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

arbitrary values good causes and premature verdicts abstract this paper offers an alternative interpretation of the conclusions kahneman and knetsch propose based on two contingent valuation cvm surveys the evaluation argues that while framing is important to cvm estimates the design implementation and empirical findings reported from these surveys do not support their judgments moreover with the exception of temporal embedding conventional economic descriptions of individual behavior can explain the response patterns that they suggest are at variance with standard value theory

assessment of public acceptance and willingness to pay for renewable energy sources in crete abstract the aim of this study is to analyse and to evaluate the citizens public acceptance and willingness to pay wtp for renewable energy sources res in crete for this purpose a contingent valuation study was conducted using a double bound dichotomous choice format to elicit people s wtp and factors affecting it residents of 1440 households all over crete were interviewed face to face major conclusions can be used as a basis for sustainable energy planning for policies and the formulation of awareness campaigns and for res investment programs and projects in order to prepare implementation conditions and enhance public acceptance of renewable energy investments and programmes mean wtp per household was found to be 16 33 to be paid quarterly as an additional charge on the electricity bill larger willingness to pay was reported by those with high family income and residence size those having a higher level of energy information and awareness concerning climatic change those who have invested in some energy saving measures and those who suffer from more electricity shortages than others

a joint investigation of public support and public values case of instream flows in new mexico abstract instream flow can be defined as the flow of water in its natural channels without diversion alone among the western us states new mexico nm fails to provide any mechanism for the protection of instream flows and has a long history of political resistance to any change in the status quo using the combined results from two statewide telephone surveys this study jointly investigates stated voting preferences for a proposed institutional change and stated valuation preferences for minimum instream flow protection the contingent valuation cv question uses a dichotomous choice dc elicitation format and a voluntary contribution trust fund payment vehicle results show a highly significant positive correlation between expressed voting preferences and expressed valuation preferences additionally those individuals who respond yes to the voting question have an expected willingness to pay wtp of 80 with a 95 confidence interval ci that is always positive 62 97 while those who respond no to the voting question have an expected wtp that is actually slightly negative 6 with a 95 ci containing zero 14 2 taken together these results provide evidence of construct validity estimation results are also shown to be temporally reliable across repeated samples thus there is strong evidence of public support for instream flow protection and its associated nonmarket benefits such evidence helps to provide instream flow concerns with standing in future nm water policy debates prominent examples include explicitly defining beneficial use and public welfare to allow consideration of instream flow protection

water markets and freshwater ecosystem services policy reform and implementation in the columbia and murray darling basins abstract water markets have featured prominently in the reallocation of water rights to restore freshwater ecosystem health incentive based water rights acquisition and transactions have emerged as a market oriented policy approach to reallocate water resources from existing uses to enhance the provision regulation and sustainability of freshwater ecosystem services this paper develops a conceptual framework to examine factors enabling and constraining successful policy reform and implementation in market based environmental water allocation this analysis distills and extends the findings and lessons of a september 2007 workshop in brisbane australia on environmental water transactions two case studies were selected in water stressed basins the columbia u s a and murray darling australia basins where transactional approaches to environmental water allocation first emerged the case studies draw upon practitioner perspectives and previous policy and economic analysis in two regions where shared political economic and physical conditions lend a strong analytical basis for comparison a common set of policy and regulatory reforms has occurred in both cases albeit in different forms and via distinct paths to develop three enabling conditions 1 establishment of rights to and limits on freshwater extraction and alteration 2 recognition of the environment as a legitimate water use and 3 authority to transfer existing water rights to an environmental purpose however these elements of policy reform are necessary but not sufficient for effective implementation a second set of driving forces barriers and adaptations explains the ability to achieve larger scale ecological outcomes these conditions include the physical social and economic factors driving demand for environmental water allocation administrative procedures organizational development and institutional capacity to effect transfers and adaptive mechanisms to overcome legal cultural economic and environmental barriers the case study analysis suggests that environmental water transactions can play an important role in establishing environmental water allocations although water markets require ongoing institutional capacity and adaptive governance the conceptual framework and empirical lessons generated through this cross case comparison provide the basis for an expanded research agenda to evaluate the design and performance of market oriented reforms as implementation experience accrues and new programs emerge in diverse ecological and political economic settings

a note on consistent estimation of mean wtp using a misspecified logit contingent valuation model abstract monte carlo evidence has shown that simple misspecified referendum contingent valuation cv models sometimes lead to good estimates of mean willingness to pay wtp empirical studies have found that estimates of mean wtp derived from simple parametric models often differ little from those derived from nonparametric methods this indicates that simple models can potentially yield wtp estimators that are relatively unbiased this note shows that very simple logit referendum cv models will estimate mean wtp consistently if the survey bids are drawn randomly from a uniform distribution

