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

public preferences for hydrogen buses comparing interval data ols and quantile regression approaches we use a quantile regression qr approach to analyse contingent valuation estimates of public willingness to pay wtp for the air and noise pollution reductions associated with the introduction of hydrogen buses in london qr results show that variables that were not significant in interval regression or ordinary least squares regression become significant at certain quantiles along the wtp distribution in addition the determinants of wtp at the lower tail of the distribution differ from those at the higher end of the distribution our findings illustrate the usefulness of quantile regression methods for analysing contingent valuation data enhancing our understanding of the determinants of willingness to pay

identifying the warm glow effect in contingent valuation abstract this paper reports the results from a contingent valuation study designed to investigate the influence of warm glow in willingness to pay wtp responses interindividual differences in warm glow motivation are measured through a factor analysis performed on a list of attitudinal items the reported wtp measures fail to pass the scope test both socioeconomic variables and motivational factor scores are significant in the explanation of the individual wtp measures we compute cold wtp measures by taking out the effect of the warm glow motivation these cold measures satisfy both the scope test and hausman s adding up property

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

using factor analysis to identify consumer preferences for the protection of a natural area in portugal abstract this paper focuses on the application of factor analysis so as to identify consumer preferences for the protection of a natural area we combine the use of factor analysis with the valuation data obtained by contingent valuation survey the survey conducted via in person questionnaires in 1997 is targeted at the economic valuation of the protection benefits of the parque natural alentejano e costa vicentina a natural protected area along the southwest coastline of portugal factor analysis results show that the consumer is characterized by a three factor motivational structure use warm glow and non use motivation factor respectively we introduce these motivation factors together with the respondent s socio economic characteristics in the economic valuation function of such natural protected area estimation results show that consumer motivation factors have an econometrically robust role therefore consumer motivations are interpreted as crucial information for accurate social cost benefit analysis of alternative protection scenarios and thus serve as an important cornerstone in designing an effective and broadly accepted management policy for the parque natural alentejano e costa vicentina

confronting the environmental kuznets curve t he environmental kuznets curve posits an inverted u relationship between pollution and economic development kuznets s name was apparently attached to the curve by grossman and krueger 1993 who noted its resemblance to kuznets s inverted u relationship between income inequality and development in the first stage of industrialization pollution in the environmental kuznets curve world grows rapidly because people are more interested in jobs and income than clean air and water communities are too poor to pay for abatement and environmental regulation is correspondingly weak the balance shifts as income rises leading industrial sectors become cleaner people value the environment more highly and regulatory institutions become more effective along the curve pollution levels off in the middle income range and then falls toward pre industrial levels in wealthy societies the environmental kuznets curve model has elicited conflicting reactions from researchers and policymakers applied econometricians have generally accepted the basic tenets of the model and focused on measuring its parameters their regressions typically fitted to cross sectional observations across countries or regions suggest that air and water pollution increase with development until per capita income reaches a range of 5000 to 8000 when income rises beyond that level pollution starts to decline as shown in the conventional ekc line in figure 1 in developing countries some policymakers have interpreted such results as conveying a message about priorities grow first then clean up numerous critics have challenged the conventional environmental kuznets curve both as a representation of what actually happens in the development process and as a policy prescription some pessimistic critics argue that crosssectional evidence for the environmental kuznets curve is nothing more than a

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

calculating the value of time spent collecting water some estimates for ukunda kenya abstract this article presents two procedures for estimating the value of time spent hauling water in developing countries both approaches are used to derive estimates of the value of time for households in ukunda kenya the results indicate that households in this village place a surprisingly high value on the time they spend collecting water a value approximately equivalent to the wage rate for unskilled labor these findings suggest that the economic benefits of improved water services in developing countries may be much greater than is commonly realized

discrete choice experiments in developing countries willingness to pay versus willingness to work a concern when conducting stated preference valuation studies in rural developing or very low income contexts is the use of monetary willingness to pay wtp estimates in circumstances where cash incomes are extremely low a significant proportion of the population are not engaged in waged labour and the exchange of goods or services is augmented through barter or work exchange the role of money is likely to be different from that within an urban developed setting as such ability to pay using money may be impaired and downwardly biased when compared with other mediums of exchange in recognition of this several studies have used hypothetical labour contributions as payment vehicles and a common finding is that households are more often willing to contribute labour than they are money in this paper we present the results of a split sample dce using money and labour contributions as payment vehicles for improved drinking water quality in kandal province cambodia we find little differences between the payment vehicles in terms of attribute non attendance marginal utilities of attributes or derived welfare values we argue that this provides support for the use of wtp in rural developing areas where there are functioning labour markets

