design and analysis of simulated consumer choice or allocation experiments an approach based on aggregate data the authors integrate concepts in conjoint analysis and discrete choice theory in econometrics to develop a new approach to the design and analysis of controlled consumer choice or resource allocat

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

variable probability of realignment in a target zone the target zone model presented here encompasses a realignment probability that increases as the fundamental deviates from the center of the zone the analysis is carried out for cases where the fundamental follows either a brownian motion or an ornstein uhlenbeck process the simplest version of the model yields tractable results which prove to be robust when its most restrictive assumption is relaxed the solution obtained is dubbed the steeper s in accordance with its most relevant feature copyright 1994 by the editors of the scandinavian journal of economics

monetary policy in open economies practical perspectives for pragmatic central bankers this paper reviews and interprets some of the key policy implications that flow from a class of dsge models for optimal monetary policy in the open economy the framework suggests that good macroeconomic outcomes in open economies are possible by focusing inflation targeting that is implemented by a taylor type rule a rule that in equilibrium is reflected in the exchange rate as an asset price optimal monetary policy will not be able deliver a stationary stable nominal exchange rate let alone a fixed exchange rate or one that remains inside a target zone because absent a commitment device optimal monetary can t deliver a stationary domestic price level another feature in the data for inflation targeting countries that is consistent with monetary policy via taylor type rule is that it will tend push the nominal exchange rate in the opposite direction from ppp in response to an inflation shock the bad news god news result of clarida and waldman 2008 is bad news about inflation good news for the exchange rate in john campbell ed asset prices and monetary policy chicago university of chicago press clarida and waldman 2014 bad news about inflation is good news for the nominal exchange rate under optimal monetary policy dsge theory and a decade of empirical evidence this is so even though in the long run of these models the nominal exchange rate must in expectation obey ppp

some empirical evidence on the effects of shocks to monetary policy on exchange rates this paper investigates the effects of shocks to u s monetary policy on exchange rates we consider three measures of these shocks orthogonalized shocks to the federal funds rate orthogonalized shocks to the ratio of nonborrowed to total reserves and changes in the romer and romer index of monetary policy in sharp contrast to the literature we find substantial evidence of a link between monetary policy and exchange rates specifically according to our results a contractionary shock to u s monetary policy leads to i persistent significant appreciations in u s nominal and real exchange rates and ii significant persistent deviations from uncovered interest rate parity in favor of u s interest rates

exchange rate target zones a survey of the literature this work selectively reviews the literature on exchange rate target zones and their theoretical and empirical methodologies and examines whether they can be used to clarify to what extent this type of exchange rate regime could contribute to greater exchange rate stability we discuss the main contributions of the first and second generations of exchange rate target zone models in an attempt to reconcile the poor empirical performance of the krugman model with the reality of exchange rate target zone regimes this line of research integrates target zones with alternative underlying economic models such as imperfect credibility intra marginal interventions and sticky price models it was thus possible to understand the correlations observed between the exchange rate its fundamentals determinants and the interest rate differential and to explain the fact that the statistical distribution of the exchange rate is hump shaped rather than u shaped this implies that the initial emphasis of target zone models on nonlinearities honeymoon effect smooth pasting and marginal interventions has vanished exchange rate target zones are better described as similar to managed floating regimes with intra marginal interventions with some marginal interventions when the exchange rate reaches the edges of the floating band

behavioural development economics lessons from field labs in the developing world abstract explanations of poverty growth and development depend on the assumptions made about individual preferences and the willingness to engage in strategic behaviour economic experiments especially those conducted in the field have begun to paint a picture of economic agents in developing communities that is at variance with the traditional portrait we review this growing literature with an eye towards preference related experiments conducted in the field we also offer lessons on what development economists might learn from experiments we conclude by sharing our thoughts on how to conduct experiments in the field and then offer a few ideas for future research

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

new evidence on the puzzles results from agnostic identification on monetary policy and exchange rates abstract past empirical research on monetary policy in open economies has found evidence of the delayed overshooting puzzle and the forward discount puzzle we revisit the effects of monetary policy on exchange rates by applying uhlig s uhlig h 2005a what are the effects of monetary policy on output results from an agnostic identification procedure journal of monetary economics 52 2 381 419 identification procedure that involves sign restrictions on the impulse responses of selected variables in a first step we leave the response of the exchange rate agnostically open and find sizeable evidence for both puzzles in a second step we additionally rule out the delayed overshooting by construction our results indicate that the forward discount puzzle is robust even without delayed overshooting