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

voluntary export restraints and foreign investment abstract this paper develops a model in which both voluntary export restraints vers and foreign investment can be considered we investigate the welfare effect of additional foreign investment under vers it is demonstrated that if the commodity subject to vers is more intensive in capital in the importing country which is assumed to be a debtor country additional foreign investment into that country raises its welfare

recreational demands for maintaining instream flows a contingent valuation approach recreational uses of streams although nonconsumptive increasingly conflict with traditional off stream uses of water in arid regions recreational demands for instream flows have collective good attributes such that the recreationists preferences may be inadequately reflected in water allocation decisions the contingent valuation approach was adapted to impute instream flow shadow prices from a sample of recreationists on the cache la poudre river in northern colorado during periods of relatively low flows the estimated instream flow marginal value exceeds the marginal value of water in irrigation suggesting a need for altered water allocation policies

bias and efficiency of single vs double bound models for contingent valuation studies a monte carlo analysis the dichotomous choice contingent valuation method can be used either in the single or double bound formulation the former is easier to implement while the latter is known to be more efficient we analyse the bias of the ml estimates produced by either model and the gain in efficiency associated to the double bound model in different experimental settings we find that there are no relevant differences in point estimates given by the two models even for small sample size the greater efficiency of the double bound is confirmed although differences tend to reduce by increasing the sample size provided that a reliable pretest is conducted and the sample size is large use of the single rather than the double bound model is warranted

incentive incompatibility and starting point bias in iterative valuation questions we test for incentive incompatibility and starting point bias to describe the effects of iterative valuation questions on willingness to pay we compare double triple and multiplebounded models with data from two surveys with similar designs of the valuation questions we find that incentive incompatibility is present in both sets of data and starting point bias is present in one the efficiency of the willingness to pay estimate is improved in only one set of data the potential loss from using iterative questions without controlling for both incentive incompatibility and starting point bias is biased willingness topay estimates

privatizing the commons an improvement recent years have seen political economists turning to an institutional paradigm wherein the extent to which property rights are defined and enforced is an important determinant of human action furubotn 1972 the institutional or property rights approach has become an important component of explanations of both economic growth and economic inefficiency the institutional environment now holds a prominent place in explanations of differential growth rates among political units and over time 1 the property rights approach has also become commonplace in the analysis of the environmental crisis where the lack of well defined property rights is seen as the cause of environmental problems and movement toward a more complete specification of those rights as the solution even bureaucratic inefficiencies have been analyzed in the context of property rights mckean 1965

social demand for electricity from forest biomass in spain does payment periodicity affect the willingness to pay in this article we analyze social preferences for a partial substitution programme of electricity generated by conventional energy sources for energy generated from a local renewable energy source such as forest biomass this analysis sets arguments in favour of accelerating the introduction of this renewable technology in the spanish electricity system simultaneously two methodological goals concerning the contingent valuation method are discussed in the first one we analyze if there are statistical differences in the willingness to pay wtp when a single or a double bounded format is employed to ask the valuation question results show that wtp estimates from single and double bounded significantly differ in the second one we analyze the effect of the periodicity of the payment vehicle on the estimates of welfare change the timeframe specification of the payment vehicle has been scarcely studied and this fact constitutes the main contribution of this paper to the specialized literature results show that periodicity influences upon the probability to favour the proposed change the periodicity does not affect to the mean wtp obtained in the single bounded format but there are statistical differences in the double bounded format these results might be explained by the presence of yea saying and payment scale bias

ex ante valuation of atmospheric visibility in a world incomplete markets for environmental goods ex ante planned expenditures rather than ex post realized outcomes explain the values which individuals attach to these goods we use the distance function to develop restrictions from a model of ex ante consumer behaviour involving these goods a contigent valuation approach is then employed to estimate policy relavant components of the ex ante economic values that recreationists attach to differing subjective probabilities of alternative atmospheric visibility levels at a wilderness location and at an urban location in oregon marginal valuations of probability changes are similar at the two sites marginal rates of time preference for resolving uncertainities vary between 10 and 50 and are inversely related to education existence value averages 10 of total value and evidence is mixed that site specific value act as surrogates for general environmental preferences

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 valuation of water quality addressing spatially heterogeneous preferences using gis and a random parameter logit model abstract the spatial distribution of agri environmental policy benefits has important implications for the efficient allocation of management effort the practical convenience of relying on sample mean values of individual benefits for aggregation can come at the cost of biased aggregate estimates the main objective of this paper is to test spatial hypotheses regarding respondents local water quality and quantity and their willingness to pay for improvements in water quality attributes this paper combines choice experiment and spatially related water quality data via a geographical information system gis to develop a method that evaluates the influence of respondents local water quality on willingness to pay for river and stream conservation programmes in canterbury new zealand results showed that those respondents who live in the vicinity of low quality waterways are willing to pay more for improvements relative to those who live near to high quality waterways the study also found that disregarding the influence of respondents local water quality data has a significant impact on the magnitude of welfare estimates and causes substantial underestimation of aggregated benefits