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

differences in demand for watershed services understanding preferences through a choice experiment in the koshi basin of nepal abstract in this study we undertake a choice experiment in order to identify differences in local demand for watershed services in the koshi basin of nepal we first examine the possibility of using a non monetary numeraire to estimate household willingness to pay for watershed services survey results indicate that while some 50 of the population is willing to pay in monetary terms for environmental services this number increases to 72 when asked to contribute in labor time social benefits from environmental services are 1 4 to 2 2 times higher in labor hours relative to benefits estimated in monetary terms our findings suggest that cash constrained rural households in developing countries are more likely to express their demand for local environmental services by offering their time rather than making a monetary payment our results also suggest that locational differences matter downstream community members who practice commercial vegetable farming have a higher demand for watershed services and are willing to pay a third more than upstream farmers for these services

green for green the perceived value of a quantitative change in the urban tree estate of new zealand abstract the urban tree estate impacts on the quality of urban life through the provision of a series of benefits that are ecological aesthetic social and economic in nature most of these benefits do not have a market price and exact information on the type of values people attach to urban trees is scarce the optimal allocation of resources towards the management of this natural asset is therefore problematic this study measures by contingent valuation the perceived monetary value of avoiding a 20 decrease in the urban tree estate of 15 cities in aotearoa new zealand the results reveal that on average households would be willing to pay around 2003 nzd 184 annually for the avoidance of a 20 reduction in their local urban tree estate with the commitment covering a period of 3 years half of the households would be willing to pay less than nzd 105 while the other half would be willing to pay more whether residents were willing to pay was influenced by the magnitude of the requested contribution bid the perceived seriousness of the 20 loss qualification and the strongest motivation for taking care of trees when using volunteer work as a metric for the valuation 66 of the sample agreed to contribute 4 h of volunteer work and 55 of those who refused to pay the contingent bid said yes to contributing in this form half the sample was dissatisfied with the number of trees in their cities the great majority wanting more trees the respondents indicated different importance levels for a series of benefits and negative effects associated with city trees aesthetics fresh air and trees representing nature in the city and bringing wildlife into the urban environment were the most highly regarded benefits while trees causing drainage problems generated the most concern the diverse motives given for interest in city trees highlighted the difficulties associated with measuring the total economic value of changes in this urban natural capital due to the non use bequest and existence value components

prescription drug use under medicare part d a linear model of nonlinear budget sets abstract medicare part d enrollees face a complicated decision they dynamically choose prescription drug consumption in each period given difficult to find prices and a nonlinear budget set we use part d claims data to estimate a flexible model of consumption that accounts for nonlinear prices dynamic responses and salience we use reduced form price responses from a linear regression of consumption on coverage range prices to compare performance under several models of behavior we find small price elasticities substantial myopia and that salient characteristics impact consumption beyond their effect on prices a hyperbolic discounting model with salience fits the data best

the response of drug expenditure to nonlinear contract design evidence from medicare part d we study the demand response to non linear price schedules using data on insurance contracts and prescription drug purchases in medicare part d we exploit the kink in individuals budget set created by the famous donut hole where insurance becomes discontinuously much less generous on the margin to provide descriptive evidence of the drug purchase response to a price increase we then specify and estimate a simple dynamic model of drug use that allows us to quantify the spending response along the entire non linear budget set we use the model for counterfactual analysis of the increase in spending from filling the donut hole as will be required by 2020 under the affordable care act in our baseline model which considers spending decisions within a single year we estimate that filling the donut hole will increase annual drug spending by about 150 or about 8 percent about one quarter of this spending increase reflects anticipatory behavior coming from beneficiaries whose spending prior to the policy change would leave them short of reaching the donut hole we also present descriptive evidence of cross year substitution of spending by individuals who reach the kink which motivates a simple extension to our baseline model that allows in a highly stylized way for individuals to engage in such cross year substitution our estimates from this extension suggest that a large share of the 150 drug spending increase could be attributed to cross year substitution and the net increase could be as little as 45 per year

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

allocation of fixed costs in distribution networks with distributed generation in this paper we propose a method for the allocation of fixed capital and nonvariable operation and maintenance costs at the medium voltage mv distribution level the method is derived from the philosophy behind the widely used mw mile methodology for transmission networks that bases fixed cost allocations on the extent of use that is derived from load flows we calculate the extent of use by multiplying the total consumption or generation at a busbar by the marginal current variations or power to current distribution factors pidfs that an increment of active and reactive power consumed or generated in the case of distributed generation at each busbar produces in each circuit these pidfs are analogous to power transfer distribution factors ptdfs unlike traditional tariff designs that average fixed costs on a per kwh basis across all customers the proposed method provides more cost reflective price signals and helps eliminate possible cross subsidies that deter profitable in the case of competition or cost effective in the case of a fully regulated industry deployment of dg by directly accounting for use and location in the allocation of fixed costs an application of this method for a rural radial distribution network is presented

