INCREASING AT AN INCREASING RATE: THE POTENTIAL CONVEXITY OF DISCRETE-CHOICE WELFARE MEASURES

When environmental quality enters random utility models linearly, welfare measures are convex in quality. The convexity is partly due to site substitution, and it has policy implications for whether changes in quality should be concentrated or diffuse. These functional form effects are illustrated in a model of Great Lakes fishing.Environmental Economics and Policy,

Does economic endogeneity of site facilities in recreation demand models lead to statistical endogeneity?

Different kinds of endogeneity problems in Random Utility Models of recreation demand have been studied in previous literature. Some site characteristics, like facilities, could be endogenous in an economic sense due to the interplay of supply and demand. That is, it may be that more popular recreation sites tend to have better site characteristics since managers with limited budgets would be more willing to invest in them. If recreation site improvements are more likely to occur at the more popular sites, then might this economic endogeneity cause problems for econometric models linking site demand to facilities. In this paper, we use Monte Carlo simulations to test whether this economic endogeneity will lead to statistical endogeneity.Random Utility Models, Facilities, Endogeneity, Monte Carlo simulations, Environmental Economics and Policy,

Comparison of Approaches to Estimating Demand for Payment for Environmental Services

Environmental Economics and Policy,

First in Class? The Performance of Latent Class Model

Replaced with revised version of poster 07/22/11.Monte Carlo Simulations, Latent Class Model, Environmental Economics and Policy,

THE EFFECT OF MODELING SUBSTITUTE ACTIVITIES ON RECREATIONAL BENEFIT ESTIMATES

We use a nested-logit model of recreational fishing to examine how varying the range of fishing activities included in the choice set affects welfare measures. The basic analytical results are quite intuitive: welfare calculations with a site-choice travel cost model that omits relevant substitute activities will tend to understate gains and to overstate losses for a fixed sample and a fixed set of model parameters. The magnitude of bias in any particular case will be directly related to the degree of substitution between the omitted activities and the activities included in the model. In our empirical application, we examine changes in the quality of trout and salmon fishing on the Great Lakes and on anadromous runs. For most of the scenarios examined, we find that models that only include Great Lakes and andromous fishing activities, to the exclusion of inland fishing activities, yield welfare results that are relatively similar to those of models that include the full range of activities, provided care is taken to extrapolate the results to a common population. The results are due to the relatively low predicted rates of substitution between inland and Great Lakes fishing activities. We derive implications for benefits transfer procedures.Resource /Energy Economics and Policy,

Valuing Forest Ecosystem Services: A Comparison of the Effects of Attitudes and Demographic Characteristics on Willingness to Pay

Environmental Economics and Policy,

TRADABLE RISK PERMITS TO PREVENT FUTURE INTRODUCTIONS OF ALIEN INVASIVE SPECIES INTO THE GREAT LAKES

Alien invasive species contribute to biodiversity loss and cause billions of dollars of economic damage in the Great Lakes. We examine the design and efficiency of a tradeable permit system for biological pollution due to alien species that invade the Great Lakes through the ballast water of commercial ships.Risk and Uncertainty,

Incentive Compatibility in an Attribute-Based Referendum Model

The manner in which WTP survey responses are elicited has received much attention in the nonmarket valuation literature because of the potential bias that may be introduced via alternate response formats. One issue of particular concern is that of incentive compatibility. Several studies have concluded that response formats that present a series of valuation questions are not incentive compatible. While the single dichotomous choice elicitation format reduces the amount of information collected, multiple-bounded elicitation formats may yield biased, unreliable results. Understanding this trade-off can help provide better information on response formats that will elicit incentive compatible responses and therefore provide realistic and policy-relevant information. This research investigates the effect of the number of multinomial choices presented to respondents in an attribute-based referendum (ABR) format on incentive compatibility of responses. Data was collected from two versions of a mail survey that used an attribute-based description of a hypothetical forest easement program in Michigan's Upper Peninsula and a referendum-style choice between the status quo and various forest easement program scenarios. The first version of the survey presented four choice scenarios to respondents while the second version presented only one choice scenario. Results suggest that the multiple-bound response format improves statistical efficiency due to the statistical significance of all estimated parameters. However, this efficiency may also overestimate WTP. The single-bounded response format displays lower statistical efficiency but may reflect more accurate preferences from respondents. Results lead to a rejection of the hypothesis that the number of choices presented to respondents has no effect on results and have implications for the reliability of nonmarket valuation information from multiple-bound response formats in attribute-based referenda models.Research Methods/ Statistical Methods, Resource /Energy Economics and Policy,

Economic Incentives for Controlling Trade-Related Biological Invasions in the Great Lakes

Ballast water from commercial ships engaged in international trade has been implicated as the primary invasion pathway in over 60 percent of new introductions of invasive alien species (IAS) in the Great Lakes since 1960. Recent policies have recognized that IAS are a form of biological pollution and have become focused on preventing new introductions. Given that emissions-based incentives are infeasible for the case of biological emissions, we investigate the cost-effectiveness of various performance proxy-based and technology-based economic incentives to reduce the threat of new invasions of Ponto-Caspian species in the Great Lakes.aquatic nuisance species, ballast water, uncertainty, risk management, performance-based incentives, environmental subsidies, International Relations/Trade, Resource /Energy Economics and Policy,

Combining Supply and Demand Estimates for Ecosystem Services from Cropland

Payment-for-Ecosystem-Services (PES) programs are gaining appeal as flexible approaches to inducing the voluntary provision of ecosystem services (ES). Farmers, who manage agricultural ecosystems, provide important nonmarket ecosystem services to the public by their choice of production inputs and management practices. Although there exist various PES programs in the United States and Europe, we are aware of none that was designed based on a comprehensive understanding of the underlying supply and demand of ecosystem services. Taking advantage of unique, coupled datasets of stated preferences, this paper combines a supply-side cost function of farmers’ willingness to adopt practices that provide increased ES with a demand-side social benefit function of residents’ willingness to pay (WTP) for these ES. The result is an empirically based, welfare-maximizing price and quantity of ES that can inform the design of future PES programs.Payment-for-Ecosystem-Services (PES), Contingent valuation, Aggregate supply and demand, Cropland, Eutrophication, Greenhouse gas, Agricultural and Food Policy, Environmental Economics and Policy, Q11, Q51, Q57, Q58,