A Choice Modelling Approach for Assessment of Use and Quasi-Option Values in Urban Planning for Areas of Environmental Interest

This study adopts a discrete choice modelling methodology to evaluate individuals’ preferences over planning alternatives for an urban site of environmental interest. Since such projects involve some uncertainty and irreversibility, a special attention is devoted to the estimation of the quasi-option values which are associated to project development. Two distinct measures for the quasi-option value are estimated, and both coefficients indicate that the public places a significant value on reduction of the possibility of adverse irreversible effects: a more prudent development strategy is valued about four times more than a procedure that provides a lesser hedge against undesired outcomes. Furthermore, the study involved elicitation of intertemporal preferences over projects with different time spans, and estimation of the implicit discount rates: the values obtained seem high if compared to standard discount rates applied to public projects, but not far from current interest rates on consumption.Urban Planning, Environmental Values, Choice Modelling, Use Values, Quasi-option Values, Discounting

The Copula Approach to Sample Selection Modelling: An Application to the Recreational Value of Forests

The sample selection model is based upon a bivariate or a multivariate structure, and distributional assumptions are in this context more severe than in univariate settings, due to the limited availability of tractable multivariate distributions. While the standard FIML estimation of the selectivity model assumes normality of the joint distribution, alternative approaches require less stringent distributional hypotheses. As shown by Smith (2003), copulas allow great flexibility also in FIML models. The copula model is very useful in situations where the applied researcher has a prior on the distributional form of the margins, since it allows separating their modelling from that of the dependence structure. In the present paper the copula approach to sample selection is first compared to the semiparametric approach and to the standard FIML, bivariate normal model, in an illustrative application on female work data. Then its performance is analysed more thoroughly in an application to Contingent Valuation data on recreational values of forests.Contingent valuation, Selectivity bias, Bivariate models, Copulas

Stima della Domanda Turistica nel Parco Marino della Maddalena: un'Applicazione del Metodo della Valutazione Contingente

In questo lavoro si utilizza il metodo della valutazione contingente per stimare il potenziale incremento della domanda turistica nel territorio della Maddalena, in seguito alla creazione del Parco Marino. Dopo una discussione di alcuni aspetti metodologici, viene presentata l’analisi econometrica dei dati. Vengono stimate e testate diverse specificazioni di un modello generale di tipo Tobit. I risultati mostrano che, condizionatamente alla creazione di specifici servizi turistici, le potenzialità della domanda sono interessanti

Application of the ML Hausman approach to the demand of water for residential use: heterogeneity vs two-error specification

This paper presents an application of two ML models to the analysis of residential demand of water: the heterogeneity and the two-error model, both apt to model demand in presence of a kinked budget constraint. The heterogeneity model is especially suitable when the distribution is characterized by a strong clustering around the kinks. Since in practice observations can be very close, but not exactly at the kink, its application may require the definition of an interval of data around the kink, so that the observations falling inside this interval are attributed to the kink. We propose a procedure, based upon the estimates obtained from the twoerror model, to define this interval. In this application we find that the heterogeneity model allows to obtain more efficient estimates than the two-error model for the parameter of principal interest, i.e. the coefficient of the price variable

Option values and flexibility preference

Preference for flexibility is a behavioral attitude displayed by people that prefer reversible to irreversible actions, and that are willing to pay a premium in order to maintain the possibility of changing their decision. This paper provides a functional characterization of preference for flexibility, based on the notion of option value. The proposed theory is shown to be useful to explain the success of marketing policies that guarantee reimbursement in consumption goods and financial markets. Moreover, it is possible to interpret some "puzzles" about observed economic behavior: for example, choice of apparently inferior solutions when economic, or political, choices involve high degrees of irreversibility

Evaluation of likelihood based tests for non-nested dichotomous choice contingent valuation models

Distributional assumptions are crucial in the estimation of the value of public projects assessed by means of contingent valuations analyses, and it would seem obvious that tests for model specification should play an important part in the statistical analysis. It can be observed, though, that when the competing hypotheses are non nested, the choice of the model is often based on heuristic grounds, or, at most, on deterministic selection model criteria such as Akaike’s (1973). In this paper we study two alternative, probabilistic, approaches to checking model specification, that, like Akaike’s, are based on the Kullback-Leibler Information Criterion (KLIC): the model selection testing proposed by Vuong (1989) and the non nested model test proposed by Cox, in the simulated approach of Pesaran and Pesaran (1993). The three approaches are confronted by comparing their performance in selecting among different contingent valuation models applied to simulated data. Our preliminary results seem to warrant the use of Vuong’s test, complemented in same cases by the application of the Cox test

