Should we pay for ecosystem service outputs, inputs or both?

Payments for ecosystem service outputs have recently become a popular policy prescription for a range of agri-environmental schemes. The focus of this paper is on the choice of contract instruments to incentivise the provision of ecosystem service outputs from farms. The farmer is better informed than the regulator in terms of hidden information about costs and hidden-actions relating to effort. The results show that with perfect information, the regulator can contract equivalently on inputs or outputs. With hidden information, input-based contracts are more cost effective at reducing the informational rent related to adverse selection than output-based contracts. Mixed contracts are also cost-effective, especially where one input is not observable. Such contracts allow the regulator to target variables that are “costly-to-fake” as opposed to those prone to moral hazard such as effort. Further results are given for fixed price contracts and input-based contracts with moral hazard. The model is extended to include a discussion of repeated contracting and the scope that exists for the regulator to benefit from information revealed by the initial choice of contract. The models are applied to a case study of contracting with farmers to protect high biodiversity native vegetation that also provides socially-valuable ecosystem services

Augmented Sustainability Measures for Scotland

We estimate and compare two empirical measures of the weak sustainability of an economy for the first time: the change in augmented green net national product (GNNP), and the interest on augmented genuine savings (GS). Yearly calculations are given for each measure for Scotland during 1992-99. Augmentation means including, using projections to 2020, production possibilities enabled by exogenous technical progress or changing terms of trade. In passing, we clarify the treatment of environmental expenditures in green accounting. The change in augmented GNNP and interest on augmented GS are both always positive, showing no sustainability problem for Scotland; but the former greatly exceeds the latter, showing an unresolved problem with the theorysustainability, Scotland, genuine savings, green NNP, augmentation

What’s it worth? Exploring value uncertainty using interval questions in Contingent Valuation

In this paper we explore the idea that people only know the value they place on a given environmental change as a range, rather than as a singleton. We use the payment ladder design of contingent valuation, and take as a case study the value of coastal water quality improvements in Scotland. Kaplan-Meier survival curves, Tobit analysis and a modified Turnbull algorithm are used to explore the data. We find that most people state their values as a range, and investigate empirically the determinants of this range. The paper concludes with some thoughts concerning possible links between value ranges, context-dependence and uncertainty.contingent valuation; preference uncertainty; payment ladders; contextdependence; coastal water quality; survival analysis

Calibration of Stated Willingness to Pay for Public Goods with Voting and Tax Liability Data: Provision of Landscape Amenities in Switzerland

Controversy remains over the degree of hypothetical bias in contingent valutation method (CVM) estimates of values for public goods, especially for public goods with significant passive-use values. This paper uses an 'indifferent voter' approach to calibrate stated WTP for a proposed public good increase with actual WTP implied by voting and tax liability data. Our data are from a CVM survey and an actual voting decision on propositions to increase public funds for landscape amenities protection in the canton of Zurich, Switzerland.contingent valuation; indifferent voter; median voter theorem; referendum;valuation

How do improvements in labour productivity in the Scottish economy affect the UK position on the Environmental Kuznets Curve?

The Environmental Kuznets Curve (EKC) hypothesis focuses on the argument that rising prosperity will eventually be accompanied by falling pollution levels as a result of one or more of three factors: (1) structural change in the economy; (2) demand for environmental quality increasing at a more-than-proportional rate; (3) technological progress. Here, we focus on the third of these. In previous work we have used single region/nation models of the Scottish and UK economies to simulate the impacts of increased labour and energy efficiency on the domestic economy’s position on the EKC, with a specific focus on CO2 emissions. There we find that, while the impacts of an increase in energy efficiency are difficult to predict, mainly due to the potential for ‘rebound’ effects, while increasing CO2 emissions, improved labour productivity is likely to move an economy along its EKC through more rapid GDP growth. However, recent developments in the EKC literature have raised the issue of whether this will still be the case if emissions are accounted for from a consumption rather than a production perspective (the ‘pollution leakage’ hypothesis) – i.e. taking account of indirect pollution generation embodied in trade flows rather than just domestic emissions generation. Here we extend our earlier single region analysis for Scotland by using an interregional CGE model of the UK economy to examine the likely impacts of an increase in Scottish labour productivity on the rest of the UK and on a national EKC through interregional labour migration and trade flows.computable general equilibrium; technological progress; environmental kuznets curve; pollution leakage

A Method to Estimate the Magnitude of "Hypothetical Bias" in Stated Preference Surveys of Passive-use Value

This paper proposes a method by which estimates of hypothetical willingness to pay for public goods with passive-use value can be compared with actual willingness to pay inferred from aggregate voting and tax liability data.

