Proceedings
2002 Decision-Making
Valuation for Environmental
Policy ProaJMBs Revii
March 21-22, 2002
Washington, DC
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2002 Decision-Making and Valuation for Environmental Policy Workshop
Table of Contents
Introduction iii
Local Environmental Decision-Making: Non-Mandated Environmental Policies and Public Participation 1
Troy Abel
Collaborative Research: Cultural Models, Values, and Networks in Environmental Decisions , 2
Scott Atran, Douglas Medin
Indicators of Ecosystem Value: Deriving Units of Exchange for Habitat Trades, Banking,
and Preservation Priorities 4
James Boyd, Lisa Wainger
Establishing Correlations Between Upland Forest Management Practices and the Economic Consequences
of Stream Turbidity in Municipal Supply Watersheds 5
Gordon Grant, David W. Hulse, Ernie Niemi
Land Management With Ecological and Economic Objectives: Developing a Production Possibility
Set of Wildlife Species Persistence and Timber Harvest Value 7
Claire Montgomery, Jeffrey Arthur, Darek Nalle, Stephen Polasky, Nathan Schumaker
An Integrated Framework for Analyzing Wetlands Policies: Ecosystem Services, Spatial Targeting,
and Cost Effectiveness 9
Stephen C. Newbold
Environmental Protections and Endogenous Technical Change: A Theoretical and Empirical Analysis 10
James J. Opaluch, Shunsuke Manage, Di Jin, Thomas A. Grigalunas
Applying Consensus and Cultural Models To Improve Environmental Decision-Making 12
Michael Paolisso, Erve Chambers
Delineating Optimal Habitat Locations for Inclusion in Migratory Flyways 14
Charles ReVelle, John Boland, Justin Williams, Scott Malcolm, Daniel Bain
Negotiating for Sustainable Development: An Evaluation of the CBEP Decision Process 16
John Scholz, Mark Lubell, Mark Schneider
The Contribution of Economic Analysts to Environmental Decision-Making: Lessons From
theFERCExperience 18
Leonard Shabman, Kurt Stephenson
Estimating the Cost of Carbon Sequestration in Global Forests 20
Brent Sohngen, Robert Mendelsohn, Roger Sedjo
Teaching Proper Use of a Household Hazardous Waste Facility 22
Carol Werner
Index 23
EPA/NSF Partnership for Environmental Research
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2002 Decision-Making and Valuation for Environmental Policy Workshop
Introduction
On December 8, 1994, the National Science Foundation (NSF) and the Environmental Protection Agency (EPA)
signed a Memorandum of Understanding establishing a partnership for the support and merit review of fundamental,
extramural environmental research. One of the most successful competitions funded as a result of this partnership
is Decision-Making and Valuation for Environmental Policy (DMVEP).
The DMVEP competition encourages research that will contribute to the development of practical, credible ap-
proaches for estimating the benefits and costs of environmental programs and improving decision-making about
environmental issues. DMVEP started in Fiscal Year (FY) 1995 and has held competitions each FY through 2002,
with the exception of FY 2000. In 1997 and 1998, DMVEP held progress review workshops for grantees funded by
the 1995 and 1996 competitions to give grantees an opportunity to report their research findings and discuss the
future directions of the research area. The proceedings document for the 1998 workshop is available on the EPA
National Center for Environmental Research Web Site at http://es.epa.gov/ncer/publications/workshop.
From FY 1997 through FY 1999, NSF and EPA made 45 DMVEP awards, totaling approximately $7.8 million. The
DMVEP competition supported a wide variety of topics during this period. Research was solicited in four related areas:
• Costs and Benefits of Environmental Programs and Policies: This area of research seeks to find and test
integrated models and improved methods to estimate and validate the costs and benefits of environmental
protection programs and policies.
• Ecosystem Valuation: Research in this area identifies valuable ecosystem functions and focuses on how
comprehensive and critical ecosystem changes can be measured in terms of social welfare.
• Human Health Valuation: This area of research seeks to improve methods to estimate values for reduc-
tions in mortality and morbidity risks resulting from environmental hazards.
• Decision-Making for Environmental Policy: This area of research examines the behavioral and institu-
tional factors that influence the development, implementation, and evaluation of environmental policies.
The March 21-22, 2002, Workshop on Decision-Making and Valuation for Environmental Policy provides a forum
for investigators funded by the FY 1997, 1998, and 1999 competitions to interact with one another and with EPA,
NSF, and other researchers interested in valuation and decision-making research. For the proceedings volume,
investigators were asked to contribute statements describing the objectives and significance of then" work as well as
preliminary findings from their research.
Any opinions, findings, conclusions, or recommendations expressed in this report are those of the investigators who
participated in the research. For further information about the DMVEP program, please contact the appropriate
Program Officers: Susan Carrillo, EPA, (202) 564-4664 or Cheryl Eavey, NSF, (703) 292-7269. Further informa-
tion on future solicitations and research abstracts may be found on the NSF/EPA Partnership for Environmental
Research Web Site at http://www.nsf.gov/home/crssprgm/epa/start/dmvep.htm.
EPA/NSF Partnership for Environmental Research Hi
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2002 Decision-Making and Valuation for Environmental Policy Workshop
Local Environmental Decision-Making: Non-Mandated
Environmental Policies and Public Participation
Troy Abel
University of Wisconsin, Green Bay, WI
In recent years, a wide variety of new policy tools
have been designed to facilitate environmental perfor-
mance in states, firms, and communities. This project
focused on the latter and the emergence of civic envi-
ronmentalism—communities who voluntarily do more
to protect the environment than is required. Although the
philosophy of many new environmental programs (in-
formation disclosure, community-based environmental
protection) rests on changing local decisions, not much
is known about community variation in capacity to un-
dertake innovative policies.
The project began with a query about the factors con-
tributing to a community's propensity to go beyond envi-
ronmental compliance? After a comprehensive literature
review, the project was focused on the interrelated con-
cepts of social capital and civics as a surrogate indepen-
dent variable for community cooperation. A search was
begun for communities that adopted one of many volun-
tary environmental policies. The adoption of a greenhouse
gas reduction policy was selected as the first dependent
measure to sort communities into two comparison groups:
environmental policy conformers and performers. The
first data collection phase produced a baseline database of
more than 160 socioeconomic variables for 3,142 coun-
ties. Project investigators developed an empirical model of
local voluntary environmental policy effort from this initial
dataset. The quantitative analysis employed factor analy-
sis and logistic regression.