Analysis of the soial acceptance of PV and BIPV technologies in Mediterranean cities

This paper provides an analysis of six Mediterranean countries as regards the attitudes and preferences on solar technologies. It analyses the social acceptance of PV technologies both in the private dimension (i.e. willingness to install a specific PV system) and in the public dimension (i.e. acceptability of specific BIPV applications in the urban context where the individual resides). We designed an original experiment, using simulations of BIPV applications in residential buildings representative of each city, in order to elicit preferences for different technological and aesthetic solutions, conditional on different levels of information on the cost effectiveness of each option. Results show the positive influence of awareness of benefits, subsidies, “neutral” information and peer effect on the potential adopter of PV technologies; a positive attitude and attachment toward the city also plays an important role. Similar results are found when we examine the social acceptability of different PV applications on residential buildings in the urban context. A comparative analysis across countries reveals that Italian, Tunisian and Jordanian respondents seem the most interested in PV technologies, while Spanish respondents focus on negative aspects associated with a PV investment. Lebanese and Egyptian respondents are in between the two positions

Politiche non sostenibili per lo sviluppo sostenibile. Il caso del Parco del Gennargentu

International experience in environmental protection planning suggests that conservation projects can be successfully realized only if associated to socio-economic promotion, while taking account of possible distortions in the distribution of benefits. Furthermore, participation of local people both in management and in planning is often indicated as crucial. In this paper we consider an unsuccessful case, the Gennargentu National Park in Sardinia. We set up and test an econometric model to explain the decision of the local communities to accept or refuse their inclusion in the Park area. Results suggest that while different perceptions of new economic opportunities can possibly influence the decision, also political and cultural motivations are significant. A strong interaction between policy makers and local people is then recommended both at policy design and implementation stages

Bias and efficiency of single vs. double bound models for contingent valuation studies: a Monte Carlo analysis

The Dichotomous Choice Contingent Valuation Method (DC-CVM), both in the single and the double bound formulation, has been in the last years the most popular technique among practitioners of contingent valuation, due to its simplicity of use in data collection. The single bound procedure is easier to implement than the double bound, especially in data collection and estimation. On the other hand, it is well known that the double bound is more efficient than the single bound estimator. It remains to analyze 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, so that neither estimator can be said to be less biased than the other. The greater efficiency of the double bound is confirmed, although it can be seen that the differences tend to reduce by increasing the sample size, and are often negligible for medium size samples. Provided that a reliable pre-test is conducted, and the sample size is large, our results warrant the use of the single rather than the double bound model

A Sample Selection Model for Protest Non-Response Votes in Contingent Valuation Analyses

Pay some money for a public good, for reasons that differ from a genuine indifference to the good. For example, some people may dislike the idea of placing monetary values to public goods like the environment or a historical monument. Some may protest against the inefficiency of the public administration in managing public funds, and refuse to pay a tax. Others may behave strategically, if they think that their answer could influence the actual level of taxation. A good survey design can effectively reduce them, but protest votes can hardly be completely removed from the dataset. The question is how to deal with them. Sometimes they are considered as true zero values, or, if the dichotomous choice method is used, as if they were below the minimum bid. Obviously, if the unwillingness to pay reflects only a protest and not a low or null valuation of the good, this procedure results in downward biased estimates of the wtp measure. It is of paramount importance that the questionnaire contains a follow up question for individuals that refuse payment, to investigate about their motivations, and interpret the responses. Alternatively, observations with protest votes are simply cut off the sample, and only the subsample with positive reservation prices is considered in the analysis. This procedure will not have any effect for the validity of the estimates only if there is no sample selection bias. Otherwise, it leads to incorrect estimates for the willingness to pay. In this paper we present a sample selection model that allows to take into account, and correct, the possible bias due to protest votes. It is shown that selection bias can sensibly affect the estimates for the willingness to pay for the public good. It will be seen that the model may present estimation problems because of flatness of the likelihood function. In some cases confidence intervals around the sample selection coefficient are too wide to give evidence of presence or absence of sample selection bias. It is argued that even in these circumstances the sample selection model with the protest votes should be preferred to the model without protest votes, since it takes into account the uncertainty about the estimates of the willingness to pay