PROCEEDINGS
1998 DECISION-MAKING AND
VALUATION FOR
ENVIRONMENTAL POLICY
WORKSHOP
2-3 April 1998
Washington, DC
Sponsored by the NSP/EPA Partnership for Environmental Research
£ NATIONAL SCIENCE FOUNDATION
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ENVIRONMENTAL PROTECTION AGENCY
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PROCEEDINGS
1998 DECISION-MAKING AND
VALUATION FOR
ENVIRONMENTAL POLICY
WORKSHOP
2-3 April 1998
Washington, DC
Sponsored by the NSF/EPA Partnership for Environmental Research
*13ftW£LO
NATIONAL SCIENCE FOUNDATION
°'*3^°
ENVIRONMENTAL PROTECTION AGENCY
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Table of Contents
Introduction v
Effective Environmental Policy in the Presence of Distorting Taxes 1
Dallas Burtraw, Ian Parry, Lawrence Goulder
Policy Applications for the Patuxent Watershed Ecological-Economic Model 3
Jacqueline Geoghegan
Valuation of Risks to Human Health: Insensitivity to Magnitude? 4
James K. Hammitt, John D. Graham, Phaedra Corso
Updating Prior Methods for Nonmarket Valuation: A Bayesian Approach To Combining Disparate
Sources of Environmental Values 5
Joseph A. Herriges, Catherine L. Kling
Optimal Experimental Design for Conjoint Analysis 6
Barbara J. Kanninan
Mortality Risk Valuation and Stated Preference Methods: An Exploratory Study 7
Alan Krupnick, Maureen Cropper, Anna Alberini, Robert Belli, Nathalie Simon
Policy, Norms, and Values in Forest Conservation: Protected Area Buffer Zone Management in
Central America 8
Max J. Pfeffer, John W. Schelhas
Aggregative and Deliberative Contexts for Valuation 9
Mark Sagoff
Distinguishing Values From Valuation in a Policy-Relevant Manner 10
Theresa Satterfield
Decision-Making Under Uncertainty in the Conservation of Biological Diversity 12
Andrew R. Solow, Stephen Polasky, Jeffrey Camm, Raymond O 'Connor, Blair Csuti
Stated Preference Valuation Using Real Money for Real Forested Wetlands 13
Stephen K. Swallow, Michael A. Spencer, Christopher J. Miller, Peter Paton, Robert Deegen,
Jason Shogren
The Transition to "Green" Technology: Implications of Irreversibiliry and Nonconvexity 15
Michael Toman
Valuing Reductions in Environmental Sources of Infertility Risk Using the Efficient Household Framework ... 16
George Van Houtven, V. Kerry Smith
Factors Influencing Participation of Local Government Officials in Environmental Policymaking and
Implementation 18
Thomas Webler, Seth Tuler, Paul C. Stern
HI
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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. Annual competitions funded through this partnership include:
Technology for a Sustainable Environment, Environment Statistics, Water and Watersheds, and Decision-Making
and Valuation for Environmental Policy.
The Decision-Making and Valuation for Environmental Policy competition was one of the competitions
sponsored in Fiscal Year (FY) 1996 by the NSF/EPA Partnership for Environmental Research. Using panels of
experts from outside the agencies, NSF and EPA staff reviewed 133 proposals and made 13 awards totaling $2.6M.
Research was encouraged on the identification and measurement of values, with an emphasis on situations where
prices or comparable standards of worth are deficient or absent, and on alternatives for involving groups and
organizations in environmental decision-making. Research was solicited in four related areas:
f Costs of Environmental Programs: This area of research seeks to find and test integrated models and improved
methods to estimate and validate aggregate and sectoral costs of environmental protection programs and policies.
* Ecosystem Valuation: Scientific advances in ecosystem research require a better understanding of the inter-
connections among social, economic, physical, and biological systems. 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.
+ Benefits of Environmental Programs and Policies: This area of research seeks to develop methods to improve
estimations of values of environmental protection programs and reductions in mortality and morbidity risks
resulting from pollution and other environmental hazards.
* Decision-Making for Environmental Policy: This area of research examines the behavioral and institutional
factors that influence the development, implementation, and evaluation of environmental policies. Improved
understanding of these influences can lead to improvements in policy design and acceptability.
The April 2-3, 1998, Workshop on Decision-Making and Valuation for Environmental Policy provides a
forum for investigators funded by the FY 1995 and 1996 competitions to interact with one another and with EPA,
NSF, and other federal officials interested in valuation research. For the proceedings volume, investigators were
asked to contribute statements describing the objectives and significance of their work as well as preliminary findings
from their first year of research.
The NSF/EPA Decision-Making and Valuation for Environmental Policy competition was executed again in
1997. The competition reviewed 69 proposals and made 15 awards. In FY 1998, an expanded Decision-Making
and Valuation for Environmental Policy Program has received approximately 120 proposals. Decisions on these
proposals are expected by July of 1998.