Our initial quantitative analysis found that Democratic
politics and a civics factor mattered, but not necessarily
as expected. The former exhibited the strongest positive
relationship to policy adoption propensity; however, the
civics measure produced a negative association.
This research advances our understanding by be-
ginning to compare communities across multiple di-
mensions to learn more about the determinants of local
policy innovation, the empirical import of social capital
measures, and analytical techniques to differentiate un-
usual cases from average ones. The research design
employed in this project integrates several theoretical
models to clarify key conceptual and methodological
issues that make it easier for other scholars to study
the process and effects of civic environmentalism. This
research is significant for the advancement of our
knowledge of community environmental policy pro-
cesses and their effects on environmental outcomes.
Pragmatic benefits from this research relate to improv-
ing our understanding of nonregulatory policies at the
local level. This project will help form policy analysis
and policy design in the future, particularly for pro-
grams aimed at the community level. If local factors
condition community policy capacity as our research
suggests, then more attention needs to be given to ca-
pacity building at the local level.
Although the quantitative measurement and model-
ing described above advance the understanding of civic
environmentalism on its own, the intention also is to use
the analysis to identify community cases worthy of more
detailed qualitative work. A few provocative scholars
have pointed out the quantitative techniques such as re-
gression focus used by researchers on average cases
when more interest lies in unusual ones. Therefore, the
models are currently being used to identify a matched-
paired sample of two kinds of communities where local
representatives will be contacted to respond to struc-
tured and semistructured surveys.
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Collaborative Research: Cultural Models, Values, and Networks
in Environmental Decisions
Scott Atran1 and Douglas Medin2
'University of Michigan, Ann Arbor, MI; 2Northwestern University, College of the Menominee Nation,
Keshena, WI
This project focuses on the interactions of mental
models, cultural values and behaviors, and social net-
works in processes of environmental decision-making
and intergroup conflict. The goal is to promote sustain-
able environmental practices and further possibilities for
adjudication of norms over transcultural boundaries.
The studies integrate four modeling techniques with roots
in psychology, sociology, and anthropology: (1) mental
models, (2) social network models, (3) the cultural-con-
sensus model, and (4) value assessment and confrontation.
These methodologies are used to assess folk-ecologi-
cal models, values, and behaviors relative to a rainforest
environment among native and immigrant Maya and La-
dino groups in Lowland Mesoamerica, and relative to hard-
wood forest and aquatic environments among Native
Americans and majority culture sportsmen in northern
Wisconsin (see Figure 1). In both sites, culturally diverse
groups live in close proximity, and share a common envi-
ronment. This approach allows examination of cultural
differences in mental models of the same environment
and the generality of findings across environments.
The studies show that different cultural groups sub-
ject to equal pressures on their common resources re-
spond with strikingly different culturally patterned be-
haviors and cognitions. Overall, there is a complex inter-
play between mental models, values, and agro-forestry
practices that are distinctive to each group. Moreover,
groups may have distorted perceptions of each other's
mental models and behavior. Finally, the studies also sug-
gest a nonobvious role for religion in helping human so-
cieties to resolve "The Tragedy of the Commons" and
other ecologically pertinent forms of "The Prisoner's
Dilemma." Supernatural agents may act to allow humans
to engage nonhuman resources in relations of "indirect
reciprocity" so as to better monitor and accommodate
nature's requirements for continuing human support.
Initial results were published in "Folkecology and Com-
mons Management in the Maya Lowlands" (Proceed-
ings of the National Academy of Sciences 1999;
96(13):7598-7603). A comprehensive overview of
Mesoamerican findings will appear as a target article for
international commentary in Current Anthropology 43(3).
Preliminary findings for North America have been sub-
mitted for publication.
On a theoretical level, these studies are important to
establish a framework for exploration of the relation-
ships between environmental cognitions, values, and
behaviors, and to provide a means of evaluating the trans-
ferability of ecological information within and between
cultures. On a practical level, these studies reveal how
intergroup conflict is significantly mediated by differ-
ences in mental models and associated values, particu-
larly environmental conflicts between Native Americans
and the majority culture. Mutual recognition of these dif-
ferences may render even unavoidable controversy and
indeterminacy in ecological behavior less acrimonious
and harmful to human and environmental health. The
results have direct policy implications for state and fed-
eral lawmakers and environmental agencies, international
policymakers, and nongovernment organizations.
Recently, the project is looking at younger native Maya
who no longer speak the native language as their first
language. Although the complexity of their ecological
models of plant-animal relationships is fairly rich, they
show evident biases that older natives do not show such
as overgeneralizing the role of palms in animal life. It
was found that Ladinos also overgeneratize the value to
animals of economically important species such as tropical
cedar and mahogany. The cognitive ramifications of these
use biases are still being explored. Also, probes are being
run for goals, attitudes, and values among Menominee
and majority culture hunters. Although each group's
model encourages conservation, differences in models
lead to misunderstanding and mistrust, particularly in
regard to majority-culture attitudes towards Menominee
(as potential negotiating partners).
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2002 Decision-Making and Valuation for Environmental Policy Workshop
Biodiversity=no. tree species/ha.
Itza1
Ladino
Q'eqchi'
Tree cover = mVha.
3500
Itza'
Ladino
Q'eqchi1
Figure 1. Biodiversity (number of tree species) and tree cover (square meters per
hectare) as a function of ethnic group (Itza' = Native Lowland Maya, Ladino
= Spanish-speaking immigrants, Q'eqchi' = Highland Maya immigrants) and
type of land use (milpa = agricultural plot, guamil = fallow, reserve = forest).
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2002 Decision-Making and Valuation for Environmental Policy Workshop
Indicators of Ecosystem Value: Deriving Units of Exchange
for Habitat Trades, Banking, and Preservation Priorities
James Boyd" and Lisa Wainger2
'Resources for the Future, Washington, DC; 2Center for Environmental Science, University of
Maryland, Baltimore, MD
Ecosystem compensation and exchange programs
require benefit analysis to guarantee that compensation
or trades preserve the social benefits lost when ecosys-
tems are destroyed or degraded. Current regulatory pro-
cedures tend to underanalyze the social value of ecosys-
tems being traded or ecosystem losses requiring com-
pensating mitigation. For example, a common practice
in wetland mitigation decisions is simply to require an
"acre for an acre" of biophysically similar wetland when
another is destroyed. This kind of compensation rule
fails to account for many of the things that determine the
social value of a particular ecosystem such as a site's
location in the greater landscape, the importance of local
substitutes for and complements to the site, and future
risks to the site's ability to provide services.
