Weak and strong sustainability indicators, and regional environmental resources

Many attempts to operationalize the ecological concept of sustainability have been undertaken by the economics profession during recent years. It seems that many mainstream economists tend to focus their research on the assumption of substitutability between man-made (manufactured) capital and natural capital (natural resources, goods and services). The crucial points of this discussion can be seen especially in contributions by R. Solow (on a more theoretical level) and by R. Atkinson and D. Pearce (on an empirical level) who all plead for at least partial substitutability. As H. Daly has pointed out, the assumption of substitutability cannot be drawn in the search for an adequate treatment of natural resources in economic and ecological modeling and policy. The paper tries to clarify some questions regarding weak and strong sustainability indicators as well as sustainability rules for dealing with regional natural resources. In the first part of the paper, the assumption of substitutability is discussed in various aspects. Given weak sustainability indicators, calculating the ?sustainability" of a regional system (or national economy) becomes almost trivial. If the rate of depreciation of natural capital is at least offset by savings (accumulation) of man-made capital then the economy is on a sustainable development path. Besides the missing of the social ?branch" of sustainability, the depreciation-savings approach lacks understanding of the fundamental objections against monetizing natural resources (e. g. biodiversity). Some crucial aspects in this context are discussed in the paper (e. g. lexicographic preferences, ?consumer"-vs.-?citizen" approach). The strong sustainability indicators are in favor of different approaches, e. g. the save-minimum-approach. The second part of the paper deals with practical sustainability rules on a regional level regarding water resources. If sustainability as a concept for future ecological, economic and social development is taken seriously, only physical constraints (taking time as an additional factor of production into account) and an applied precautionary principle can indeed lead to sustainability. Congress topic: Environmental Management, Sustainability and Development Keywords: Weak/Strong Sustainability Indicators; Regional Indicators for Sustainable Development

The Development of a Common Investment Appraisal for Urban Transport Projects.

In December 1990 we were invited by Birmingham City Council and Centro to submit a proposal for an introductory study of the development of a common investment appraisal for urban transport projects. Many of the issues had arisen during the Birmingham Integrated Transport Study (BITS) in which we were involved, and in the subsequent assessment of light rail schemes of which we have considerable experience. In subsequent discussion, the objectives were identified as being:- (i) to identify, briefly, the weaknesses with existing appraisal techniques; (ii) to develop proposals for common methods for the social cost-benefit appraisal of both urban road and rail schemes which overcome these weaknesses; (iii) to develop complementary and consistent proposals for common methods of financial appraisal of such projects; (iv) to develop proposals for variants of the methods in (ii) and (iii) which are appropriate to schemes of differing complexity and cost; (v) to consider briefly methods of treating externalities, and performance against other public sector goals, which are consistent with those developed under (ii) to (iv) above; (vi) to recommend work to be done in the second phase of the study (beyond March 1991) on the provision of input to such evaluation methods from strategic and mode-specific models, and on the testing of the proposed evaluation methods. Such issues are particularly topical at present, and we have been able to draw, in our study, on experience of:- (i) evaluation methods developed for BITS and subsequent integrated transport studies (MVA) (ii) evaluation of individual light rail and heavy rail investment projects (ITS,MVA); (iii) the recommendations of AMA in "Changing Gear" (iv) advice to IPPR on appraisal methodology (ITS); (v) submissions to the House of Commons enquiry into "Roads for the Future" (ITS); (vi) advice to the National Audit Office (ITS) (vii) involvement in the SACTRA study of urban road appraisal (MVA, ITS

Estimating economic values for a sustainable energy supply : a case study in Northern Cyprus

PhdStated preference techniques are widely used to evaluate an individual’s preferences in the context of environmental economics. The aim of this thesis is to explore the use of different stated preference methods to estimate willingness to pay (WTP) for micro-generation solar systems. The case study setting is North Cyprus. Households’ preferences and choices for generating electricity on their premises were assessed using contingent valuation (CV) and choice experiments (CEs). CV was employed to estimate individuals’ WTP for micro-generation solar technology, and also willingness to accept (WTA) compensation for loss of amenity and feed-in tariff. The data comprised a survey of 369 individuals through the face-to-face interviews. The survey was split between two separate CV experiments, one using open-ended questions, and the other in the double-bounded format. A Becker-DeGroot-Marschak (BDM) incentive compatible experimental approach was adopted with a cheap-talk to reduce strategic behaviour and hypothetical biases. Additionally, a CE survey of 205 respondents was carried out to evaluate the attributes that influence respondents’ choices in the adoption of micro-generation solar panels. The attributes comprised a government subsidy, feed-in tariff, investment cost, energy savings, and the space required for installation. Respondents were asked to choose their most preferred alternative from two hypothetical scenarios of attributes and the status quo (do nothing). One of the important findings of this thesis is the significance of the suggested experimental approach, which enabled the convergence of WTA/WTP values. The contribution of this thesis relies on the use of BDM with CV, as well as the CE, to value ii preferences for micro-generation solar panel adoption. This is the first application of the BDM and CE methods to evaluate solar technology in Northern Cyprus.AS Bank for providing the partial fundin