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

the sign and size of option value we adapt the theoretical state preference model to value nonmarket public goods under individual uncertainty about use illustrating with an assessment of willingness to pay to prevent acid rain lake damage in the northeast united states individual

a satisfactory benefit cost indicator from contingent valuation abstract standard economic concepts are used to develop a model of individual behavior when subject to the constraints of the contingent valuation choice context the model yields refutable consequences that are consistent with previously reported empirical findings including some that have been thought to be anomalous the model is used to show that different contingent valuation formats have predictably different performance characteristics notably the hicksian compensating measures are satisfactory benefit cost indicators when elicited using any one of several formats identified in the text of the formats examined one form of a policy referendum appears to have the most satisfactory characteristics overall we conclude that contingent valuation is a progressing research program

renewables portfolio individual preferences and social values towards res technologies abstract the massive deployment of renewable energy sources represents a high priority for greece in order to comply with the directive 2009 28 ec on the promotion of the use of energy from renewable sources by 2020 in this perspective aegean islands especially lesvos are endowed with a considerable potential of a portfolio of renewables a fact that the entrepreneurial interest has already been targeted however regulatory attempts for a massive penetration of renewables do not take seriously into account preferences and risk perceptions of local communities where the proposed projects are to be installed the aim of this study is to investigate individual preferences and social values towards specific technologies of renewables in lesvos island we apply an open ended contingent valuation survey in order to analyze factors shaping public attitudes towards a portfolio of renewable technologies and estimate the economic welfare willingness to pay of the preferred technologies we argue that such information is relevant for energy policy design and the establishment of effective measures for the promotion of renewable energy sources

consumers willingness to pay for green electricity a meta analysis of the literature at present electricity generated from power plants using renewable sources costs more than electricity generated from power plants using conventional fuels consumers bear these expenses directly or indirectly through higher prices for renewable energy or taxes the number of studies published over the last few years focusing on people s preferences for renewables has increased steadily making it more and more difficult to identify key explanatory factors that determine people s willingness to pay wtp for renewables we present results of a meta regression on valuation of consumer preferences for a larger share of renewable energy in their electricity mix our meta regression results reveal a number of important factors that explain the differences in wtp values for renewable energy different valuation methods show widely different values with choice experiments producing the highest estimates our results further indicate that consumers wtp for green electricity differs by source with hydropower being the least valued variables that are often omitted from primary valuation studies are important in explaining differences in values these variables describe individual and household characteristics as well as information on the type of power plant that will be replaced by renewables further the marginal effect of a survey conducted in the us is pronounced we also assess the potential for using the results for out of sample value transfer and find a median error of 21 c 2015 elsevier b v all rights reserved

household willingness to pay for expanding fuel cell power generation in korea a view from co2 emissions reduction abstract the fuel cell fc is accepted as the state of the art instrument for reducing co2 emissions in the field of power generation in korea therefore the korean government has planned to expand fc power generation from 565 gwh in 2013 to 13 449 gwh by 2027 this article aims to assess the public value or acceptability of this expansion in terms of reducing co2 emissions to this end we derive the public s additional willingness to pay wtp for the expansion using a contingent valuation survey of 1000 korean households for the purpose of mitigating the response effect in eliciting their wtp and increasing statistical efficiency in analyzing the wtp data we employ a one and one half bounded dichotomous choice question format furthermore we use the spike model so as to model zero wtp responses the mean additional monthly wtp for the expansion is computed to be krw 1407 usd 1 37 per household expanding the value to the national population gives us krw 310 5 billion usd 304 4 million per year we can conclude that korean households are ready to shoulder some of the financial burden of expanding fc power generation to reduce co2 emissions

the problem of instream flows to obtain a surface water right in the arid american west private appropriators have been required to undertake actual physical diversion of the water that requirement largely negates the role of private contacting to preserve or enhance water flows for recreational wildlife and aesthetic purposes in this paper a model is developed and used to examine the courts rationale for denying private claims to instream flows the ways in which such claims can be made amenable to the prior appropriation system are explored the paper is motivated by the failure of public agencies to achieve an approximately optimal solution

property rights protest and the siting of hazardous waste facilities ture since that time no major hwf has been sited anywhere in the united states the epa had anticipated that local opposition would make finding these sites an exceptionally difficult task their pessimism was well founded and if anything understated according to the hazardous waste counsultant s latest state by state review the outlook for siting hwfs in the future is even more bleak than in the past due in large part to what they term a worsening of the emotional atmosphere surrounding siting efforts this failure to site any new hwf has come about in spite of assurances by government and company officials that new facilities built according to the present standards would pose negligible risks to the local residents attempts have been made to break the deadlock by instituting extensive public participation procedures establishing state siting boards with the power to overrule local decision makers and requiring facility owners to compensate local governments for safety services the latter provided in this paper we argue that the ambiguous nature of the present property rights governing the siting of hwfs is an important cause of the stalemate we offer a new approach to siting which recognizes the de facto property rights assumed by local communities we propose a political market via a referendum

reliability and predictive validity of contingent values does the nature of the good matter abstract because the contingent valuation mechanism cvm elicits verbal reports of maximum willingness to pay and not actual willingness to pay analysts have expressed doubts about the reliability and validity of contingent values for commodities such as environmental amenities this skepticism is usually attributed to the amorphous nature of the commodity and to peoples lack of familiarity or experience however our comparison of two commodities which lie at polar extremes of the private good public good continuum suggests that the nature of the good may have little influence on the reliability and predictive validity of the cvm instead aspects of the cvm itself e g explicit payment obligation may be more important for high intention behavior consistency