rethinking ecosystem services to better address and navigate cultural values ecosystem service approaches have become a prominent basis for planning and management cultural services and non use values are included in all major typologies and present some of the most compelling reasons for conserving ecosystems though many barriers exist to their explicit characterization the values that conform least well to economic assumptions variously lumped together with as cultural services have proven elusive in part because valuation is complicated by the properties of intangibility and incommensurability which has in turn led to their exclusion from economic valuation we argue that the effectiveness of the ecosystem services framework in decision making is thwarted by i conflation of services values and benefits and ii failure to appropriately treat diverse kinds of values we address this challenge by 1 distinguishing eight dimensions of values which have implications for appropriate valuation and decision making 2 demonstrating the interconnected nature of benefits and services and so the ubiquity of intangible values 3 discussing the implications of these propositions for ecosystem services research and 4 outlining briefly a research agenda to enable decision making that is ecologically appropriate and socially just because many ecosystem services co produce cultural benefits full characterization of services must address non material values through methods from diverse social sciences

comparative reliability of the dichotomous choice and open ended contingent valuation techniques abstract the comparative reliability of dichotomous choice and open ended contingent valuation methods cvm is evaluated by resurvey of the same households 9 months after their original survey test retest correlations on willingness to pay are statistically significant at the 1 level and range from 0 57 for the dichotomous choice cvm to 0 62 for the open ended cvm the test retest correlations were not statistically different between dichotomous choice and open ended cvm a likelihood ratio test for temporal stability of each method s willingness to pay functions indicates stability half of the time for both methods

target zones and exchange rate dynamics this paper develops a simple model of exchange rate behavior under a target zone regime it shows that the expectation that monetary policy will be adjusted to limit exchange rate variation affects exchange rate behavior even when the exchange rate lies inside the zone and is thus not being defended actively somewhat surprisingly the analysis of target zones turns out to have a strong formal similarity to problems in option pricing and investment under uncertainty

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

returns from research in economies with policy distortions hybrid sorghum in sudan conventional estimates of the economic return to agricultural research use market prices for the values of products and inputs on this basis economic rates of return are typically well above the cost of capital suggesting that more investment in research would be socially desirable but these estimates may be incorrect if as is often the case market prices are distorted by market failures or government policies and hence do not reflect social values this paper presents a simple partial equilibrium methodology with which to improve the measurement of social returns to research by taking account of multiple distortions in the market prices of products inputs and foreign exchange the method also takes account of variation in domestic and world prices making a product tradable in some years and nontradable in others the method is applied to the case of hageen dura 1 hd 1 sub saharan africa s first commercially successful hybrid sorghum hd 1 was released in the sudan in 1983 from the start of research in 1979 to 1992 the hd 1 breeding program had an estimated irr of 97 when all major policies in the sorghum market the fertilizer market and the exchange rate are taken into account the high rate of return to hd 1 research was due to the program s low cost and rapid payoff pointing to the potential value of small adaptive research programs taking full advantage of foreign technology and genetic material to produce locally appropriate crosses in a short period of time even in the highly distorted economies of africa such programs can yield very high payoffs

evaluating returns to agricultural research a review this paper reviews and compares the most common approaches used to evaluate public agricultural research investment ex post studies fall into two major groups a consumer and producer surplus analyses estimating average rates of return to research and b production function analyses estimating marginal rates of return to research ex ante studies fall into four groups a those using scoring models to rank research activities b those employing benefit cost analysis to establish rates of return to research c those using simulation models and d those using mathematical programming to select an optimal mix of research activities

the effects of supply shifts on producers surplus changes in the supply curve caused by technological improvements in production or changes in national policy may or may not benefit producers as a whole depending on the type of shift in the supply curve a structured analysis of different changes in the supply curve that model this situation is given and the change in producers surplus is examined depending on quantitative aspects of the supply and demand curves for supply and demand curves that are linear or power functions a small downward pivot of the supply curve will increase producers surplus only if the equilibrium point is far enough into the elastic region of the demand curve and any downward pivot of the supply curve will decrease producers surplus if the equilibrium point is in the inelastic region of the demand curve similar results are obtained for the more general case of convex supply and demand curves

on the sustainability of exchange rate target zones with central parity realignments abstract i show that parity realignments alone do not suffice to ensure the long run sustainability of an exchange rate target zone with imperfect credibility due to the gambler s ruin problem however low credibility and frequent realignments can destabilize the exchange rate