On the other hand, state-of-the-art economic meth-
ods that employ these basic elements of valuation are dif-
ficult and costly to apply. The conventional economic so-
lution involves monetization of the value provided by an
ecosystem's services using hedonic, travel cost, contin-
gent valuation, and other econometrically sophisticated
methods. However, although monetization is desirable in
theory, it is often impractical. In practice, it is rare to see
agency decision-makers or private conservation organi-
zations making land use decisions based on comprehen-
sive monetization exercises.
One resolution to this conflict is a methodological
middle ground: evaluation tools that identify, based on
sound economic principles, likely differences in ecosys-
tems' social benefits, but that also are easily implemented
by noneconomists using existing data sources. This study
derives, applies, and critiques a set of ecosystem benefit
indicators. Organized around the concepts of ecosys-
tem services and valuation principles, this project shows
how Geographic Information System (GIS) mappings
of the physical and social landscape can improve under-
standing of the ecosystem benefits arising in specific
locations. The core of the project is the development of
a pilot ecosystem service indicator system and the appli-
cation of that system to real-world land use decisions.
The indicator system focuses on landscape factors that
limit or enhance an ecosystem's ability to provide ser-
vices and limit or enhance the expected value of those
services. This kind of analysis yields an organized, de-
scriptive, and numerical depiction of sites involved in
specific mitigation projects.
The GIS landscape analysis is a clear improvement
over assessment methods that ignore landscape context
when assessing trades and compensating mitigation. First,
landscape analysis allows for qualitative analysis of ben-
efit tradeoffs. Second, in some cases, the indicators al-
low for relatively unambiguous improvements in deci-
sion-making (e.g., when tradeoffs are minimal and one
ecosystem can be seen to clearly dominate another).
Third, the data and tools foster a spatial, holistic ap-
proach to benefit assessment. Fourth, there is high con-
fidence that this kind of tool can lead to more transpar-
ent and consistent evaluations than crude standardized
trading ratios or reliance on "best professional judgment"
The project concludes with an evaluation of the limi-
tations associated with indicator-based assessment tools.
Indicators, by their very nature, sacrifice precision and
raise methodological issues that are more explicitly and
better handled by conventional monetization (economet-
ric) tools. An understanding of limitations is therefore an
important component of the pilot project.
EPA/NSF Partnership for Environmental Research
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2002 Decision-Making and Valuation for Environmental Policy Workshop
Establishing Correlations Between Upland Forest Management
Practices and the Economic Consequences of Stream Turbidity
in Municipal Supply Watersheds
Gordon Grant, David W. Hulse, and Ernie Niemi
University of Oregon, Eugene, OR
This research project evaluated the causes and con-
sequences of increased sedimentation and persistent tur-
bidity during a major flood in western Oregon in 19%.
Turbidity was related to land and reservoir management
activities. The response and costs incurred by the City
of Salem, Oregon, and its water users to the storm and
its aftermath were analyzed, and a framework was de-
veloped for understanding the evolving relationships
among land, reservoir, and water supply management
and managers in response to changing social demands
and natural events in the Santiam watershed.
Several complementary approaches were employed
to examine the linkages among forest land use, reser-
voirs, and municipal water supply during the 19% flood
and afterwards. Through interviews, a detailed analysis
was conducted of costs incurred by the City of Salem,
including both acknowledged and hidden costs. Using
clay mineralogy, the sources of turbid water were fin-
gerprinted, and these sources were related to land man-
agement practices and reservoir management within the
upstream watershed. Geographic Information System
analysis was used to look at the spatial relationships be-
tween land management activities and sources of persis-
tent turbidity in the watershed.
The high turbidity triggered diverse economic conse-
quences. Damage from clogging of the filters, plus other
short-run costs to the city's water utility totaled $1.1 mil-
lion. Some industrial water customers incurred costs of
$2 to 3 million, primarily in lost revenues, because they
responded to the city's request to curtail operations dur-
ing the crisis. The city, at a cost of $1.6 million, subse-
quently increased its ability to cope with future pulses of
high turbidity by expanding an early-warning monitoring
system, increasing its treatment capacity, securing backup
supplies from other sources, and increasing storage of
treated water. This rare occurrence of high turbidity clari-
fied the value of having a watershed that usually delivers
extraordinarily pure water, on average, it allows the city
to avoid $2 to 4 million in annual treatment costs.
A detailed look at the relationships among landforms,
turbidity, and clay mineralogy revealed that earthflows are
overwhelmingly the dominant source of the extremely fine
clays producing persistent turbidity in the Santiam Basin
(see Rgure 1). These clays comprise between 70 and 90
percent of the clay fraction from earthflows but are rare
in other landforms. Along with being highly concentrated
spatially, delivery of clays to the stream network are also
concentrated in time. Almost all major turbidity episodes
occur during large winter storms, but the time between
major storms is a key factor determining turbidity levels.
The flood revealed the complex and often contradic-
tory web of management objectives among the agencies
and parties responsible for water management in the
Santiam. It highlighted how management for one nar-
row set of objectives might exacerbate problems in an-
other sector. For example, decades of logging in the
North Santiam Basin targeted the most unstable piece of
ground, thereby potentially exacerbating sediment pro-
duction during storms. The operation of dams for flood
control prolongs the release of persistent turbidity down-
stream, causing problems for municipal water users.
Relying on the normal behavior of a watershed to pro-
duce clean water under all circumstances exposes soci-
etal vulnerability to inherent geological hazards.
The next steps will be to communicate these find-
ings to a diverse audience, including city planners, wa-
tershed councils, resource management agencies, and
the larger scientific community.
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2002 Decision-Making and Valuation for Environmental Policy Workshop
Upstream
Sate/rfS£22'*-<~
municipal
water
Big Cliff Dam
Detroit Dam
Earthflows
Jj
Downstream sources:
• Earthflows
• Debris flows
• Channel erosion
Reservoir mixin
& f ractionatio
Debris \
flows A>
Detroit Reservoir
figure 1. Persistent turbidity pathways in the North Santiam River.