Social norms, morals and self-interest as determinants of pro-environment behaviours : the case of household recycling

The first author gratefully acknowledges the support of the Polish Ministry of Science and Higher Education and the Foundation for Polish Science.This paper considers the role which selfish, moral and social incentives and pressures play in explaining the extent to which stated choices over pro-environment behaviours vary across individuals. The empirical context is choices over household waste contracts and recycling actions in Poland. A theoretical model is used to show how cost-based motives and the desire for a positive self and social image combine to determine the utility from alternative choices of recycling behaviour. We then describe a discrete choice experiment designed to empirically investigate the effects such drivers have on stated choices. A hybrid logit model is used to link statements over attitudes to recycling to choices, dealing with a potential endogeneity problem caused by the joint effects of un-observables on attitudes and choices. We find that a substantial share of our respondents prefer to sort their waste at home rather than in a central sorting facility. This preference is associated with a moral/intrinsic motivation, involving a belief that sorting at home is more thorough than central sorting.Publisher PDFPeer reviewe

Social norms, morals and self-interest as determinants of pro-environment behaviours: the case of household recycling.

This paper considers the role which selfish, moral and social incentives and pressures play in explaining the extent to which stated choices over pro-environment behaviours vary across individuals. The empirical context is choices over household waste contracts and recycling actions in Poland. A theoretical model is used to show how cost-based motives and the desire for a positive self and social image combine to determine the utility from alternative choices of recycling behaviour. We then describe a discrete choice experiment designed to empirically investigate the effects such drivers have on stated choices. A hybrid logit model is used to link statements over attitudes to recycling to choices, dealing with a potential endogeneity problem caused by the joint effects of un-observables on attitudes and choices. We find that a substantial share of our respondents prefer to sort their waste at home rather than in a central sorting facility. This preference is associated with a moral/intrinsic motivation, involving a belief that sorting at home is more thorough than central sorting

Controlling for the effects of information in a public goods discrete choice model

This paper develops a reduced form method of controlling for differences in information sets of subjects in public good discrete choice models, using stated preference data. The main contribution of our method comes from accounting for the effect of information provided during a survey on the mean and the variance of individual-specific scale parameters. In this way we incorporate both scale heterogeneity as well as observed and unobserved preference heterogeneity to investigate differences across and within information treatments. Our approach will also be useful to researchers who want to combine stated preference data sets while controlling for scale differences. We illustrate our approach using the data from a discrete choice experiment study of a biodiversity conservation program and find that the mean of individual-specific scale parameters and its variance in the sample is sensitive to the information set provided to the respondents

Should historic sites protection be targeted at the most famous? Evidence from a contingent valuation in Scotland

We used a contingent valuation survey of a random sample of the general public living in Scotland to estimate how willingness to pay (WTP) for the conservation of historic sites (such as castles and stone circles) varies with how well-known these sites are and whether people have visited them. Each respondent was asked to state a maximum WTP in terms of higher income taxes for the conservation of two sites, one of which was “famous” and one of which was less well-known. The hypothetical scenario involved payment to avoid future damage to each site. When observable differences in respondent characteristics are controlled for, we found no significant differences in mean WTP across sites. However, a significant effect was found for respondent familiarity with each site (in terms of recognising it on a photograph), with sites which respondents were more familiar with attracting higher WTP values. Distance effects on WTP were mixed: significant effects of distance of the site from respondents’ homes were only found for the less well-known sites, but not for famous sites. The main conclusions of the study were that (i) the Scottish general public are willing to pay for the conservation of historic sites and that (ii) such values exist as much for less well-known sites as for famous sites. This implies that public funds should not be allocated solely to conservation of the best-known sites