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

the environment as a luxury good or too poor to be green abstract this paper discusses the views of different authors on the relations between economic growth and environmental scarcities it lays out the common assumptions behind inglehart s postmaterialist thesis in environmental sociology krutilla s criterion for the valuation of environmental amenities hirsch s notion of the positional economy and pearce s numerical results on weak sustainability the paper shows how different views on the environmental consequences of economic growth imply at the same time different theories about environmental movements in rich countries there is an increasing demand for environmental amenities which cannot be substituted by products of the material economy and there are also environmental movements against the effluents of affluence in poor countries there are environmental movements characterized as the environmentalism of the poor

the new approach to wilderness preservation through benefit cost analysis over the last 15 years economists of resources for the future led by john krutilla have been developing a new approach to wilderness preservation this paper offers a concise exposition of their approach and adds a few new steps the basic ingredient of the new approach is a perception of declining net benefits of wilderness development and rising net benefits of wilderness preservation over time these alter the entire shape of the benefit cost analysis of potential development the new steps involve reversibility postponability and recognition of multiple interest rates

modern varieties productivity and sustainability recent experience and emerging challenges abstract the contribution of modern varieties of cereal crops to increased productivity in the postgreen revolution period is reviewed and the future role of hybrids and biotechnology discussed particular emphasis is given to the ways in which modern varieties may contribute to input efficiency and sustainability finally economic and institutional issues in restructuring plant breeding programs for the most efficient use of resources in both the public and private sectors and at the national and international levels are analyzed

measurement of bequest value using a non monetary payment in a choice experiment the case of improving forest ecosystem services for the benefit of local communities in rural kenya abstract this paper adds to the limited literature on the bequest value of environmental resources a choice experiment ce was carried out in order to estimate the economic value of changes in ecosystem services that impact on the welfare of rural communities in the vicinity of a rainforest in kenya our results demonstrate that in addition to valuing immediate benefits respondents were willing to pay 1750kshs for the use of forest resources by posterity the results also establish that the chosen non monetary payment vehicle was not evaluated differently to a standard cash payment

intergenerational discounting a new intuitive approach abstract this paper proposes a new intergenerational discounting approach for computing net benefits from the use of environmental resources the approach explicitly incorporates the perspectives of both the current and future generations as argued for by pigou pigou a c 1920 the economics of welfare 1952 4th edition london macmillan and ramsey ramsey f p 1928 a mathematical theory of saving econ j 38 543 559 and required by most national and international laws related to the use of these resources an equation for use in the calculation of net discounted benefits is developed which provides a middle position whereby both the reality of personal discounting and that of social discounting are included in a social welfare function

environmental issues and economic decisions in developing countries abstract this paper explains the key role of environmental economics in incorporating environmental concerns into decision making and in facilitating the more efficient management of natural resources as a step toward sustainable development it reviews concepts and techniques for valuation of environmental impacts for use in conventional cost benefits analysis as well as key related aspects including environmental impacts of economywide policies multicriteria analysis risk and uncertainty and discount rate issues several developing country case studies are summarized which cover a range of practical valuation methods the evidence presented suggests that the valuation techniques for determining use values may be applied successfully in appropriate cases but examples involving nonuse values are rare the use of multiobjective desicion methods also needs to be explored where economic valuation is not feasible

economic value of wetlands based recreation abstract the loss of wetlands is an issue of growing concern previous studies have focused primarily on quantifying the commercial storm protection and energy output values of wetlands relatively little research has been devoted to quantifying the outdoor recreational value of wetlands in this paper the recreational value of wetlands is discussed conceptually within a total economic value framework total economic value contains many value components which are broadly divided into non use current use and future use values each of these value categories can be further subdivided into expenditures and consumer s surplus an empirical study was conducted to measure expenditures and consumer s surplus associated with on site current recreational uses of a coastal wetlands area aggregate expenditures were estimated at approximately 118 million and aggregate consumer s surplus was estimated at approximately 27 million these results suggest that the economic impacts and net economic benefits associated with wetlands based recreation may be substantial hence recreational functions provided by wetlands may be important considerations for wetlands policy and management

valuation of ecotourism resources using a contingent valuation method the case of the korean dmz abstract the korean demilitarized zone dmz which has been untouched by human interference for the last half century has become a sanctuary for rare species of animals and plants conflicts concerning development between communities and environmentalists are arising estimates of the preservation value of the dmz are necessary for society to properly address these issues such estimates will help policy makers address issues of conservation management sustainable development and public financial support given this situation the objectives are two fold the primary objective of this study is to obtain estimates of the preservation value of the korean dmz and civilian control zone ccz a secondary objective is to examine the potential for hypothetic bias in respondents answers in a contingent valuation method framework findings suggest hypothetical bias is present in the survey including a real payment vehicle may reduce hypothetical bias in eliciting willingness to pay wtp best estimates are the mean wtp is us 16 74 per capita aggregate preservation value lies between us 264 and 602 million these findings indicate that conservation of the dmz and ccz is not only important for moral and ecological reasons but the dmz and ccz are of considerable economic value to south koreans any development unfriendly to the environment will degrade the quality of the ecosystem of the dmz as well as decrease its economic value