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2002 Decision-Making and Valuation for Environmental Policy Workshop
Land Management With Ecological and Economic Objectives:
Developing a Production Possibility Set of Wildlife Species
Persistence and Timber Harvest Value
Claire Montgomery1, Jeffrey Arthur1, Darek Nolle1, Stephen Polasky2, and Nathan Schumaker3
'Oregon State University, Corvattis, OR; University of Minnesota, St. Paul, MN;
3V.S. Environmental Protection Agency, Washington, DC
The primary objective of this study was to integrate
biological and economic models in an optimizing frame-
work to address economic issues related to efficiency.
The resulting model was used to estimate the productive
capacity for three outputs (timber, great homed owls, and
common porcupines) on a forested landscape over time,
ignoring landowner types and objectives, and to compare
that to likely management on fee study landscape by simu-
lating the current landowner pattern and objectives. The
wildlife species were selected to represent competing con-
servation objectives; their habitat needs are different
The study area was a 1.7-million hectare forested land-
scape in the Oregon Cascade Range. A spatially explicit dy-
namic simulation model, PATCH,1 was used to model the im-
pact on wildlife of timber harvest-induced habitat alteration. A
proxy for PATCH, that quickly predicted populations as a
function of habitat attributes, was used in the optimiza-
tion. The optimization model was solved repeatedly for
fee maximum net present value of timber harvest subject
to varying levels of constraints for wildlife population sizes
using a heuristic algorithm. The solutions are an estimate
of the set of maximum potential combinations of the mod-
eled outputs. To simulate likely management, net present
value of timber was maximized on private land (about
45% of fee area), and timber harvest was disallowed on
federal land.
Results are illustrated in Figure 1. Three graphs show
maximum potential combinations for each pair of out-
puts. The current landowner simulation is shown by a
marker on each graph. Maps show fee configuration of
owl habitat for three outcomes: maximum timber value,
fee current landowner simulation, and the maximum po-
tential combination feat achieved fee same owl popula-
tion as fee current landowner simulation.
The study illustrates how analysis based on estimation
of productive capacity for a site can be used to search for
opportunities to improve current management. We found
that it might be possible to increase owl populations by 30
percent over likely current management levels without re-
ducing timber values or porcupine populations or con-
versely, to increase fee timber by 13 percent and porcu-
pines by 30 percent without reducing owl populations.
Current management, in which private land is managed
for timber in response to market incentives and federal
land is managed almost exclusively for other forest uses,
appears to be inefficient Models like this one may prove
useful for identifying situations where fee payoff for making
fee difficult policy changes to markets and/or to federal
land management to encourage landscape-level manage-
ment of forests is likely to be great
Incorporation of more realism in fee wildlife models
(e.g., predator/prey relations, more refined habitat pref-
erences), fee timber model (e.g., roading, site quality),
and fee vegetation model (e.g., disturbance regimes, more
refined vegetation classes) will improve fee practical use-
fulness of this approach. The model can be used to im-
prove understanding of fee tradeoffs between alterna-
tive conservation objectives by carefully selecting wild-
life to model that represent different conservation goals
(e.g., old-forest-dependent endangered species versus
large numbers of species wife more general habitat needs).
Finally, there are many forest uses, aside from wildlife
and timber, that might be modeled using this framework
(e.g., fire risk, recreation).
'Schumaker MR A users guide to the PATCH model EPA/600/R-98/135. Environmental Research Laboratory, U.S. Environmental
Protection Agency, Corvallis, OR, 1998.
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2002 Decision-Making and Valuation for Environmental Policy Workshop
Timber vs. Owls
Timber vs. Porcupines
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Owl Habitat Maps: 5th decade, Dark is good habitat
A: Maximum timber value B: Current Landowners C: Maximum potential for
Owte = 3800, Timber=24.3 date = 8500, Timber=21.1 Owte = 8500, Timber=23.9
Figure 1. Results of simulated likely management
8
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2002 Decision-Making and Valuation for Environmental Policy Workshop
An Integrated Framework for Analyzing Wetlands Policies:
Ecosystem Services, Spatial Targeting,
and Cost Effectiveness
Stephen C. Newbold
Department of Environmental Science and Policy, University of California, Davis, CA
This research project focuses on developing a frame-
work for analyzing the potential environmental and eco-
nomic impacts of alternative wetland management strate-
gies. The broad objectives of this research are to: (1) esti-
mate functions describing relationships between the extent
and configuration of wetlands and other land use types to
the provision of three classes of ecosystem services that
wetlands can provide: water quality enhancement, provi-
sion of habitat for wildlife, and flood control benefits;
(2) estimate wetlands restoration costs and exogenous land
use conversion probabilities; and (3) incorporate these into
a spatial optimization model that can determine the optimal
configuration of restoration activities for a range of envi-
ronmental objectives subject to a budget constraint
Thus far, models for two ecosystem services from
wetlands have been developed for the Central Valley of
California: the provision of habitat for mallards, and the
attenuation of nutrients from nonpoint source runoff.
Habitat benefits were estimated by acount regression model
that relates breeding mallard abundances to the configura-
tion of land use types in the study area. Water quality
benefits were estimated by a spatially distributed model of
nonpoint source runoff as well as nitrogen and phospho-
rus attenuation in wetlands. County assessor data were
used to estimate average land values for each land use
type in each county in the study area. Wetlands construc-
tion costs were estimated using expected costs for pro-
posed Wetlands Reserve Program projects in California
for the year 2000. The habitat and water quality models,
along with the estimates of restoration costs, were inte-
grated into a numerical optimization framework, and two
decision scenarios in the Central Valley of California were
analyzed. The first scenario was a case of optimal spatial
targeting in a small watershed, and in the second scenario,
sites were selected from those offered for enrollment in
an easement program throughout the study area. The re-
sults indicate the potential for gains in effectiveness from
spatial targeting and substantial tradeoffs between envi-
ronmental benefits. Maximizing habitat quality in the wa-
tershed yielded a 38 percent increase in mallard abun-
dance and a 3 percent decrease in nitrogen loads to die
river. In contrast, maximizing water quality resulted in a
25 percent decrease in nitrogen loads and a 2 percent
increase in mallard abundance. Qualitatively, similar re-
sults were obtained when sites were chosen from a set of
offered sites throughout the valley, but the tradeoffs were
not as severe. The results also suggest that at traditional
funding levels, the Wetlands Reserve Program in Califor-
nia could reduce nitrogen loads to rivers by approximately
29,000 kg and increase total mallard abundance in the
breeding season by approximately 440 individuals through-
out the Central Valley in a given year.
