The value of information in biosecurity risk-benefit assessment: an application to red imported fire ants

Policy makers are confronted daily with uncertainty, especially in complex areas like biosecurity. One way to improve decision-making and reduce uncertainties is to collect more information. Information is costly – whether the value of improved decision-making justifies the cost is a fundamental question facing policy makers. This paper addresses that question by making three practical contributions for binary choices (such as whether to implement or forego a particular policy). First, it analyses the determinants of the value of information, and how that value changes with features of the problem. Second, it uses this analysis to derive simple rules of thumb which provide upper bounds on the value of additional information. Third, it provides a practical application of the value of information in deciding whether to attempt eradication of the red imported fire ant.Environmental Economics and Policy,

Search, bioprospecting, and biodiversity conservation

To what extent can private-sector bioprospecting incentives be relied upon for the protection of biological diversity? The literature contains dramatically different estimates of these incentives from trivial to quite large. We resolve this controversy by isolating the fundamental source of the discrepancy and then providing empirically defensible estimates based on that analysis. Results demonstrate that the bioprospecting incentive is unlikely to generate much private-sector conservation. Thus, other mechanisms are likely required to preserve the public good of biodiversity.Bioprospecting, biodiversity, conservation, efficient search, information

Enforcement and over-compliance

Economists generally view environmental enforcement as a tool to secure compliance with regulations. This paper demonstrates that credible enforcement significantly increases statutory over-compliance with regulations as well. We find that many plants with discharges typically below legally permitted levels reduce discharges further when regulators issue fines, even on other plants. Also, non-compliant plants often respond to sanctions by reducing discharges well beyond reductions required by law. Thus, increased enforcement generates substantial discharge reductions above and beyond those expected from simply deterring violations.Over-compliance; Fines; Compliance; Enforcement; Regulation; Pollution Policy; Environmental economics; Environmental enforcement; Water pollution; Beyond compliance

Enforcement and Environmental Compliance: A Statistical Analysis of the Pulp and Paper Industry

This paper explores empirically the impact of changes of enforcement efforts on environmental compliance. Our strategy is to link observed fines and other enforcement actions to subsequent compliance behavior. We find that, on the margin, the impact of a fine for water pollutant violations is about a two-thirds reduction in the statewide violation rate in the year following a fine. This surprisingly large result obtains through the regulator’s enhanced reputation. We find that the deterrence impact on other firms in a state is almost as strong as the impact on the sanctioned firm. In contrast to fines, non-monetary sanctions contribute no detected impact on compliance.Fines, Reputation, Pollution, Compliance, Enforcement

Enforcement and Over-Compliance

Economists generally view environmental enforcement as a tool to secure compliance with regulations. This paper demonstrates that credible enforcement significantly increases statutory overcompliance with regulations as well. We find that many plants with discharges typically below legally permitted levels reduce discharges further when regulators issue fines, even on other plants. Also, likely non-compliant plants often respond to sanctions by reducing discharges well beyond reductions required by law. Thus, increased enforcement generates substantial discharge reductions above and beyond those expected from simply deterring violations.Over-compliance; Fines; Compliance; Enforcement; Regulation; Pollution Policy

Consumer Surplus Estimates and the Source of Regression Error

Contrary to widely held belief, we show that the source of regression error does not matter when calculating Marshallian surplus. A misspecified demand curve, not the assumed source of regression error, leads to differences in estimates of consumer surplus.Regression Error, Marshallian Surplus, Welfare Analysis, Consumer/Household Economics, D60, C24, Q51,

Effects of the private-label invasion in food industries

Using supermarket scanner data, we test a variety of hypotheses from trade journals about the invasion of private-label food products. According to conventional industry wisdom, name-brand firms defended their brands against new private-label products by lowering their prices, engaging in additional promotional activities, and increasingly differentiating their products. Our empirical evidence is inconsistent with these beliefs.private label; entry; price; promotional activity; differentiation; supermarket

Mercury advisories: Information, education, and fish consumption

This paper examines responses to a national FDA advisory that urged at-risk individuals to limit store-bought fish consumption due to the dangers of methyl-mercury. We investigate consumer response using both parametric and nonparametric methods. Some targeted consumers significantly reduced canned fish purchases as a result of the advisory, suggesting that information-based policies can achieve the issuing agency’s goals. Education and newspaper readership were important determinants of response, suggesting that information acquisition and assimilation are key factors for risk avoidance. While some groups reduced consumption as a result of the advisory, we do not find a response among the relatively large group of at-risk households which met neither the education nor readership criteria. The advisory also had unintended spillover effects; some consumers not considered at-risk reduced consumption in response to the advisory.mercury; health information; health advisory; environmental health; fish consumption; children’s health; environmental risk; pollution;

Residential Water Consumption: A Cross Country Analysis

Survey data from over 1,600 households in ten countries were used to analyse the determinants of residential water demand. Results show that in every country the price elasticity is negative and statistically significant. Households that do not have to pay for the water they use (volumetric water charges) consume about a third more water than similar households that do have to pay such charges. Consumers’ attitudes do not have a statistically significant effect on total water use, although they do increase the probability of households using some water saving behaviours. Volumetric water charges also have an impact on the adoption of water saving actions. Full-cost water pricing appears to be a highly effective instrument to manage residential water demand.water demand, water consumption, water pricing, Environmental Economics and Policy, Resource /Energy Economics and Policy, C21, Q25, Q50,