what s to know about hypothetical bias in stated preference valuation studies abstract hypothetical bias arises in stated preference valuation studies when respondents report a willingness to pay wtp that exceeds what they actually pay using their own money in laboratory or field experiments although this bias is not found in all stated preference surveys hypothetical wtp typically exceeds the actual value by a factor of two to three unfortunately there is no widely accepted general theory of respondent behaviour that explains hypothetical bias therefore two meta analyses are reviewed to test current hypotheses regarding the causes of this overstatement of wtp and the associated recommendations to mitigate the bias suggestions for future research are made including the development of a general theory

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

farmer s rights and genetic conservation in traditional farming systems abstract crop genetic resources are concentrated in some of the world s poorest farming systems these resources have been used by industrial countries without compensating farmers concerns for equity and conservation have led to proposals to protect crop genetic resources as intellectual property this paper argues that conventional intellectual property regulations e g utility patents and plant variety protection should not be used to protect crop genetic resources it suggests that farmers rights as an alternate form of intellectual property rights be used to indirectly compensate farmers by supporting genetic conservation it examines methods of in situ conservation for crop genetic resources

changing monetary policy rules learning and real exchange rate dynamics when the exchange rate is priced by uncovered interest parity and central banks set nominal interest rates according to a reaction function such as the taylor rule the real exchange rate will be determined by expected inflation and the output gap or the unemployment gap of the home and foreign countries this paper examines the implications of these taylor rule fundamentals for real exchange rate determination because the true parameters in central bank policy rules are unknown to the public and change over time the model is presented in the context of a least squares learning environment this simple learning model captures the volatility and the major swings in the real deutschemark euro dollar exchange rate from 1976 to 2007

willingness to accept compensation for the environmental risks of oil transport on the amazon a choice modeling experiment abstract this paper looks at the question of whether subsistence level indigenous people place a value on the preservation of ecosystems independent of direct impacts of environmental change such as impacts on their production activities the economics literature generally suggests that non use values don t exist among the poor and in the informal sector of the economy we examine this issue through a choice modeling experiment a survey was conducted of rainforest communities who live on the banks of the amazon river rio solimoes in the vicinity of proposed oil and gas pipelines the data were analyzed in the choice modeling framework revealing relatively high amounts of compensation that were necessary in order to accept the potential ecosystem damages associated with oil transport even if the people were completely compensated for direct damages such as loss of access to productive resources these results suggest that environmental quality is important for its own sake a result that is very different from the implicit assumption among many economists

a comparison of stated preference methods for environmental valuation this paper presents an empirical comparison of contingent valuation cvm and choice experiments which are used to value environmental quality changes both of these methods require individuals to state their preferences for environmental qualities however choice experiments differ from cvm in that environmental attributes are varied in an experimental design which requires respondents to make repeated choices between bundles of attributes the empirical application involved the effect of environmental quality changes arising from forest management practices on recreational moose hunting values significant differences were found between the values derived from the two methods however detailed examination of the implied choice behaviour suggested that respondents ignored substitute recreation areas in the cvm question restricting the choice experiment model to consider only the one site where quality was varied resulted in welfare estimates similar to the cvm model this highlights the importance of substitutes in environmental valuation and suggests that choice experiments may be more appropriate than cvm in some cases

using choice experiments to value the environment this paper we outline the choice experiment approach to environmental valuation this approach has its roots in lancaster s characteristics theory of value in random utility theory and in experimental design we show how marginal values for the attributes of environmental assets such as forests and rivers can be estimated from pair wise choices as well as the value of the environmental asset as a whole these choice pairs are designed so as to allow efficient statistical estimation of the underlying utility function and to minimise required sample size choice experiments have important advantages over other environmental valuation methods such as contingent valuation and travel cost type models although many design issues remain unresolved applications to environmental issues have so far been relatively limited we illustrate the use of choice experiments with reference to a recent uk study on public preferences for alternative forest landscapes this study allows us to perform a convergent validity test on the choice experiment estimates of willingness to pay

target zones and realignments recent contributions emphasize that the presence of exchange rate target zones has important effects on the within band behavior of exchange rates when agents are forward looking the authors find that the implications of available models are inconsistent with european exchange rate data and they suggest that the frequent realignments occurring in the period they consider may be responsible for this they construct a model in which the likelihood of a realignment in the near future increases as the exchange rate approaches the limits of its fluctuation band and show that its implications are broadly consistent with the evidence copyright 1992 by american economic association