Support of mallard populations and the attenuation
of nutrients from nonpoint source runoff are not the
only environmental benefits that wetlands can provide,
but they were used here to illustrate methods for model-
ing ecosystem services, targeting restoration activities
using spatial optimization models, and measuring the
tradeoffs between different environmental goals. Future
work will focus on developing a model of flood control
benefits from wetlands, and estimating exogenous land
use conversion probabilities.
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Environmental Protection and Endogenous Technical Change:
A Theoretical and Empirical Analysis
James J. Opaluch, Shunsuke Manage, Di Jin, and Thomas A. Grigalunas
Environmental and Natural Resource Economics, University of Rhode Island, Kingston, RI
Technological change is central to maintaining stan-
dards of living in modem economies with finite resources
and increasingly stringent environmental goals. Success-
ful environmental policies can contribute to efficiency by
inducing, rather than inhibiting, technological innovation.
Yet, little research to 'date has focused on the design and
implementation of environmental regulations that encour-
age technological progress, or in measuring productivity
change in the face of depletion of natural resources and
increasing stringency of environmental regulations.
This research project models and measures produc-
tivity change, with an application to offshore oil and gas
production in the Gulf of Mexico using Data Envelop-
ment Analysis. This is an important application because
energy resources are central to sustaining our economy,
and because petroleum products are currently among
the most significant energy resources. The traditional
issue of measuring productivity change was recast by
recognizing that production activities implicitly embody
joint production of market and environmental outputs.
Thus, measures of productivity change consider both
market and nonmarket outputs.
The net effects of technological progress and depletion
on productivity or offshore oil production in the Gulf of
Mexico were measured using a unique field-level set of data
of production from all wells in the Gulf of Mexico for the
time period from 1946-1998 (see Figure 1). Past technol-
ogy indexes based on simple counts of technological inno-
vations were updated and extended to account for the im-
portance of each innovation using the results of an industry
survey. Results are consistent with the hypothesis that tech-
nological progress has mitigated depletion effects over the
study period, but the pattern differs from the conventional
wisdom for nonrenewable resource industries. Contrary to
the usual assumptions of monotonic changes in productiv-
ity or an inverted "U" shaped pattern, productivity declined
for the first 30 years of the study period. More recently,
however, the rapid pace of technological change has out-
paced depletion and productivity has increased rapidly, par-
ticularly in the most recent 5 years of the study period.
Next, the Porter Hypothesis was recast, and a revised
version was tested. The Porter Hypothesis states that stricter
environmental regulations can contribute to productive
efficiency. The Porter Hypothesis was recast to include
market and nonmarket outputs. The results show a long-
run upward trend of productivity, accounting for envi-
ronmental and market outputs. Granger causality tests were
used to examine the direction of causality between inno-
vation and environmental regulation. Although firm con-
clusions of the causal relationship between environmental
stringency and technological innovation (new inventions)
could not be made, we found a clear causal direction from
environmental stringency to less structural aspects of in-
novation such as so-called "learning by doing."
10
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2002 Decision-Making and Valuation for Environmental Policy Workshop
Productivity
Index
1.8
1.6
1.4
12
1.0
0.8
Figure 1. Estimates of Total Factor Productivity (TFP) and depletion in Gulf of Mexico OCS
production, 1946-1998.
EPA/NSF Partnership for Environmental Research
11
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2002 Decision-Making and Valuation for Environmental Policy Workshop
Applying Consensus and Cultural Models To Improve
Environmental Decision-Making
Michael Paolisso and Erve Chambers
University of Maryland, Baltimore, MD
This research project seeks to strengthen the capac-
ity of national and state agencies and local communities
to better incorporate stakeholder interests, beliefs, and
values into environmental decision-making. Specifically,
the research combines theoretical and methodological de-
velopments from environmental and cognitive anthropol-
ogy to identify and model environmental stakeholders'
priorities, beliefs, and values related to ecology and pollu-
tion. The resulting cultural models are formal representa-
tions of shared explicit and implicit knowledge, interests,
beliefs, and values that members draw on to process,
understand, and give value to the contemporary environ-
mental challenges facing their communities, industries,
and ecosystems.
The project includes undertaking field-based research
with three Chesapeake Bay stakeholder groups: environ-
mental professionals, which includes scientists; conser-
vationists and resource managers; and farmers and com-
mercial fishermen, known locally as watermen. For each
of these groups, qualitative and quantitative studies are
being completed of the cultural schemas and models that
organize implicit, assumed environmental knowledge, par-
ticularly as it applies to local and state decision-making
related to pollution control and natural resource manage-
ment. The results of the qualitative research suggest that
the three stakeholder groups share a continuum of un-
derlying values about preserving the environment, and all
strongly support efforts to protect the environment and
sustainably use natural resources. Key values that are
implicitly shared among the groups are a sense of moral
responsibility to protect the environment, a willingness
to sacrifice short-term benefits for longer term environ-
mental good, and a feeling of dependence on the environ-
ment for their livelihood and lifestyle. Despite an underly-
ing agreement on core environmental values, farmers and
watermen perceive strong differences between their en-
vironmentalism and environmental knowledge, compared
to environmental professionals, and vice versa. This can
be most clearly seen in the comparison of watermen and
environmental professionals in the context of recent de-
cisions to increase regulation of the blue crab fishery.
Using the cultural model approach, a watermen model
of blue crab management was identified (see Figure 1).
Watermen conceptualize the blue crab fishery as jointly
managed by divine providence and secular management
God, personified in nature, provides crabs for human con-
sumption, and it is beyond the capacity of science and
management to fully understand and regulate nature. For
watermen, nature is too random and variable for science
to understand. What science can and should understand
is how man's pollution affects blue crabs, hi other words,
science can only understand what man has created, not
what God has created. Moreover, science must provide
information for environmental decisions on pollution, with
the end result as a decrease in the pollution that threatens
crab reproduction and the sustainability of the blue crab
fishery. Finally, despite public ±etoric, watermen believe
in a role for natural resource management agencies. This
role should focus on assisting watermen to control the
greed of some individuals whose overharvesting makes it
difficult for a larger group of watermen to continue to be
economically viable. Thus, although nature provides crabs,
humans need to help manage the crabs by addressing pol-
lution problems and developing policies that promote
sustainability of the blue crab fishery. In the end, the re-
search has found that despite public discourse on blue
crab management in which watermen and environmental
professionals are strongly opposed to each other's posi-
tions on regulations, watermen have an underlying cul-
tural model of blue crab management that has compo-
nents of the ecological model used by scientists and re-
source managers to guide their decision-making. The fact
that this similarity has not been recognized lends credence
to the viewpoint that there is a need to promote dialogue
among stakeholders at the cultural model or schema level.
