas cargill and robert meyer 2maurice levi and john makin derive the reducedform effect of expected inflation on nominal interest rates as a function of the structural parameters

forecast uncertainty ex ante and ex post u s inflation and output growth survey respondents who make point predictions and histogram forecasts of macro variables reveal both how uncertain they believe the future to be ex ante as well as their ex post performance macroeconomic forecasters tend to be overconfident at horizons of a year or more but overestimate i e are underconfident regarding the uncertainty surrounding their predictions at short horizons ex ante uncertainty remains at a high level compared to the ex post measure as the forecast horizon shortens there is little evidence of a link between individuals ex post forecast accuracy and their ex ante subjective assessments

the spatial extent of water quality benefits in urban housing markets water quality regulation continues to be controversial as demonstrated by recent litigation between the u s environmental protection agency and the state of florida over nutrient standards while the costs of standards are usually known benefits may be diverse and difficult to identify this study investigates the effects of enhanced water quality on both waterfront and nonwaterfront property prices using hedonic models within an urban market findings indicate 1 the value of increased water quality depends upon the property s location and proximity to waterfront and the surface area of the water body and 2 aggregate benefits to nonwaterfront homes may dominate those realized by waterfront homeowners

valuing a fishing day an application of a systematic varying parameter model deciding how to allocate forage among animals is a fundamentally important process in range management the wisdom of these decisions can be enhanced by estimating the marginal value of forage needed by competing species we present a method for

specification bias in contingent valuation from omission of relative price variables the specification bias from omission of relative price variables in contingent valuation functions is investigated omitted variable bias will cause the determinants of willingness to pay wtp to assume zero the omission of relative price variables constitute policy implications forecast values of wtp values will be biased when empirical wtp functions are used the effects of relative prices in empirical valuation functions should be included in future studies of contingent valuation

inflation s negative effects on real stock prices new evidence and a test of the proxy effect hypothesis the present study examines the effects of inflation on real stock prices using an error correction model of the s p 500 inflation is shown to have a negative and significant impact in a variety of model specifications the study also investigates whether the observed negative relation arises because inflation proxies for more fundamental relations between stock prices and either future output relative price uncertainty or inflation uncertainty the evidence reveals that inflation does not merely proxy for those other factors and thus the proxy effect hypothesis in its various forms is rejected

interest rates uncertainty and the livingston data the observed relationship between the standard deviation of forecasts and past forecast errors as found in the livingston survey suggests the interpretation of the standard deviation as a measure of inflation uncertainty the mean and the standard deviation for the inflation rate forecast found in the livingston survey furthermore are used as regressors in a reduced form interest rate equation the results indicate a large negative effect of such uncertainty on interest rates the inclusion of the uncertainty measure and commonly omitted lagged values of all variables in our analysis of data leads to more theoretically plausible estimated effects of money growth and expected inflation on interest rates than do standard estimates

gender differences in wage losses from impairments estimates from the survey of income and program participation this article develops a model of the relationships among functional impairments work disability employment participation and wage offers the model is estimated separately for males and females with data from the 1984 survey of income and program participation using estimates of disability and wage equations we rank 25 functional impairments by severity of disability and estimate the wage penalty associated with each impairment the results show that limitations to mobility and strength are relatively more disabling for males than for females while the opposite is true for limitations to sensory capacities and appearance

disabled workers and wage losses some evidence from workers with occupational injuries using data from the survey of ontario workers with permanent impairments 1989 90 the authors examine the effects of work related disabilities on the wage losses of disabled male workers one important focus of the analysis is whether the size of disabled workers wage losses was affected by whether they remained at or left the job where the accident occurred the authors also estimate the longer term persistence of wage shocks for disabled workers the estimates suggest that wage losses were larger for disabled workers who did not return to work with their time of accident employer than for those who did return with the latter earning 27 more furthermore wages appear to have been more persistent for workers who did not return to their accident employer than for those who did return

consensus and uncertainty in economic prediction we define consensus as the degree of agreement among point predictions aimed at the same target by different individuals and uncertainty as the diffuseness of the corresponding probability distributions this distinction is made operational with the aid of the nber asa survey data on matched point and probabilistic forecasts of inflation and the rate of change in gross national product the means of the two sets of forecasts agree closely standard deviations of point forecasts tend to understate uncertainty as measured by standard deviations of the predictive probability distributions however these measures of consensus and uncertainty are on the whole positively correlated there is evidence that expectations of higher inflation generate greater uncertainty about inflation tests also favor the hypothesis that a rise in inflation uncertainty has adverse effects on real growth

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

modelling multi period inflation uncertainty using a panel of density forecasts this paper examines the determinants of inflation forecast uncertainty using a panel of density forecasts from the survey of professional forecasters spf based on a dynamic heterogeneous panel data model we find that the persistence in forecast uncertainty is much less than what the aggregate time series data would suggest in addition the strong link between past forecast errors and current forecast uncertainty as often noted in the arch literature is largely lost in a multi period context with varying forecast horizons we propose a novel way of estimating news and its variance using the kullback leibler information and show that the latter is an important determinant of forecast uncertainty our evidence suggests a strong relationship of forecast uncertainty with level of inflation but not with forecaster discord or with the volatility of a number of other macroeconomic indicators copyright 2006 john wiley sons ltd