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

adopt a hypothetical pup a count data approach to the valuation of wildlife the willingness to pay wtp for a coyote conservation program is estimated using a novel payment vehicle based on how many problem coyotes respondents would be willing to sponsor for a year this hypothetical scenario mimics an increasingly popular type of actual market data from a phone survey conducted in prince edward island are analyzed using count data models that consider different processes explaining zero responses and the level of positive responses this is particularly important in the case of coyotes often regarded as an economic bad estimates of wtp per coyote per year around 18 22 and annual wtp per contributor of about 46 57 are obtained

climate change and agriculture the role of international trade predictions of future climate and atmospheric conditions are reviewed and the implications for agriculture in different areas of the world are identified the swopsim static world policy simulation model used to evaluate the worldwide economic effects of climate change is described an economic sensitivity analysis of concurrent yield losses in major grain producing regions considering the possibility of concurrent changes in production potential elsewhere in the world is reported agricultural impacts of climate change based on three general circulation models are evaluated

using contingent valuation to value environmental improvements alternative methods available to economists for valuing non market goods are outlined contingent valuation is then used to value a ban on straw burning

monetary contracting between central banks and the design of sustainable exchange rate zones abstract an exchange rate system is a contract which commits central banks to intervene in the foreign exchange market the design features of the system include the rules of intervention the limits placed on exchange rates and the crisis scenario describing possible transitions to new regimes this paper considers the various trade offs one faces in designing an exchange rate system one of these pertains to the amount of reserves which the central banks must have on hand in order to forestall a speculative attack and make the system sustainable the amount of reserves needed depends crucially on the assumed crisis scenario

stochastic devaluation risk and the empirical fit of target zone models in the model of this paper an exchange rate fluctuates between given boundaries for random lengths of time and jumps discretely when devaluation occur we provide explicit solutions for the stochastic processes followed by the exchange rate and by the expected rate of depreciation when the likelihood and the size of devaluations vary stochastically over time the model produces realistic patterns of covariation between exchange rates and interest rate differentials and provides interesting interpretations of available empirical evidence we also specify how to infer devaluation risk from target zone data

bequest values for marine resources how important for indigenous communities in less developed economies communities owning and living on ancestral land tend to have a strong sense of stewardship over the land and its resources which may translate into an economic value to present generations of being able to pass on ancestral lands to future generations i e bequest value this study estimates bequest values to local users of a traditional fishing ground on the coral coast of fiji using a contingent valuation approach using monetary as well as time based contributions bequest values are estimated at between fj 1 25 1 41 us 0 64 0 73 per individual per week or fj 183 90 us 106 91 per household per year this represents a significant proportion of stated average household expenditure comparable to spending on durable household goods and clothes and footwear these results suggest that low income groups may have significant bequest values which should be accounted for in developing economy valuation studies

the convention on biological diversity and agriculture implications and unresolved debates1 summary the convention on biological diversity addresses two controversies that surround plant genetic resources pgrs one debate has been over property rights governing pgrs and the distribution of benefits from their use the second has been over the adequacy of measures to maintain crop genetic diversity this paper examines how these two debates are linked and reviews previous multilateral attempts to address them the convention signals wider international acceptance of stricter property rights over pgrs and the need for multilateral assistance for pgr conservation however current proposals to implement the convention appear too limited in scope to achieve their stated conservation objectives while several areas of controversy remain these include debates over i intellectual property protection for biological inventions ii control over pgrs in international gene banks iii the international biosafety protocol regulating biotechnology iv mechanisms to finance pgr conservation and v the allocation of funds between in situ and ex situ conservation q 1998 elsevier science ltd all rights reserved