directional heterogeneity in distance profiles in hedonic property value models abstract in environmental economics hedonic property value hpv models have often employed distance from a localized environmental disamenity as a proxy for perceived risk the magnitude of a distance effect on housing prices however may depend upon the direction in which it is being measured we generalize conventional distance models to allow for continuously varying directional effects by converting from cartesian to polar coordinates a simple empirical example for housing prices around woburn massachusetts between 1988 and 1996 illustrates how failure to allow for directional heterogeneity can obscure otherwise statistically significant distance effects in hpv

on designing constructed markets in valuation surveys in this paper i consider some of the methodological issues involvedin designing valid contingent valuation cv scenarios i identifythe several parts of these scenarios and the design issues particularto those parts although my principal example is the scenario i andothers used in the exxon valdez oil spill study of the naturalresource damages to prince william sound alaska i generalize toother types of cv scenarios

on the choice of funtional form for hedonic price functions this study examines how errors in measuring marginal attribute pric es vary with the form of the hedonic price function in simulations consumers with known utility functions bid for houses with given attributes various forms of the hedonic function are estimated using equilibrium housing prices errors in estimating marginal attribute prices are calculated by comparing each consumer s equilibrium marginal bid vector with the gradient of the hedonic function when all attributes are observed linear and quadratic box cox forms produce lowest mean percentage errors however when some attributes are unobserved or are replaced by proxies linear and linear box cox functions perform best copyright 1988 by mit press

dealing with censored data from contingent valuation surveys symmetrically trimmed least squares estimation the purpose of this paper is to explore the use of a consistent and robust estimator when estimating a willingness to pay wtp equation using the censored data collected by a contingent valuation survey 1 mitchell and carson s payment card format 11 12 strongly encourages the respondent to give a wtp value that is zero or greater because payment cards do not normally include any negative values but some respondents who answer with a zero wtp may in fact have negative wtp as a simple example if people are asked about improving a salt water pond s water quality to the point that shellfish taken from it would be edible there may be individuals in the sample who use the pond for other recreational activities that would be hindered by the presence of people shellfishing in addition anyone who enjoys quietness around and on the pond also might want to be paid a certain amount to allow the ponds to be made shellfishable in brief not every public effect on net is a good to every affected person but anticipating the varieties of reasons for negative valuation is at least difficult if not impossible this was true in our research aimed

resource rights and markets in a general equilibrium model of production rights to a free resource lead to distributional deadweight losses in partial equilibrium the present paper examines related distortions in a general equilibrium model of production with output prices constant for the small open economy the free resource can result in lower output than a market with weak substitution in the other sector the free resource also leads to a convex production frontier implying a price increase lowers output in the sector regarding policy an import tariff export subsidy or price support would lower sector output these general equilibrium distortions increase the incentives to favor resource markets over rights

house prices during siting decision stages the case of an incinerator from rumor through operation abstract the impact of an undesirable land use on house prices is not constant over time previous proximity studies which employed only discrete changes in information such as an epa superfund site announcement ignored potentially important phases of the adjustment process this study explicitly measures how the effects of an undesirable land use evolve over the siting process and life of the disamenity some price response to rumors of a facility is indicated and the evidence that prices respond at groundbreaking before operation is strong the distance premium persists at least 7 years after the facility begins operations

can renewable energy be financed with higher electricity prices evidence from a spanish region abstract in this paper we estimate the willingness to pay for mix of renewable sources of electric power by means of a discrete choice experiment survey conducted in spain in 2010 two main categories of power supply attributes are explored source of renewable power wind solar and biomass and the origin of such power the findings suggest that most consumers are not willing to pay a premium for increases in the shares of renewable in their electricity mix for two of the three renewable sources considered wind and biomass an increase of the renewable mix would require a discount instead we record positive willing to pay for increases in the share of both solar power and locally generated power however preferences for types of renewable solar and wind are found to be heterogeneous by classifying respondents in two groups according to the implied importance of the share of renewable sources in their power mix we identify a market segment consisting of 20 of respondents that could promote renewable energy in the absence of subsidies this is because such a segment shows willingness to pay higher than the current feed in tariffs

markets for water rights under environmental constraints abstract the cumulative impact of pollutants on water quality at a given location along a river is a function of prior loadings as well as pollution and surface flows at that particular site the question of whether it is possible to maintain water quality under alternative mechanisms for allocating surface water and pollution rights is addressed we model the optimal allocation of surface water and pollution rights along a river with water quality constraints due to cumulative effects the shadow values of water and pollution rights are contingent on location it is shown that a nash equilibrium in a market for tradable surface water rights in conjunction with a market for pollution damages implements the optimal solution the market supports location specific prices for both consumptive water rights and pollution damages

giving respondents time to think in contingent valuation studies a developing country application abstract this paper evaluates whether the time given people to think about their responses to cvm valuation questions influences their answers our study was conducted in nigeria as part of an evaluation of rural households willingness to pay for public taps and private connections to improved drinking water systems respondents who were allowed time to evaluate the proposed water system bid significantly less than those who did not have that time moreover this conclusion was upheld regardless of whether the water system was a public tap or a private connection