Contingent valuation of river pollution control and domestic water supply in Kenya

The basic theme of this study is that determination of the economic value of water resources is a necessary condition for rational decision-making and management of these environmental assets, and their associated public goods, in developing countries. The research particularly evaluates the contingent valuation (CV) method as a technique for evaluating increments and decrements in environmental and natural resource service flows, and estimates households' evaluations for improvements in river water quality and connections to piped water supply for domestic uses. The study objectives were to (a) estimate the economic value of piped water supply and improved water quality in the Nzoia River Basin, Kenya, (b) evaluate the feasibility of using the CV technique to value an environmental amenity and its related quasi-public service in rural settings where respondents have limited education and monetary resources, (c) examine the role of temporal dimensions of bid payments (i e, frequency of payments) in contingent values for environmental commodities, (d) empirically investigate embedding effect bias in contingent valuation of improvements in river water quality improvement in a less developed economy, and (e) evaluate the role of water connection charges in households' willingness to hook onto piped water supply in Webuye Division, Kenya. Empirical analysis and estimates of the non-market value which local people assign to water quality in the Nzoia River and a private household water connection is based on a detailed survey of a representative sample of 311 households in Webuye Division of Bungoma District, Kenya. In an on-site survey carried out in May through September 1995, contingent markets were developed for the two goods, (1) improved river water quality, and, (2) provision of a private connection to water supply. The corresponding willingness to pay (WTP) values are explained using Ordinary Least Square regression models. Whatever the good, the WTP is seen to increase with income. However, the effects of other factors are more specific to the contingent good. In order of strength, the other determinants of WTP "quality" are sex, age, household ranking of status of domestic water source, distance from river to household residence, the other factors affecting WTP "connections" are existing source of water supply, household size, ranking of river water quality, and age of household head. On the whole, residents accepted the exercise of contingent valuation and were willing to pay important amounts (Ksh 459 and Ksh 386 on average per household per year, respectively, for goods 1 and 2). Discussion issues include policy significance of the resulting WTPs in terms of the demand for river pollution control and individual household water connections, the effect of the goods upon the CV evaluation process, the "Third World" impacts of frequency of payments in contingent valuation, including perceived-frequency and income-smoothing routes, the embedding effect in WTP values for water pollution abatement in the Nzoia River basin, the importance of pricing influences, specially payment profiles for initial connection charges, on household decisions to connect to piped water systems, and limitations of the study

An economic analysis of concentrator photovoltaic technology use in South Africa: a case study

South Africa relies heavily on fossil fuels, particularly coal, to generate electricity and it is a well known fact that the use of fossil fuels contributes to climate change, as it produces greenhouse gases (GHGs). In fact, internationally South Africa is the 17th highest emitter of GHGs (Congressional Research Service (CRS), 2008). Coupled with the environmental consequences of fossil fuel use, South Africa has a further responsibility of addressing the inherited backlog of electricity provision to the rural, and previously disadvantaged communities. In an attempt to address these two problems, the government issued the White Paper on Renewable Energy. In this paper, renewable energy alternatives are proposed to replace a portion of traditional electricity generating methods. Concentrator photovoltaic (CPV) energy generation is one such renewable option available to government. CPV uses optic elements (such as lenses) to concentrate sunlight onto solar cells. Owing to the light being concentrated, the cells in CPV use less semiconductor material, which makes them more efficient in comparison to conventional photovoltaic (PV) cells. CPV is a technology that operates well in regions with high solar radiation. As such, South Africa is particularly well suited for this technology, with average solar radiation levels ranging from 4.5 to 6.5 05 ℎ/. CPV is also well suited for off-grid application, which addresses electricity demand in remote rural areas. This study is an economic project analysis of the installation, operation, maintenance, and decommissioning of CPV technology in a rural area in the Eastern Cape, South Africa. The study area chosen for this purpose is the Tyefu settlement in the Eastern Cape. Tyefu was deemed ideal for this type of analysis due to four characteristics. Firstly, Tyefu is a remote rural settlement at the end of the national grid. Secondly, the community is very poor and previously disadvantaged. Thirdly, many households are without Eskom generated electricity. Lastly, the study area is located in an area with ideal irradiance levels for CPV. Two methods of economic project analysis are applied to this case study, namely a costbenefit analysis (CBA) and a cost-effectiveness analysis (CEA). Additionally, two types of CBA are performed, namely a private CBA and a social CBA. The private CBA evaluates the Tyefu electrification project from a private investor's perspective and the social CBA evaluates the project from society's point of view. The CEAs carried out compare the costeffectiveness of the traditional PV technology to that of CPV in terms of private and social costs. The private costs and benefits of the CPV project were identified and valued in terms of market prices. Then, this cost benefit profile was used to calculate net benefits which in turn were discounted to present values using a private discount rate of 6.42 percent. Three decision making criteria were generated, namely the net present value (NPV), the internal rate of return (IRR) and the benefit cost ratio (BCR). Sensitivity analysis was carried out by varying the private discount rate and the bidding price. The social costs and benefits of the CPV project were identified and valued in terms of shadow prices. This cost benefit profile was used to calculate net benefits. The net benefits were discounted to present values using a composite social discount rate equal to 5.97 percent. The same decision making criteria used in the private CBA were used in the social CBA and a sensitivity analysis was completed by varying the social discount rate. In terms of the private CEA, the costs were identified and valued in terms of market prices. All costs were brought to present values using the private discount rate of 6.42 percent. In terms of the social CEA, the costs were identified and valued in terms of shadow prices. All costs were brought to present values using the social discount rate of 5.97 percent. The cost-effectiveness (CE) ratios calculated have identical denominators since the annual output for both technologies are identical - both CPV and PV systems deliver 30 300 kWh per annum. This output is based on the demand of the given case study. The private CBA showed unfavourable results. The private CBA has a NPV of R2 046 629.01, the IRR is undefined (this is due to no sign change being present in the cost benefit profile), and has a BCR of 0.365. However, the social CBA yielded positive results, with a NPV of R125 616.64, an IRR of 8 percent (which exceeds the social discount rate of 5.97 percent), and a BCR of 1.045. The CEA showed that the CPV is more cost-effective than the traditional PV both in terms of private and social costs. The private CE ratio of CPV is R4.23/kWh compared to PV's CE ratio of R4.39/kWh. Similarly, the social CE ratio of CPV is R3.51/kWh compared to PV's CE ratio of R3.69/kWh. CPV rollout appears to be socially efficient on a small scale according to the social CBA. Consequently, the CPV project is not seen as desirable in terms of the private CBA as the benefit (income received per kWh) in the private analysis is too small to outweigh the costs of implementing and running a CPV plant in Tyefu. On the other hand, a redeeming factor is that CPV may be feasible privately, for large scale applications. A major reason for the CPV project not being appealing to private investors is that the maximum bidding price of R2.85/kWh (as at August 2011) is not high enough for private investors to undertake the CPV project. The sensitivity analysis of the bidding price showed that the bidding price of R2.85/kWh needs to be increased in the range of 250 percent (R7.13/kWh) and 300 percent (R8.55/kWh) for a great enough incentive to exist for private investors. It is thus recommended that policymakers take this into consideration when formulating policy. In terms of the social CBA, it is recommended that government undertake CPV projects of this kind, as it will be a socially desirable allocation of resources. If government were to pursue these types of projects, it is recommended that CPV be implemented as it is more cost effective than PV