returns to public investments in agriculture with imperfect downstream competition a multiple market framework is developed to measure the size and distribution of research benefits the model considers an upstream raw product market and a downstream finished product market and allows for imperfect competition in the intermediary food processing sector a central conceptual result is derived an increase in raw product output is a sufficient condition for costreducing innovations in the farm sector to increase social welfare a special case of linear farm supply and isoelastic processing production functions reveals that necessary conditions for welfare to decrease are a convergent farm supply shift an oligopsonistic upstream market configuration and increasing returns to scale processing technology a basic goal of public agricultural research is to reduce the costs of farm production toward this end governments have invested considerable resources to improve basic scientific knowledge develop novel technologies and facilitate the adoption of modern plant varieties and farming methods economists have generally concluded that public investments in agriculture have achieved remarkable success in lowering the marginal cost of farm production due in large part to the effectiveness of land grant research and extension activities chavas and cox cochrane as a result of these cost changes public agricultural investments have been shown to yield impressive social rates of return in numerous studies for a survey of this literature see alston norton and pardey several recent papers have shown that imperfect competition in the downstream processing sector can affect both the size and the distribution of welfare changes dryburgh and doyle consider the impact of technical innovation in a multimarket study of the british dairy industry under alternate downstream in

exchange rate target zones realignments and the interest rate differential theory and evidence abstract this paper develops a target zone model for the exchange rate where the expected realignment is an increasing function of the distance of the exchange rate from the central parity as a percentage of the width of the band in this framework the interest rate differential increases with the deviation of the exchange rate from the central parity when the exchange rate is close to the central parity and it decreases when the exchange rate is close to the edges of the band finally the paper looks at the evidence from the ems and finds partial support for the implications of the model

the state of the art of environmental valuation with discrete choice experiments abstract this paper provides with a review of the state of the art of environmental valuation with discrete choice experiments dces the growing body of literature on this field serves to emphasize the increasing role that dces are playing in environmental decision making in the last decade the paper attempts to cover the full process of undertaking a choice experiment including survey and experimental design econometric analysis of choice data and welfare analysis the research on this field is found to be intense although many challenges are put forward e g choice task complexity and cognitive effort experimental design preference and scale heterogeneity endogeneity or model uncertainty reviewing the state of the art of dces serves to draw attention to the main challenges that this methodological approach will need to overcome in the coming years and to identify the frontiers in discrete choice analysis

multivariate mixed models for open ended contingent valuation data willingness to pay for conservation of monk seals although dichotomous choice dc contingent valuation cv has been recommended by the us noaa blue ribbon panel for large scale contingent valuation studies useful information can still be obtained from smaller open ended oe studies often undertaken as a precursor to a dc survey the cv study considered here was carried out in greece and looked at willingness to pay wtp for protecting the mediterranean monk seal monachus monachus in the aegean area this is the most endangered seal in the world and the application of the cv methodology was the first such application in greece the oe data consist of two responses first a binary response detailing whether or not respondents were in principle prepared to pay for the protection of this seal secondly those respondents who answered yes to the first question were then asked to state their maximum wtp for such protection a multivariate binomial log normal mixture model is used to develop a bid function including explanatory variables such as income sex age and education such a modelling approach provides an alternative to more commonplace tobit estimation however the model is extended to include further information which was collected on

exchange rate determination under interest rate rules we propose a theory of exchange rate determination under interest rate rules in a two country model we first show that simple interest rate feedback rules can determine a unique and stable equilibrium without any explicit reaction to the nominal exchange rate we characterize how the behavior of the exchange rate and of the terms of trade depends in a critical way on the monetary regime chosen though not necessarily on monetary shocks we give a simple account of exchange rate volatility in terms of monetary policy rules we provide an explanation of the relation between nominal exchange rate volatility and macroeconomic variability in terms of the monetary regime adopted by monetary authorities

divestment of the english forestry estate an economically sound choice abstract this paper evaluates if the proposed divestment of the english forestry commission estate in 2010 was economically rational the analysis is composed of two parts first an amenity value threshold for continued public access to the estate was estimated based on a stated value of the estate i e 700 million and assuming a discount rate of 3 5 the estate should never have been considered for sale however assuming a discount rate of 5 then the associated critical amenity value was estimated to be approximately 5 million second travel cost methods were employed to value public access to the forest of dean as a proxy for the estate an on site survey was conducted that yielded estimates of consumer surplus that exceed the critical amenity value of the estate by two orders of magnitude even when we employ a discount rate above that typically used in public policy decision making therefore we conclude that the policy to divest the estate for 700 million was not a good deal and as such the resulting policy reversal was an economically sensible decision