The project will continue to explore whether similar
cultural models of environment and pollution exist with
the other stakeholder groups, the farmers, and environ-
mental professionals. Final project activities will empha-
size integrating this underlying environmental knowledge,
beliefs, and values into ongoing decision-making for
pressing environmental concerns on the Bay.
12
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2002 Decision-Mating and Valuation for Environmental Policy Workshop
God Provides Crabs
nature manages crabs
nature provides
crabs for human use
DIVINE
> PROVIDENCE
pollution destroys greed threatens
crab habitat sustainable harvest
iTnman Actions Harm Crabs
regulation promote
sustainable harvest
science studies V SECULAR
poltationeSects > MANAGEMENT
Humans Attempt To
Reduce Harm to Crabs
Figure 1. Cultural model of watermen's reasoning about blue crab management
EPA/NSF Partnership for Environmental Research
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2002 Decision-Making and Valuation for Environmental Policy Workshop
Delineating Optimal Habitat Locations for Inclusion
in Migratory Flyways
Charles ReVelle, John Boland, Justin Williams, Scott Malcolm, and Daniel Bain
Johns Hopkins University, Baltimore, MD
Land development, especially of wetlands, has resulted
in the degradation and elimination of important stopover
habitat for migratory birds within the Atlantic flyway, and
the process of elimination is likely to continue to occur. To
assist in securing the survival of species that use the fly-
way, a decision support methodology was developed to
identify alternative configurations of newly protected habi-
tat locales. Such locales would be utilized to augment and
enhance the currently protected areas in the U.S. portion of
the Atlantic flyway network.
The methodology selects new areas for protection,
achieving a connected, braided network of habitat step-
ping stones extending from Maine to Florida (see Fig-
ure 1). The methodology consists of a zero-one opti-
mization model to suggest new areas for protection.
The model uses:
• Geographic Units. Seven hundred fifteen counties from
the 17 Atlantic flyway states between Maine and Florida
were used as the basic geographic units.
• Managedj4/Eos.Certaintypesoffederallyrnanagedlands
(e.g., national parks, wildlife refuges) comprised the
existing baseline system of protected stopover habitat
• Bird Species. Two species with well-known wetland
habitat needs, the black duck and the sora rail, guided
the formulation of the Flyway Model.
• Flight Distance Standards. Three alternative distance
standards were used to define allowable distances
between successive stopovers in the network: 97,
121, and 145 km (60, 75, and 90 miles), although
any desired standard can be used.
• "Quality " Index. Aside from location considerations,
the desirability of counties as stopover locales was
measured by a single quality index based on both the
prevalence of wetlands (representing habitat suitabil-
ity) and land costs.
Two objectives were explored. The first objective was to
maximize the total geographic "coverage" of the flyway re-
gion, where a county is defined as being "covered" if it has a
(new or existing) stopover within the specified distance stan-
dard. The second objective was to maximize the average
"quality" of new stopover locales, defined in terms of the
quality index. Solutions were developed on the tradeoff curve
between the objectives of coverage and quality. The solutions
should be thought of as approximate plans or policy options.
The results will be useful in the development and evaluation
of wetland policies, programs, and plans administered by
natural resource agencies and conservation organizations.
The flyway model was a first step in a multiyear re-
search effort on nature reserve selection and design. The
presence of the EPA-funded flyway project at Johns
Hopkins indicated prior and important focus to the David
and Lucille Packard Foundation, which awarded funds
for this project through a competitive process, a research
grant entitled "The Multi-Objective Design of Nature Re-
serves." This project is a collaboration between Johns
Hopkins University (Dr. Charles ReVelle, Co-PL) and
Princeton University (Dr. Simon Levin, Co-P.I). Tech-
niques and models are under development to select the
reserves that assure the representation of multiple species
and address important spatial considerations such as the
shape of reserves and the existence of wildlife corridors.
14
EPA/NSF Partnership for Environmental Research
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2002 Decision-Making and Valuation for Environmental Policy Workshop
County not covered
Covered county
Existing managed area
Newly selected stopover
0 100 200 300 400 Kilometers
Figure 1. Sample solution for augmenting the Atlantic Ryway. Thirty-eight (38) new stopovers are selected to
augment the existing managed areas. Approximately 95 percent of the flyway region is covered under
the distance standards (121,97 km). The quality achievement rating is 0.36, slightly below the
average quality rating of 0.40.
EPA/NSF Partnership for Environmental Research
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2002 Decision-Making and Valuation for Environmental Policy Workshop
Negotiating for Sustainable Development: An Evaluation
of the CBEP Decision Process
John Scholz1, Mark Lubell1, and Mark Schneider2
Florida State University, Tallahassee, FL; 2State University of New York, Stony Brook, NY
The goal of this research project is to understand
the factors that facilitate cooperation between stake-
holders involved in watershed partnerships and other
community-based environmental protection initiatives,
with a particular focus on the U.S. Environmental Pro-
tection Agency's National Estuary Program (NEP). The
NEP is one of the most prominent and well-developed
examples of community-based environmental protec-
tion, and thus provides an excellent laboratory for the
study of cooperation.
The theoretical perspective for this study relies on
political economic theories of collective action, which
attempt to identify the social, political, and environmen-
tal factors that raise or lower the benefits and costs of
cooperation. To understand the effect of collaborative
policies like the NEP on various indicators of coopera-
tion, a comparative approach has been adopted that uti-
lizes surveys of stakeholders from 20 estuaries included
in the NEP and 10 non-NEP estuaries. The main hy-
pothesis is that the NEP can change attitudes and re-
structure social relationships in ways that increase the
likelihood of cooperation.
Preliminary findings suggest that the NEP has several
interesting effects on the possibility of cooperation. So-
cial networks within the NEP are larger, more likely to
bridge multiple levels of the federal system, span conflict-
ing interest groups, and integrate scientific researchers
(see Figure 1). NEP stakeholders are more likely to be-
lieve that estuary policies are effective, although this ef-
fect is confined to stakeholders with social values that are
congruent with the consensual approach of watershed
partnerships. The NEP also appears to reduce "cognitive
conflict," which is the tendency of stakeholders with com-
peting values to have very divergent perceptions of the
severity of environmental problems and the fairness of
estuary policies.