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

determinants of visitors willingness to pay for the national marine park of zakynthos greece abstract we examined the influence of visitors profile information sources environmental dispositions and visit evaluation on visitors willingness to pay wtp for the national marine park of zakynthos regarding wtp amounts pledged parameters of visit evaluation were the most significant predictors the estimated annual revenue that could be gained could cover the operating costs of the protected area management body visitor and visit characteristics were not significant determinants of visitor responses to the payment principle question while they explained a relatively small amount of variation in the wtp amount multiple regression model nationality was not a significant predictor of wtp all the same greek visitors showed more signs of pro environmental attitudes than foreign ones non use values dominated over use values and higher wtp amounts were associated with bequest value an alternative classification of the valuation system alleged to justify wtp is proposed where option value could be arranged together with use value components under the assumption that future use could still be regarded as another form of use value moreover existence and bequest values could be approached separately under the hypothesis that the former is expected to be associated with relatively lower wtp amounts pledged while the latter is expected to lead to relatively higher wtp amounts our study adds to the complexity and context dependency of wtp determinants park managers are suggested to organize environmental education programs that could decrease visitors consensus estimation error and act as a feedback through word of mouth information gained by friends and relatives

economic value of cedar relics in lebanon an application of contingent valuation method for conservation abstract the cedar forests in lebanon give shelter to a rich biodiversity and they constitute important mountainous relic habitats harboring a wide range of endemic rare and threatened species and species with economic potential these forests once covering the eastern and western mountain chains have been the providers of quality timber for the region in historical times the ancient practices have left the country with only 12 forest relics distributed on the mount lebanon chain even though recognized worldwide as flagship species and sites of cultural religious and historical values these forests have attracted limited international funds for their conservation these funds proved not to be sustainable for long term conservation plans therefore a system for securing local funds for the protection of cedar forest is needed in this context this research study was designed having three main objectives which are firstly to illustrate the differences in the value of cedar forests between citizens and villagers users and non users secondly to identify the best ways to collect local funds and design other tools involving for example public participation needed in setting out a sound strategy for the conservation of the cedar forests thirdly to use the findings of this study as a tool to investigate in further studies and to inform and influence decision makers about the importance of a long term conservation and sustainable use program as well as to consider a strategic approach for its sustainable use using an open ended questionnaire contingent valuation method is applied to highlight the importance of well informed population to obtain the willingness to pay wtp for a scenario to conserve cedar forests in lebanon to increase their surface areas to promote sustainable activities and to explore the degree of importance of their attributes and of the option bequest and existence values as perceived by the lebanese population the wtp is tested by using a regression model relating wtp to all socio demographic variables the questionnaires 416 were performed in three main cities in lebanon and in villages surrounding two nature reserves the difference in the individual wtp value for users and non users was approximately us 20 per household for both villagers and city dwellers the frequency of the zero wtp value was higher for non users the results obtained encouraged a national initiative to create a national trust fund and to integrate symbolic fees on the amenity services associated with cedar forests

ethical issues with contingent valuation surveys in developing countries a note on informed consent and other concerns this article calls attention to some of the problems involved in the ethical review and oversight of contingent valuation research in developing countries including the question of what informed consent means in a cross cultural context a central area of concern is that contingent valuation cv surveys have the potential to confuse or mislead respondents this can cause an individual respondent who is confused or misled to take actions that could harm himself or members of his household the spread of misinformation and confusion among the study population could also influence the policy process itself in unintended and unfortunate ways perhaps harming the respondent or others there are three main ways in which cv surveys can mislead or confuse an individual respondent and spread confusion in the study population 1 inaccurate provision of background information in the cv scenario 2 the description of the hypothetical market and 3 the use of the referendum elicitation procedure and other split sample experiments commonly used by cv researchers the difficulties of cross cultural communication and cooperation add to the ethical complexity of conducting cv surveys in developing countries three cross cultural problems deserve special attention by both institutional review boards and contingent valuation researchers i prom ises of anonymity and the right of respondents not to participate ii power asymmetries between international and local members of the contingent valuation research team and iii compensation of respondents

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

eliciting preferences for public goods in nonmonetized communities accounting for preference uncertainty one major challenge when conducting contingent valuation studies in developing countries is the choice of the appropriate payment vehicle since regular cash income does not exist for the majority of the population and market integration is low households in rural areas have less experience with monetary exchanges in these cases labour time may be a more appropriate payment vehicle a common finding of studies using labour time as the payment vehicle is that households are more often willing to contribute working time as compared to money however so far empirical evidence is missing if the labour time elicitation format reduces respondent s uncertainty of contributions in this study we analyze and compare uncertainty of people s stated willingness to contribute wtc time and money for a local public good in a non monetized small scale community in bougainville papua new guinea we do so by establishing an open ended method for eliciting people s wtc the range wtc method which elicits the upper and lower bound of a person s wtc we find that uncertainty is reduced when respondents are asked for labour time contribution instead of monetary contributions thus we provide empirical evidence that indeed labour time is the preferred to money in the elicitation of stated wtc in non monetized communities