an evaluation of monetary and non monetary techniques for assessing the importance of biodiversity and ecosystem services to people in countries with developing economies abstract biodiversity supports a range of ecosystems services that are of fundamental importance to people in poor countries economic valuation of biodiversity is important for the development of policies that protect biodiversity and alleviate poverty this paper provides an evaluation of monetary and non monetary techniques for assessing the value of biodiversity to people in least developed countries ldcs specifically research questions include 1 to what extent have monetary and non monetary techniques been used to assess the value of biodiversity and ecosystem services in ldcs 2 what are the key methodological practical epistemological and policy challenges to assessing the value of biodiversity and ecosystem services in ldcs 3 how can valuation methods be improved to allow more accurate valuation in ldcs

choice modelling and its potential application to tropical rainforest preservation abstract loss of rainforest occurs in part because of a global market failure problem markets routinely transmit signals about international demands for forest products such as timber but fail to transmit signals about demands for preservation to make efficient resource allocation choices decision makers need some framework to estimate the non use values that might be held by an international community for rainforest preservation non market valuation techniques can be used for this purpose but framing and other problems limit the application of the contingent valuation method cvm an alternative technique choice modelling cm appears to hold some promise because it can be used to model complex situations and to frame choices consistent with real life choices in this paper a cm experiment to assess the values that australians hold for rainforest conservation in vanuatu is reported the experiment disguises effectively the issue of interest rainforest conservation in vanuatu within a pool of other conservation locations also the experiment demonstrates that choice tradeoffs may involve a variety of environmental and socio economic factors rather than be concentrated on some monetary tradeoff the results demonstrate that a variety of predictive and valuation tools can be gained from a cm experiment and suggest that further development is warranted

self interest altruism and health risk reduction an economic analysis of voting behavior while classical economic theory suggests that the demand for private goods is motivated by economic self interest a growing body of literature suggests that the demand for public goods is driven both by self interest and by altruistic motives the political arena has been a major testing ground for this hypothesis recently a number of studies have tried to empirically isolate and determine the importance of economic versus ideological factors in explaining political choices by representatives kau and rubin 1979 peltzman 1984 kalt and zupan 1984 while congressional voting records have provided a rich source of data for empirical analysis a consensus opinion on the importance of self interest versus altruism has not been reached and remains controversial altruistic motivations have also been

market distortions and benefits from research the benefits from cost reducing research and their distribution under a range of price policies are compared with those that would arise in the absence of the policies while any price policy affects the distribution of research benefits the net national or world benefits may be reduced lef unchanged or increased depending on the nature of the policy and the significance of the country in the world market for the commodity some implications for decisions on price policies and for distortions in incentives for the allocation of resources to research are raised

timber harvest adjacency economies hunting species protection and old growth value seeking the dynamic optimum abstract forests have the potential to provide ecosystem services timber mature growth aesthetics and wildlife and endangered species protection forest managers are faced with complex ecosystem management decisions due to competing and complementary social values and differential interactions of these social values with timber production as a result management strategies can have dramatic aggregate and intertemporal welfare implications this paper portrays the trade offs and externalities in choosing or changing the forest management objective and the resulting rankings of management policies in addition the paper analyzes the role of economies of scale in harvest area where larger harvest areas generate average cost savings in harvesting and reseeding thereby promoting more intensive harvesting at the expense of environmental benefits

the calculation of returns to research in distorted markets reply abstract most of the emperical literature calculating rates of return to publicly sponsored research assumes that research is the only relevant government intervention for most countries this assumption is untenable this paper shows that improperly measuring government inducedmarket distortions can severely bias research rate of return calculations if the interaction between successful research and other government interventions increases the cost of the other interventions then neglecting market distortions unambigously increases the calculated rate of return three examples of government induced distortions show that the magnitude of the upward bias in calculated rates of return can be extremely large in some cases more than 100 percentage points a normative implication is that governments should account for interactions between research and price interventions when determining research support levels a positive implication is that existing government research funding patterns are more readily explainable as reasonable behavior by a government that accounts for these interactions

genetic improvements in major us crops the size and distribution of benefits the distribution of welfare gains of genetic improvements in major us crops is estimated using a world agricultural trade model multi market welfare estimates were 75 larger than estimates based on the price exogenous change in revenue method frequently used by plant breeders annual benefits of these genetic improvements range from us 400 600 million depending on the supply shift specification of this 44 60 accrues to the us 24 34 accrues to other developed countries developing and transitional economies capture 16 22 of the welfare gain the global benefits of a one time permanent increase in us yields are us 8 1 billion discounted at 10 and us 15 4 billion discounted at 5 gains to consumers in developing and transitional economies range from us 6 1 billion 10 discount rate to us 11 6 billion 5 discount rate

