ECO 3620. Environmental Economics
Measuring Benefits
1.
Types of Nonmarket Benefits
Use Value: consumptive vs nonconsumptive
Existence Value; aka nonuse value, passive use value; motives: altruistic, ecological, bequest
Option Value:
2.
Consumer Surplus
Willingness to pay
Willingness to accept
3.
Revealed Preference
Travel cost method (
The Economic Benefits Of Mountain Biking at One of Its Meccas
)
Hedonic price method (
The Effect of Road Traffic on Residential Property Values
)
Averting behavior method
4.
Stated Preference
Contingent valuation: hypothetical bias, free riding, strategic bias, embedding problem
Contingent behavior
Attribute-based (conjoint analysis):
Example 1
,
Example 2
An example:
Mitigating the Hypothetical Bias of Willingness to Pay: A Comparison of Ex-Ante and Ex-Post Approaches
5.
Combined Methods
6.
Value of statistical life
Hedonic wage (
What Determines the Value of Life
) ... 3 problems (accurate information, sample selection bias, involuntary risk)
Averting behavior (
Self-Protection and Averting Behavior, Values of Statistical Lives, and Benefit Cost Analysis of Environmental Policy
)
Contingent valuation
A pictorial summary