Supporting Decisions: Understanding natural resource management assessment techniques

Report to the Land and Water Resources Research and Development Corporation. This document presents a review of NRM decision support techniques. It draws upon previous studies in the fields of management science, operations research, environmental economics and natural resource management. The objectives of the document are to: Explain the workings of the more significant (representative) methods of NRM decision support (including the latest developments); Discuss how these decision support methods may influence the outcome of NRM decisions; and Provide practicing NRM decision makers with guidance for choosing which methods to apply.Australia;natural resource management;assessment;decision support;

Valuing the environmental benefits of reduced acid deposition in the semi-natural environment

Acid deposition is a present and future cause of environmental damage in vulnerable areas of Scotland important for nature conservation and salmon fishing. The UK government, in cooperation with other European states, has agreed to substantial reductions in emissions of SO2, the primary cause of acidification. Although the cost of abatement will be extremely high little effort has been made to value the environmental benefits of ecosystem recovery. This partly reflects the difficulties involved in establishing reliable dose-response functions that can predict long-term ecological change for acidified ecosystems, but also the problem of providing a monetary estimate for biodiversity losses which have no market value. This study aims to generate reliable estimates of the future economic benefits generated by recovery from acidification in the seminatural environment of Scotland. The Contingent Valuation Method is applied to value the non-use benefits of abatement under a range of acidification scenarios. Average household willingness to pay (WTP) was £247 and £351 per year when faced with low and high damage , with a present value in excess of £9 and £13 billion respectively. WTP was not influenced by future recovery level or rate or recovery. When faced with risky outcomes respondents were found to be risk averse when both environmental gains and losses are considered. A hedonic price model, which links market data to changes in water chemistry and fish populations predicted by the MAGIC model, was used to estimate the economic benefits to the rod and line salmon fishery. The present value of the benefits to the Scottish salmon fishery were estimated to be £3.7 million. Non-use benefits associated with recovery from acidification therefore greatly outweigh user benefits but may be prone to hypothetical bias. Further research into scope effects in CVM studies is required, and the potential to calibrate CVM responses in line with real economic commitments should be investigated

Cape Wind: Public values and perceptions Application of contingent valuation method

The Cape Wind proposal to build 130 turbines in Nantucket sound has been a central figure in development of renewable energy in New England. The aim of this study was two fold. First, the contingent valuation method was used to estimate an economic value the public has on policy for the preservation of Nantucket sound, within the scopes of the project. The second goal was to identify lessons that could be learned from the Cape Wind proposal and applied to future renewable energy projects in New England. Results revealed that the public has a positive economic value for a policy that would allow the resources of Nantucket Sound to be used as a wind park. Lessons that can be applied to future renewable energy developments include increasing public involvement in the early stages of planning and increasing public education on renewable energy