exchange rate volatility and the time varying effects of aggregate shocks abstract this paper investigates the dynamics of the real exchange rate and relative output among the us and five of its top six trading partners since the collapse of bretton woods it employs long run restrictions to identify the usual suspect macroeconomic shocks and their relative importance for exchange rate fluctuations an improvement of the econometric application is that it allows for the contribution of each shock to the real exchange rate and relative output to vary over time while the volatility of us output both total and relative to that of the uk or canada is estimated to have substantially reduced since the mid 1980s consistent with the great moderation findings of many others the volatility of real exchange rates has experienced a gradual and continuous increase over the same period monetary shocks account for only a small fraction of these dynamics although they do track well the increase in volatility of us output during the great inflation period it is supply type shocks that seem to be more important for the relative output volatility reductions of the mid 1980s conversely demand shocks seem to account for the largest portion of the volatility increases in the real exchange rate perhaps unsurprisingly both volatilities increase during the 2007 financial crisis and the ensuing 2008 2009 great recession periods associated with higher economic uncertainty

expected encounters and willingness to pay for outdoor recreation there is increasing interest in the management of natural resources for recreational activities much of it concerning the effect of crowding in outdoor recreation earlier work outlined models for estimating the effect of increased visitor contacts on individual willingness to pay for wilderness experiences cicchetti and smith 1973 others have looked at how crowding affects recreational resource valuation and criteria for the optimal management of recreational resources anderson and bonsor 1974 fisher and krutilla 1972 while the present paper is also concerned with the effect of visitor contacts on willingness to pay for outdoor recreation it differs from earlier work by looking at how individual willingness to travel is influenced by pre trip expectations of interparty encounters at the site we begin the paper by reviewing the related literature concerning user contacts and outdoor recreation the next section discusses the methods employed in this study and presents the empirical results based on data from the high peaks area of the adirondack mountains in new york state the final section discusses the results and our conclusions

the distribution of benefits from technical change among classes of consumers and producers an ex anteanalysis of beans in brazil abstract because new agricultural technology in developing countries has sometimes bypassed small farmers who are an important social group in low income countries design of technology specifically appropriate to small farmers has been advocated as a policy goal this paper appraises the comparative returns to investment in small farm biased scale neutral and large farm biased technology for bean production in brazil a consumer surplus model is developed to estimate the distribution of benefits among producing sectors and classes of consumers while previous studies have relied on geometrical approximations to measure economic benefits as the area under the supply shifts here an exact analytic solution is obtained by integrating from the supply axis scale neutral technology leads to significant small farmer benefits while maximizing benefits to consumers large farm biased technology results in less benefits to small farmers and consumers and only minor gains to large farmers when compared to scale neutral technology small farm biased technology produces the greatest gains to small farmers but the lowest level of benefits to consumers

cultural bequest values for ecosystem service flows among indigenous fishers a discrete choice experiment validated with mixed methods perhaps the most understudied ecosystem services are related to socio cultural values tied to non material benefits arising from human ecosystem relationships bequest values linked to natural ecosystems can be particularly significant for indigenous communities whose livelihoods and cultures are tied to ecosystems here we apply a discrete choice experiment dce to determine indigenous fishers preferences and willingness to pay for bequest gains from management actions in a locally managed marine area in madagascar and use our results to estimate an implicit discount rate we validate our results using a unique rating and ranking game and other mixed methods we find that bequest is highly valued and important respondents were willing to pay a substantial portion of their income to protect ecosystems for future generations through all of our inquiries bequest emerged as the highest priority even when respondents were forced to make trade offs among other livelihood supporting ecosystem services this study is among a relative few to quantify bequest values and apply a dce to model trade offs value ecosystem service flows and estimate discount rates in a developing country our results directly inform coastal management in madagascar and elsewhere by providing information on the socio cultural value of bequest in comparison to other ecosystem service benefits

labeling energy cost on light bulbs lowers implicit discount rates lighting accounts for nearly 20 of overall u s electricity consumption and 18 of u s residential electricity consumption a transition to alternative energy efficient technologies could reduce this energy consumption considerably to quantify the influence of factors that drive consumer choices for light bulbs we conducted a choice based conjoint field experiment with 183 participants we estimated discrete choice models from the data and found that politically liberal consumers have a stronger preference for compact fluorescent lighting technology and for low energy consumption greater willingness to pay for lower energy consumption and longer life was observed in conditions where estimated operating cost information was provided providing estimated annual cost information to consumers reduced their implicit discount rate by a factor of five lowering barriers to adoption of energy efficient alternatives with higher up front costs however even with cost information provided consumers continued to use implicit discount rates of around 100 which is larger than that experienced for other energy technologies