Several positive effects of the NEP on stakeholder at-
titudes and social connections are demonstrated, which
suggest that collaborative policies deserve continued at-
tention from the environmental policy community. Fur-
thermore, several key beliefs were identified about water-
shed policies that influence perceptions of effectiveness;
these beliefs provide good targets for policymakers. How-
ever, the findings also highlight some of the difficulties of
multistakeholder negotiations and suggest that collabora-
tive policies are not appropriate for all types of environ-
mental problems and stakeholders.
The next step is to focus a sharper empirical lens on key
questions about watershed and community-based policies
that have not been answered Do watershed partnerships
actually lead to more cooperative behaviors and improve en-
vironmental outcomes like water quality? Do successful wa-
tershed partnerships have positive spillover effects for other
policies, (e.g., by improving the effectiveness of water per-
mit enforcement)? Do the factors that encourage coopera-
tion among stakeholders vary across types of stakeholders,
(e.g., farmers versus local government officials versus envi-
ronmental interest groups)? Answering these more detailed
questions will provide an even fuller picture of the evolution
of cooperation in watersheds.
16
EPA/NSF Partnership for Environmental Research
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2002 Decision-Making and Valuation for Environmental Policy Workshop
City of Tampa Hillsborough/Pinellas/Manatee Counties
FLDOT
FL Games &
Freshwater Fish Commission
Hillsborough County
Parks and Recreation
OtyofTampa
Wastewater Facilities
Mote Marine Laboratory
(link to TB NEP)
Tampa Bay Regional
Planning Council
Surface Water
Improvement
and Management
Hillsborou^
County Board of
County
Tampa Bay
Study Group
Pinellas County
Utilities
-Self-employed
-The SunCoast Conservancy
-U.S. EPA
Nautilus
Environmental
NMFS
Manatee County GovL
Manatee County Envt
Management Dept
Hillsborough County
Metropolitan Planning
atyofTampa,
Sanitary Services DepL
Dames and Moore
FLDOH
Hillsborough County
FL Phosphate Council
River
Parks Dept Holland and Knight LLP Greenways Task Force
Figure 1. The Tampa Bay NEP Network.
EPA/NSF Partnership for Environmental Research
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2002 Decision-Making and Valuation for Environmental Policy Workshop
The Contribution of Economic Analysts to Environmental
Decision-Making: Lessons From the FERC Experience
Leonard Shabman and Kurt Stephenson
Department of Agricultural and Applied Economics, Virginia Tech, Blacksburg, VA
This research project evaluates whether and how
different forms of economic information (benefit esti-
mates, cost estimates, economic impact, etc.) influence
environmental policy decisions. Case studies are being
completed in several areas: hydropowerdamrelicensing,
natural resource damage awards, and federal water project
investments. This project considers the frequently made
claim that environmental valuation—environmental ben-
efits measurement—is necessary for, and often is cen-
tral to, environmental decision-making.
Benefit measurement, albeit not for environmental
services, has long been practiced by the Corps of Engi-
neers, the Federal Power Commission (now FERC), and
others responsible for water resources development. More
recently, legislation has called for expanded use of ben-
efit cost analysis in environmental decision-making, and
recent administrations have issued guidelines and require-
ments for conducting benefit cost analysis. Court and
administrative processes levy fines for oil spills and other
disturbances to the environment, presumably based on
money estimates of the environmental damage.
The economics profession has responded to this ap-
parent demand for benefit measurement with refined theo-
retical foundations as well as new data collection and analy-
sis methods to support an extensive environmental valua-
tion research program. The environmental economics lit-
erature now includes thousands of articles describing,
applying, and comparing measurement techniques. Among
these articles are many arguing that environmental valua-
tion is both desired by decision-makers and makes an es-
sential contribution to democratic decision-making.
The heterodox economists' (American Institutional-
ism and neo-Austrian) critique of the profession's envi-
ronmental valuation research program argues that such
measurement is inconsistent with the decentralized pref-
erence discovery and revealing processes of both mar-
kets and democratic decision-making. As a result, they
argue environmental valuation will be of little interest
when making environmental decisions, and an alterna-
tive policy-economics research program is needed to
support environmental decision-making.
Based on a review of FERC decisions, it is concluded
that environmental valuation estimates, for the reasons
argued by the critics, are rarely done and if done, have
been used to legitimize decisions made on other grounds.
Instead, the FERC decision-making process is struc-
tured to assess tradeoffs of money measures of oppor-
tunity cost (forgone power benefits and other benefits)
against measures of physical changes in the environ-
ment. However, the understanding and measurement of
opportunity costs often are limited. Economics research
into improved opportunity cost measurement would make
a more significant contribution to FERC decision-mak-
ing than further work on environmental valuation.
18
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2002 Decision-Making and Valuation fortEnvifonniehtal Policy Workshop
Environmental
Policy Contexts
• Operating
conditions at
hydropower dams
• Natural resource
damages from
industrial sites and
accidents
• Water resource
project evaluation
Development
of Evaluation
Procedures
and Protocols
J
Osgfl®
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2002 Decision-Making and Valuation for Environmental Policy Workshop
Estimating the Cost of Carbon Sequestration in Global Forests
Brent Sohngen1, Robert Mendelsohn2, and Roger Sedjo3
'The Ohio State University, Columbus, OH; 2Yale University, New Haven, CT; Resources for the
Future, Washington, DC
This research project explores the cost of large-scale,
global carbon sequestration programs in forests. The spe-
cific objectives of the project are to develop: (1) a model
of the marginal cost of carbon sequestration in forests;
(2) a global carbon storage database for forested biomes;
and (3) alternative strategies for carbon sequestration in
forests and estimate costs.
This research explores the theoretical link between the
marginal damages from carbon emissions and the annual
marginal benefits of carbon sequestration. A carbon se-
questration valuation function is then developed and incor-
porated into a model of global timber markets. The resulting
carbon sequestration-forestry model is integrated with an
integrated assessment model to complete the links between
sequestration, the carbon cycle, and energy markets. Simu-
lations with different climate damage functions are prepared
to show the optimal time path for carbon sequestration and
the potential costs of sequestration programs.