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

contingent valuation techniques for assessing environmental impacts further evidence abstract this paper provides further evidence on the development and application of the iterative bidding technique used to assess environmental impacts three specific issues the hypothetical nature of the survey technique the questionnaire information structure and the bidding procedure starting point are examined theoretically and empirically to determine their effect on individual bid behavior the empirical results indicate that the importance of these influences may have been overstated in earlier studies

nonuse values in benefit cost analysis benefit cost analysis bca is a pragmatic realization of the theory of welfare economics much of the research associated with bca has sought to expand the types of benefits that can be measured in dollar terms with this research there has been a progressive movement of goods and services from the set without measures usually designated as intangibles in bca terminology to the set with for example the recreational services provided by projects associated with dams for hydroelectric power or flood control were regarded as intangible until the development of the travel cost model for estimating the demand for outdoor recreation sites one of the current frontiers in bca research is associated with modeling and measuring nonuse benefits in contrast to the past efforts with intangibles research on this topic has remained controversial with few direct effects on the practice of applied welfare economics there are two principal reasons for this outcome first there has not been an accepted set of definitions for nonuse benefits and second applied studies with empirical estimates of nonuse benefits have until recently been non existent clearly these problems are related a consistent set of definitions is a necessary prerequisite for empirical implementation i will argue that consistent definitions for nonuse benefits have been elusive because the conceptual frameworks used in the literature to describe its primary components option value and existence values are not mutually consistent in the process of demonstrating this result i will describe the elements of a consistent framework for treating both use and nonuse benefits and apply it in explaining some of the problems with the available empirical estimates of nonuse benefits

restricting the market for quota an analysis of tobacco production rights with corroboration from congressional testimony regulatory programs that restrict output levels often impose restrictions on the transfer of rights to produce or to use particular inputs in this paper we use a unique cross section time series data set from north carolina to quantify the welfare effects of transfer restrictions for poundage quota under the u s flue cured tobacco program we find that the deadweight costs of such restrictions are small but that the distributional effects are substantial we analyze congressional testimony on quota transfer legislation and conclude that our estimates of the distributional effects are consistent with expressed views of market participants

starting point bias in dichotomous choice valuation with follow up questioning abstract follow up questions are frequently used to improve the efficiency of dichotomous choice contingent valuation questionnaires however a number of authors e g 12 16 have noted a significant difference between the wtp distributions implied by initial and follow up question responses this paper investigates starting point bias as one explanation for the phenomenon we develop a model of starting point bias in the context of dichotomous choice questioning with follow up using a monte carlo simulation to illustrate the potential bias imparted to wtp estimates an application is provided based on data from a cv study in northcentral iowa

designing transactions without framing effects in iterative question formats abstract several studies document that iterative question formats used in contingent valuation studies produce anomalies in respondent behavior that appear to threaten the validity of welfare estimates by decomposing iterative question formats into their ascending and descending sequences we show that these anomalies occur only in ascending sequences we describe the conditions under which comparable patterns of behavior are likely to be found in other iterative question formats that begin with a discrete willingness to pay question we then develop a unified explanation of these anomalies using our model of framing based on prospect theory we provide the first head to head test of rival explanations of these behavioral patterns by developing refutable hypotheses for the strategic behavior yea saying anchoring and cost expectations models finally based on our own statistically robust model we show how these anomalies can be eliminated without loss of the statistical efficiency of most iterative question formats

directional heterogeneity of environmental disamenities the impact of crematory operations on adjacent residential values a hedonic study of residential house sales in rawlins wyoming was conducted to estimate the impact of an environmental shock from a new point source upon adjacent residential property values we use a unique data base of house sale prices and associated house attributes including structural and neighbourhood characteristics and geographic distances and directions from the source of the shock atmospheric emissions from a new crematory our data spans 27 months of house sales 7 months before and 20 months after the startup of crematory operations results indicate that proximity measured both in terms of direction and distance from the crematory imparts a statistically significant negative impact on average house sale prices an increase of 0 3 to 3 6 of average sale price for every one tenth mile increase up to one half mile in distance away from the crematory but depending on direction from the crematory this distance benefit increases somewhat with calendar time only for houses located west of

2006 presidential address water markets in the west prices trading and contractual forms rising urban and environmental demand for water has created growing pressure to reallocatewaterfromtraditionalagriculturaluses theevolutionofwatermarketshas beenmorecomplicatedthanthoseforotherresources inthispaper wefirstexplainthese differences by examining water rights and regulatory issues second we place our research in the context of the economics literature on water marketing third we present new comprehensive data on prices and the extent nature and timing of water transfers across 12 western states from 1987 to 2005 we find that prices are higher for agriculture to urban trades versus within agriculture trades in part reflecting the differences in marginal values between the two uses prices for urban use are also growing relative to agricultural use markets are responding in that the number of agriculture to urban transactions is rising whereas the number of agriculture to agriculture transfers is not further there is a shift from using shortterm leases to using multiyear leases of water and permanent sales of water rights this pattern underscores the need to consider the amounts of water obligated over time rather than examining only annual flows in assessing the quantities of water traded as is the common practice in the literature considering water obligated over time termed committed water we find significantly more is transferred and the direction of trading is different than if the focus is on annual flows finally the data reveal considerable variation in water trading across the states jel q2 n5 l5 k3

