ECONOMICS AND ECOSYSTEM MANAGEMENT: DISCUSSION

Environmental Economics and Policy,

VALUATION OF GROUNDWATER QUALITY CONTINGENT VALUES, PUBLIC POLICY NEEDS, AND DAMAGE FUNCTIONS

In a departure from past contingent valuation research of groundwater quality, this paper estimates a damage function for nitrate exposures based on actual water test results of individual wells. From the perspective of reliability, it is argued that such a full information approach more closely represents the goal of valuation research in this area -to estimate the economic values that people would place on improving water quality if they were actually experiencing contaminated water. The adoption of a damage function approach linking willingness to pay to actual exposures is also more useful to policy makers at the study site because it potentially provides benefit information to a broad range of policy options. Finally, because the damage function is based on objective data that could be obtained from other sources such as local well test programs, such an approach may be desirable from a benefits transfer perspective. Damages, as measured by willingness to pay for protecting individual well supplies within a 10 mg/L NO,-N health standards are estimated to be a concave function of nitrate exposure levels.Resource /Energy Economics and Policy,

THE IMPORTANCE OF SPATIAL DATA IN MODELING ACTUAL ENROLLMENT IN THE CONSERVATION RESERVE ENHANCEMENT PROGRAM (CREP)

This paper uses actual enrollment and Geographic Information Systems (GIS) data in six geographically diverse states to demonstrate that enrollment rates in the Conservation Reserve Enhancement Program (CREP) are a function of the incentives offered. If aggregate county land use data were used, as has been done previously, incentives appear insignificant.Environmental Economics and Policy,

Simple Computational Methods for Measuring the Difference of Empirical Distributions: Application to Internal and External Scope Tests in Contingent Valuation

This paper develops a statistically unbiased and simple method for measuring the difference of independent empirical distributions estimated by bootstrapping or other simulation approaches. This complete combinatorial method is compared with other unbiased and biased methods that have been suggested in the literature, first in Monte Carlo simulations and then in a field test of external and internal scope testing in contingent valuation. Tradeoffs between methods are discussed. When the empirical distributions are not independent a straightforward difference test is suggested.Research Methods/ Statistical Methods,

CONNECTING TAXES AND WILLINGNESS TO PAY FOR FARMLAND PROTECTION: A COMPARISON OF LOCAL AND STATE FUNDED ALTERNATIVES IN NEW YORK

The costs of tax relief for New York agricultural landowners is compared with the willingness-to-pay for farmland protection as measured in valuation research. Under an income tax rebate, the program cost is positively related with the perceived household benefits, whereas this trend is reversed under a local property tax exemption.Agricultural and Food Policy, Public Economics,

CAN HYPOTHETICAL, QUESTIONS PREDICT ACTUAL, PARTICIPATION IN PUBLIC PROGRAMS? A FIELD VALIDITY TEST USING A PROVISION POINT MECHANISM

Niagara Mohawk Power Corporation utilized a demand revealing public good mechanism to implement a green electricity program for provision of renewable energy and planting trees. This GreenChoiceTM program provided an opportunity to test the reliability of contingent valuation for predicting actual participation levels. In this study, participation levels predicted by hypothetical open-ended and dichotomous choice questions are compared to a reference level obtained from the actual GreenChoiceTM program. This approach represents an important improvement over past public goods contingent valuation validity tests which have relied on voluntary contribution mechanisms to elicit actual willingness to pay, and thus are likely to overestimate hypothetical bias because of free riding. Yet, even with a demand revealing mechanism and controlling for awareness, hypothetical participation levels obtained from dichotomous choice responses are found to significantly exceed actual contributions. In contrast, open-ended responses predict actual contribution levels, in that hypothetical open-ended responses are not significantly different from actual responses. Calibration of hypothetical responses is also explored.Public Economics, Resource /Energy Economics and Policy,