The results suggest that over the next 100 years,
forests could sequester 38.6 to 102 billion metric tons at
carbon prices ranging from $61 to $187 per ton. Carbon
sequestration in forests could be large enough to have an
effect on carbon abatement prices and the energy mar-
ket, although the effect is not dramatic. Nearly 70 per-
cent of sequestration is predicted to occur with reduced
deforestation and additional plantations in tropical and
subtropical regions of South America, Africa, and Asia-
Pacific. The remaining 30 percent of sequestration is
predicted to occur in the temperate zone. Much of the
carbon results from land use change, although changing
rotations and management intensity are relatively more
important in the temperate zones (see Table 1).
To date, there have been no global estimates of the
costs of carbon sequestation, and other studies have not
considered the importance of dynamic factors such as
forest growth and rising climate damages. Failing to ac-
count for system-wide and dynamic effects could bias
other estimates of carbon sequestration costs downward.
These estimates account for timber market activity, and
thus account for potential leakage in markets. Most of
the additional storage (70%) is predicted to occur in tropi-
cal regions through reductions in deforestation. Surpris-
ingly, storage in markets does not account for much
additional carbon sequestration at the prices considered.
A number of additional steps should be taken with
this research. First, the integrated results could be linked
to estimates of climate and carbon impacts on forest
growth and distribution to assess whether climate im-
pacts affect the cost of carbon sequestration. Second,
although land supply functions are included for all re-
gions of the world, the model does not fully integrate
global forestry and agricultural markets. Additional re-
search should be undertaken to develop a global eco-
nomic model of forestry and agriculture. Third, given
the potential importance of trading and property rights,
the single global demand function for forest products
and carbon rent should be expanded to include regional
demand functions for forest products to capture poten-
tial trade effects and the effects of different distributions
of initial property rights to carbon in forests.
20
EPA/NSF Partnership for Environmental Research
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2002 Decision-Making and Valuation for Environmental Policy Workshop
Table 1. Proportion of carbon sequestration arising from different activities in different regions. These
estimates assume that carbon damages rise from approximately $23 per ton of emissions in 2000 to
$188 per ton by 2100.
Land Use Increasing Manage. Market
Change Age Intensity Storage
2010 (Carbon Price = $33.01)
Land Use Increasing Manage. Market
Change Age Intensity Storage
2100 (Carbon Price = $187.54)
Temperate Regions
N.America 79 21 1 (2)
Europe 30 85 0 (15)
FSU 97 4 0 (1)
China 100 0 0 0
Oceania 100 0 0 0
Temperate 85 18 0 (3)
51
63
74
82
83'
63
39
25
18
13
5
28
1
8
6
2
3
6
3
4
2
3
9
3
Tropical Regions
S. America
India
Asia-Pacific
Africa
Tropical
GLOBAL
77
98
98
98
88
87
25
0
3
3
14
16
0
2
0
0
0
0
(3)
0
(1)
(1)
(2)
(2)
90
90
80
96
89
81
9
(1)
17
4
9
15
1
3
4
1
2
3
0
8
(1)
(1)
(0)
1
EPAJNSF Partnership for Environmental Research
21
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2002 Decision-Making and Valuation for Environmental Policy Workshop
Teaching Proper Use of a Household Hazardous Waste Facility
Carol Werner
University of Utah, Salt Lake City, UT
"Why do people use toxic household products?" "Can
we teach them to be more careful in their use and disposal
of these products?" The purpose of this research project
was to teach residents about the County's new Household
Hazardous Waste (HHW) disposal facility, but to do so in
a way that discouraged unnecessary use and waste and
encouraged long-term behavior change. Five behaviors
were targeted: (1) switch to nontoxic alternative prod-
ucts; (2) store chemicals at proper temperatures to extend
shelf life; (3) use up leftovers instead of disposing of them;
(4) share unwanted leftovers with friends; and (5) take
spoiled products to the HHW facility.
Over a 2.5-year period, a holistic program was de-
veloped, using psychological principles of how people
process messages, what increases acceptability of the
message, what increases memory for the information,
and what can be done to help people maintain new be-
haviors. A variety of strategies for getting groups inter-
ested in the program were used. One strategy that did
not work was to send materials to church groups and
ask them to develop programs in conjunction with our
"liaison." Only a handful of churches provided us with
the name of a person interested in organizing their group,
and only one group reported a successful leftover ex-
change. This approach was abandoned, and speaking at
senior centers took place as a way to find out what might
interest people about HHW. It was learned that people
are concerned about toxics and eager to learn about ef-
fective nontoxic alternatives. A new program was de-
veloped around these interests. A key feature is that the
individual's attitude and behavior change are embedded
in a significant reference group so they can learn from
each other. To date, more than 80 groups have partici-
pated in our group discussions. Two people from each
group completed a questionnaire as a rough index of
program impact.
Reported Behavior Change. Since our presentation,
33 percent of the respondents had taken something to
the HHW disposal facility. If this percentage of "proper
disposers" generalized to everyone who saw our pre-
sentation, the behaviors of more than 400 households
(33% of the estimated 1,275 households not already us-
ing the facility) were potentially changed.
Attitudes. Participants' attitudes and behavioral in-
tentions differed significantly from matched control group
members who had missed the meeting, supporting the
idea that participants had been influenced by their friends'
comments and behaviors during the meeting. How does
this level of change (33%) compare to previous promo-
tion campaigns? Five other respondents—or 10%—re-
ported they had already been using the facility in the 5
years since it had opened. Costs for this impact are fairly
modest (approximately $25 per group for the presenta-
tion; average group size of 31).
The current program aims to extend this work in sev-
eral broad areas; (1) training observers to document meet-
ing content so that those processes can be related to attitude
and behavior change; (2) evaluating the handouts; (3) de-
veloping additional mechanisms for institutionalizing long-
term change; and (4) packaging the program so that county
personnel in other states would use our program in design-
ing their own education and outreach program.
22
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2002 Decision-Making and Valuation for Environmental Policy Workshop
Index of Authors
Abel,T.,l Paolisso,M.,12
Atran,S.,2 ReVelle, C, 14
Boyd,J.,4 Scholz,J.,16
Grant, G., 5 Shabman, L., 18
Montgomery, C, 7 Sohngen,B.,20
Newbold,S.C.,9 Werner, C., 22
Opaluch,J.J.,10
EPA/NSF Partnership for Environmental Research 23
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