a note on the nonequivalence of import barriers and voluntary export restraints abstract this paper uses a general equilibrium approach to analyze the consequences of import barriers and voluntary export restraints with respect to international prices and domestic prices under the assumption of perfect competition in all markets it shows that the final outcome with respect to domestic prices depends on the way in which governments allocate the revenue arising from the restrictions the equivalence result obtained by using partial equilibrium is only one of the possible outcomes

estimating the effect of air quality spatial versus traditional hedonic price models author affiliation helen r neill department of environmental studies greenspun college of urban affairs university of nevada las vegas 4505 maryland parkway box 454030 las vegas nv 89154 4030 usa helen neill unlv edu corresponding authordavid m hassenzahl department of environmental studies greenspun college of urban affairs university of nevada las vegas 4505 maryland parkway box 454030 las vegas nv 89154 4030 usa david hassenzahl unlv edudjeto d assane department of economics college of business university of nevada las vegas 4505 maryland parkway box 456006 las vegas nv 89154 6006 usa djeto assane unlv edu acknowledgment the authors are grateful to the editor and two anonymous referees for valuable comments the authors wish to thank ms debra march director of the lied real estate institute at the university of nevada las vegas for supporting this research project with real estate data and mr russ merle senior planner from clark county for providing air quality data the views expressed in this paper do not necessarily reflect those of the lied real estate institute and clark county government the authors are responsible for any possible errors 1 introductiontraditionally ordinary least squares ols methods have been used for hedonic modeling ols has the advantage that it can be applied to large data sets it is limited however by its inability to account for spatial autocorrelation for example geostatistical approaches using maximum likelihood estimation mle can account for spatial autocorrelation but in turn are limited by current computing techniques to relatively small data sets i e sets of 1000 or fewer depending on the complexity of the model and number of variables consequently for large data sets modelers must either use ols and be hampered by inadequately specified estimates of relatively low significance or apply mle techniques to a sample of the data set these shortcomings suggest two major research questions the first question which is central to this paper relates to the robustness of competing methods of estimation here we contribute a method for estimating and predicting hedonic price models while controlling for spatial dependence of proximal homes the other question of general interest deals with the usefulness or validity of hedonic modeling for environmental characteristics that is the importance of air quality in explaining sales price of homes in order to evaluate these two questions we propose and test an approach that uses a block bootstrap method to account for spatial dependence in the data our two step procedure consists of first creating blocks of temporal and spatial information within a larger data set of home sales prices and then implementing the bootstrap by resampling from each block next we apply ols and geostatistical mle estimation techniques to generate and store coefficient estimates for each resample the stored sets of resamples then represent monte carlo simulations of the full data set for each of the estimation techniques these can be compared to evaluate the robustness of the methods based on their respective predictive powers our findings may be summarized as follows we find that the geostatistical mle method which accounts for spatial effects outperforms the traditional ols method in several ways theoretically the geostatistical mle method better represents the expected spatial autocorrelation between error terms empirically this method provides better results with respect to expected signs statistical significance and predictive power the block bootstrapping technique allows hedonic modelers to effectively address spatial autocorrelation for large data sets overall we find that under these simulated conditions measured air quality matters for our data set regardless of the method used the remainder of this paper contains five sections

a bayesian approach to assessing the robustness of hedonic property value studies hedonic price models are widely employed to estimate implicit prices for bundled attributes residential property value studies dominate these applications using a representative cross sectional property value data set we employ bayesian methods to translate a range of priors in covariate selection typical of hedonic property value studies into a range of posterior estimates we also formulate priors regarding measurement error in individual covariates and compute the ranges of resulting posterior means finally we empirically demonstrate that a greater and more systematic use of prior information drawn from one s own data and from other studies can break the collinearity deadlock in this data

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

procedural invariance testing of the one and one half bound dichotomous choice elicitation method the contingent valuation method for estimating willingness to pay for public goods typically adopts a single referendum question format which is relatively statistically inefficient as an alternative cooper hanemann and signorello 2002 propose the one and one half bound oohb format allowing researchers to question respondents about both a lower and higher limit on project costs thereby securing substantial gains in statistical efficiency using an experimental design we find that responses to oohb valuation questions fail crucial tests of procedural invariance we test various competing models of observed response patterns including strategic misrepresentation of standard preferences and nonstandard models of preference formation

option value a conceptual overview the importance of nonuser benefits to the process of efficiently allocating natural environments was first emphasized by krutilla 15 a decade and a half ago one of the components of these nonuser benefits is option value originally introduced by weisbrod 23 as relevant for assets that might be difficult to reproduce option value has been the subject of considerable debate perhaps the simplest approach to explaining the meaning of option value is to use an example consider an individual who is uncertain whether he or she will consume the services of a particular asset in the future furthermore assume this individual is also uncertain whether the asset will be available in the future should he