VOLUNTARY REVELATION OF THE DEMAND FOR PUBLIC GOODS USING A PROVISION POINT MECHANISM

public goods, voluntary contributions, provision point, experiments, information, group size, Resource /Energy Economics and Policy, H41, C92,

A META ANALYSIS OF CONTINGENT VALUES FOR GROUNDWATER QUALITY IN THE UNITED STATES

This paper provides an overview and a meta analysis of existing US contingent valuation studies of groundwater quality. Using 108 observations from 14 studies, core economic variables, risk variables, and elicitation effects are found to systematically influence groundwater values. Other research design features are also investigated.Resource /Energy Economics and Policy,

Beyond Optimal Linear Tax Mechanisms: An Experimental Examination of Damage-Based Ambient Taxes for Nonpoint Polluters

The regulation of nonpoint source water pollution from agriculture is a complex problem characterized by a multiplicity of polluters, informational asymmetries, complex fate and transport processes, and stochastic environmental factors. Taken together, these characteristics make regulatory policy based on individual firm emissions prohibitively costly. To circumvent this issue, economists, beginning with the seminal work of Segerson (1988), have devised economic incentive instruments that assign liabilities based on deviations between the observed ambient water quality level and a specified pollution threshold (Xepapadeas 1991; Horan, Shortle and Abler 1998, 2002; Hansen 1998, 2002). In the special case of a linear damage function, the regulator can optimally set the parameters of Segerson's (1988) incentive scheme solely with information on the damage function. When the damage function is nonlinear, a depiction that likely represents many watersheds, Segerson's incentive scheme is firm-specific, and the regulator must acquire costly firm-specific data on factors such as input use, land management practice, and soil type. Using a linear damage function setting, recent laboratory experimental economics efforts have investigated the ambient-based mechanisms proposed by Segerson, as well as some simple variants (Spraggon 2002, 2004; Poe et al. 2004; Vossler et al. 2005). A fundamental limitaion of this body of research, however, is that has utilized an "optimal design" in which the threshold pollution level for triggering the abient-based policy is set equal to the social optimum. It is therefore unclear whether subjects are optimally responding to the tax and threshold combination, or simply trying to reacting to the focal point created by the threshold. A second limitation of past experimetnal economics research is that, following Segerson, these investigations have utilized the limited case of a linear tax function. While a tax policy is relatively straightforward to apply when damages are linear, the application to real world situations may be limited. A more believable circumstance is that economic damages increase at an increasing rate as ambient pollution levels rise. This paper advances the experimental literature on ambient based pollution mechanisms in two important ways. First, by employing a range of marginal tax rates and threshold levels, we show that subjects do in fact respond optimally to the tax and cutoff combination. Second, by using the damage based tax proposed Hansen (1998) and Horan et al. (1998), we show that aggregate results when the economic damages from ambient water pollution are nonlinear are not significantly different from corresponding results under the linear tax.Environmental Economics and Policy,

The Value of Private Risk Versus the Value of Public Risk: An Experimental Analysis of the Johannesson et al. Conjecture

In 1996 Johannesson et al. published a paper in this journal entitled “The Value of Private Safety versus the Value of Public Safety.” Based on preliminary evidence from a hypothetical contingent valuation study, these authors argue that consumers behave as “pure altruists” and reject the notion of paternalistic preferences for safety in a coercive tax setting. These pure altruists consider the cost of a program that might be imposed on other voters when they decide whether to vote for or against public safety programs. The authors conclude that further empirical research in this area is warranted. This paper presents a set of laboratory economics experiments to test Johannesson et al.’s conjecture under controlled conditions in which participants face an actual risk of financial loss. The laboratory results extend those of Johannesson et al., providing strong evidence of pure altruism but limited support for paternalistic altruism for risk.Altruism, risk, voting, public goods, Research Methods/ Statistical Methods, Risk and Uncertainty, D81, D64, H41, C91, C92, D72,