overcoming the barriers for biodiesel use in spain an analysis of the role of convenience and price abstract the aim of the paper is to analyse biodiesel market acceptance in spain in particular we study the intention to use biodiesel by spanish diesel car drivers and the factors explaining this intention to achieve this goal we developed a model of the intention to use biodiesel based on the theory of planned behaviour but extended in two ways the first one consists of the inclusion of two new predictors of the intention to use environmental self identity and biodiesel knowledge and the second the extension of the model to take into account the two barriers in the adoption of biodiesel in the market potential price premium and limited availability in the petrol stations this model has been specified as an ordered probit and estimated using data from a survey conducted in spain results indicated that apart from the attitudes towards biodiesel use the most important factors explaining the intention to use biodiesel are the biodiesel knowledge and the environmental self identity in other words the new predictors in the theory of planned behaviour model in addition the effects of all the factors attitudes subjective norms perceived behavioural control biodiesel knowledge environmental self identity and socio demographic characteristics on the intention to use were different depending on the price and the availability of the biodiesel in the market thus we can conclude that to analyse the intention to use biodiesel different price and availability scenarios should be taken into account empirical results indicated that to increase biodiesel use the best option is to increase biodiesel knowledge and environmental self identity

tariffs quotas and voluntary export restraints with and without internationally mobile capital this paper presents a general framework for comparing the effects of tariffs quotas and vers voluntary export restraints both with and without international capital mobility expressions for the shadow price of foreign exchange and the shadow price of capital under each type of trade restriction are derived and it is shown that although international capital mobility raises the welfare cost of tariff protection it lowers the welfare cost of quantitative restrictions in most cases the effects of exogenous shocks in the presence of quotas are intermediate between those in the presence of tariffs and those in the presence of vers tarifs douaniers contingentements et restrictions volontaires d l exportation quand le capital est ou n est pas mobile internationalement l auteur presente un cadre general d analyse qu il utilise pour comparer les effets de tarifs douaniers de contingentements et de restrictions volontaires a l exportation dans des contextes ofu le capital est ou n est pas mobile internationalement l auteur derive le prix fictif du change etranger et le prix fictif du capital sous l un et l autre types de restrictions au commerce et montre que meme si la mobilite internationale du capital augmente le cofut en terme de bien etre de la protection tarifaire elle reduit le cofut en terme de bien etre des restrictions sur les quantites echangees dans tous les cas les effets de chocs exogenes quand des contingentements existent sont toujours dans la fourchette entre ceux qu on observe quand des tarifs douaniers existent et ceux qui prevalent quand des restrictions volontaires i l exportation existent

more on the non equivalence of voluntary export restraints abstract this note demonstrates that vers limiting exporters to a percentage of the domestic market are not equivalent to other trade restrictions and that they can be inferior to equivalent import quotas even when the quota rents accrue to foreign exporters

option price estimates for water quality improvements a contingent valuation study for the monongahela river abstract we present the findings from a contingent valuation survey designed to estimate the option price bids for the improved recreation resulting from enhanced water quality in the pennsylvania portion of the monongahela river the findings are based on a survey design that used professional interviewers to conduct personal interviews determined from a representative sample of 393 households in addition the research suggests that protest bids and outliers be viewed similarly accordingly a new technique for identifying outlying responses is proposed the findings suggest that the question format affects the option price estimates and that criteria for determining the final sample of responses can have an important influence on contingent valuation results

option value a general approach this article examines a potential bias if expected consumer surplus is used to measure the benefits of a price change under uncertainty this bias which is called option value may be positive or negative a general framework is developed for analyzing the determinants of the sign of option value and this framework is applied to three types of uncertainty income uncertainty quality uncertainty and uncertainty over consumer tastes in the first two cases option value has a determinate sign however in the last case option value may be positive negative or zero in an unpredictable fashion

evidence of the effects of water quality on residential land prices we use hedonic techniques to show that water quality has a significant effect on property values along the chesapeake bay we calculate the potential benefits from an illustrative but limited water quality improvement and we calculate an upper bound to the benefits from a more widespread improvement many environmental hedonic studies have almost entirely ignored the potential for omitted variables bias the possibility that pollution sources in addition to emitting undesirable substances are likely to be unpleasant neighbors we discuss the implications of this oversight and we provide an application that addresses this potential problem o 2000 acadcmic prcss

option value an exposition and extension this article examines the role of the discount rate in making decisions that will have significant implications for the environment the authors begin by providing a rationale for discounting in general and by describing the main factors that determine

sensitivity of contingent valuation to alternative payment schedules insensitivity to payment schedule wherein respondents do not adequately differentiate between a one time payment and a series of payments may be an important but often overlooked factor in the design interpretation and use of contingent valuation studies several contingent valuation experiments involving a familiar private good and a less familiar environmental commodity indicate that although respondents distinguished between lump sum and periodic payment schedules implicit discount rates were very high suggesting that sensitivity to payment schedule is an important subject for further study

the choice of functional forms for hedonic price equations comment abstract rosen 13 freeman 4 halvorsen and pollakowski 6 and others have stressed that economic theory does not suggest an appropriate functional form for hedonic price functions 1 it consequently is reasonable to try several functional forms and utilize the multiple regression equation with the best performance in this spirit halvorsen and pollakowski 6 recommend using the box cox flexible functional form for hedonic analysis and measuring best performance with a goodness of fit test the box cox methodology has also been adapted in hedonic studies by goodman 5 linneman 10 blomquist and worley 1 and eberts and gronberg 3 2 the box cox is particularly suited for testing functional forms because many familiar forms such as semilog log linear and translog are subsets of the flexible box cox permitting nested hypothesis testing in this note we illustrate that the formal hypothesis testing advantage of the box cox functional form is purchased at the expense of other important goals the goal of most hedonic studies is to estimate the prices of the characteristics to measure the response to changes in the prices and or to predict future expenditures using a best fit criterion to choose functional forms does not necessarily lead to more accurate estimates of characteristic prices in fact the large number of coefficients estimated with the box cox functional form reduces the accuracy of any single coefficient which could lead to poorer estimates of specific prices second because any negative number raised to a noninteger real power is imaginary the traditional box cox functional form is not suited to any data set containing negative numbers third the box cox functional form may be inappropriate for prediction since the mean predicted value of the untransformed dependent variable need not equal the mean of the sample upon which it is estimated the predicted untransformed variable housing value will be biased the predicted untransformed dependent variable may also be imaginary fourth the nonlinear transformation results in complex estimates of slopes and elasticities which are often too cumbersome to use properly we discuss each of these drawbacks and quantify them when possible in the remainder of this note

measuring option prices from market behavior abstract option prices can be calculated from empirical demand models given knowledge of the utility theoretic structure implied by the demand specifications and the joint density of the random variables consumers face formulas for option price are given for three common weakly complementary demand specifications because it can be difficult to assess behavioral uncertainty and calculate option prices in practice knowledge of the sign of option value is important since it is a guide to the bias from ignoring this type of uncertainty the sign of option value is determined for sources of uncertainty that have proved elusive in previous treatments

bias in discrete response contingent valuation abstract the empirical literature on discrete response contingent valuation has found that seemingly innocuous changes in the statistical models estimated result in significantly different point estimates of willingness to pay this paper hypothesizes and tests several potential explanations for these results first it investigates and compares the biases inherent in single bounded and double bounded maximum likelihood estimation procedures and examines how they react to various bid designs and sample sizes then it examines the presence and identification of outliers in binary choice data and how these outliers influence estimation finally it presents an alternative approach to addressing the issue of outliers which explicitly acknowledges the possibility of upwardly biased response probabilities

statistical approaches to the fat tail problem for dichotomous choice contingent valuation if a cumulative density function esti mated from dichotomous choice data has an unre alistically fat right hand tail mean willingness to pay wtp will be overestimated truncating the range of integration results in a lower bound esti mate of the true mean wtp a normalization pro cedure proposed by boyle welsh and bishop 1988 unnecessarily depresses the estimate further a new statistical approach is presented that allows a best guess estimate of mean wtp because this estimate involves extrapolation beyond the range of the data it tends to be highly variable jel q21

contingent valuation in korean environmental planning a pilot application to the protection of drinking water quality in seoul this paper describes the application of the contingent valuation cv or willingness to pay wtp survey technique to a problem of public policy evaluation in seoul korea matters of principal interest include the definition of the problem and policy protection of seoul s drinking water supply from disruption by slugs of contaminants in the source river the han adjustments to standard cv techniques and assumptions required by the cultural and physical reality of seoul the representativeness of the spatially drawn sample estimation of the willingness to pay equation as a check on theoretical validity and the policy implications of the results the bottom line is asserted to be that cv may be especially valuable in countries such as korea that have serious environmental problems and a history of not producing data that might be used in alternative indirect benefit estimation exercises further it appears that if care is exercised in adjusting to local reality the method can be made as successful as it has been in the u s and northern europe

generating electricity with forest biomass consistency and payment timeframe effects in choice experiments abstract this paper presents a choice experiment analyzing the consumers preferences towards a policy for replacing conventional electricity with electricity generated from forest biomass the results show that consumers specially prefer the effects related to the lower risk of forest fires and to the decrease in pressure on non renewable resources the article also presents a methodological test in relation to the payment timeframe and its effect on marginal willingness to pay and consistency of responses using choice experiments the most frequent and realistic payments are associated with lower presence of inconsistent responses finally we cannot reject the null hypothesis of no effects of payment timeframe on marginal willingness to pay

hazardous waste sites and property values in the state of new jersey the polluter pays principal is justified as a deterrent to future pollution however the us experience suggests that it has considerably reduced the clean up rate of existing hazardous waste sites coaseapos s theorem is used as basis to propose that a partnership between the polluters and property owners near these sites will not only ease financial burden but will also speed up the pace of cleanup a hedonic price model is used to empirically estimate the impact of siting of hazardous waste sites on property values and determine the economic feasibility of the proposed partnership the empirical estimates are based on municipality level data from the state of new jersey the benefis from speedy clean up of hazardous waste sites to new jersey property owners are observed to exceed the cleanup cost of these sites

institutional path dependence in climate adaptation coman s some unsettled problems of irrigation districts that emerged in the american west in the late nineteenth and early twentieth centuries in response to aridity to facilitate agricultural water delivery use and trade raise the transaction costs today of water markets these markets are vital for smooth reallocation of water to higher valued uses elsewhere in the economy and for flexible response to greater hydrological uncertainty this institutional path dependence illustrates how past arrangements to meet conditions of the time constrain contemporary economic opportunities they cannot be easily significantly modified or replaced ex post