Any opinions, findings, conclusions, or recommendations expressed in this report are those of the investiga-
tors who participated in the research. For further information about this competition, please contact the Program
Officers: Ms. Deborah Hanlon, EPA, Office of Research and Development, 202/564-6836, or Dr. Rachelle
Hollander, NSF, 703/306-1743.
Further information on the competition, abstracts, and results of funded research and future solicitations may
be found on the EPA National Center for Environmental Research and Quality Assurance Home Page at http://
www. epa. go v. ncerqa.
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Effective Environmental Policy
in the Presence of Distorting Taxes
Dallas Burtraw and Ian Parry
Resources for the Future, Washington, DC
Lawrence Goulder
Stanford University, Stanford, CA, and Resources for the Future, Washington, DC
Traditional analysis of environmental problems is
cast in a so-called "first best" setting absent distortions
away from economic efficiency other than environ-
mental externalities. This project is investigating the
cost of environmental policies in a more realistic
"second-best" setting in which the economy is distorted
away from economic efficiency prior to the adoption of
environmental policy. The economic cost of policy
instruments is being investigated in the presence of
preexisting distortionary taxes, and guidance for policy-
makers for the choice of instruments to reduce the cost
of environmental policies is being developed.
Environmental policies offer benefits through
environmental improvement and by imposing costs on
firms that raise product prices to better reflect the social
opportunity costs of resources used in production.
However, set in a context with preexisting distortionary
taxes, an offsetting detrimental effect is identified. The
increase in product prices serves to lower the real wage
of workers, which can be viewed as a "virtual tax"
layered on top of preexisting taxes that amplifies the
distortions of the tax system. Some environmental
policies have a third effect stemming from their ability
to raise revenues that in principle could be used to
reduce preexisting taxes, offsetting the tax-interaction
effect to an important but only partial degree.
This project focuses on the comparison of
revenue-raising and nonrevenue-raising instruments and
evaluates their economic cost in achieving a stated
environmental goal. Analytical and numerical general
equilibrium models are used to examine the costs of
pollution reduction under a range of environmental poli-
cy instruments in a second-best setting with preexisting
factor taxes and to provide guidance for the choice of
policy instruments under various circumstances. The
presence of distortionary taxes raises the costs of
pollution abatement under each instrument that is exam-
ined (i.e., taxes, nonauctioned permits, performance
standards, fuel [output] taxes and technology standards)
relative to its costs in a first-best world. For plausible
values of preexisting tax rates and other parameters, the
cost increase for all policies is substantial (35 percent or
more). This extra cost is an increasing function of the
magnitude of preexisting tax rates.
Policies that raise revenues promise to signifi-
cantly out-perform policies that fail to do so. For
instance, nonauctioned permits can be several times
more expensive than environmental taxes or auctioned
permits. A detailed analysis of the SO2 emission
allowance trading program indicates that preexisting tax-
es raise the cost to the economy of this regulation by
$907 million per year, adding an additional 70 percent
to the compliance cost for the program. If the program
were to raise revenue, this could reduce the cost by
$533 million according to our model. Earlier work on
instrument choice has emphasized the potential re-
duction in compliance cost achievable by converting
fixed emissions quotas into tradeable emissions permits.
This project's results indicate that the regulator's
decision of whether to auction or grandfather emissions
rights can have equally important cost impacts.
The cost differences among instruments depend
importantly on the extent of pollution abatement under
consideration. For small emission reductions, the
investigators found that nonauctioned permits perform
relatively worse. For instance, the costs of reducing
carbon emissions by 10 percent are more than 300
percent higher using nonauctioned permits than under a
tax. Strikingly, for all instruments, except the fuel tax,
these costs converge to the same value as abatement
levels approach 100 percent. Figure 1 indicates the net
efficiency gain of taxes and nonauctioned permits in
achieving climate change goals, when emissions are set
at the so-called "Pigouvian level," calibrated to an
efficient level in a first-best world absent preexisting
taxes. The horizontal axis indicates a range of potential
marginal damages from carbon that in turn determine
the Pigouvian level of emission reductions (not shown),
and the vertical axis indicates benefits less costs (net
benefits). The top curve shows the efficient carbon tax
if there are no preexisting taxes in the economy. The
middle curve shows the efficient carbon tax given
preexisting taxes. Though it is uniformly lower, both
yield positive net levels for any level of marginal
damages and an associated goal for emission reductions.
The bottom curve indicates the net benefits if a
nonauctioned permit (carbon quota) scheme is used to
achieve the Pigouvian level of emission reductions.
Over a large range of plausible marginal damage
estimates, the net benefits of this type of policy are
negative.
The investigators are modeling the institutional
setting of the U.S. electric utility industry to consider
the regulation of multiple pollutants, other environ-
mental policies special to the industry, and various
forms of imperfect competition and market structure.
Other important extensions have to do with the role of
heterogeneity among firms and the relationship between
environmental quality, economic productivity, and labor
supply.
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40
30
e
i »
"
"
-5
-10
Carbon Tax
or Quota,
tu>=0
Carbon Quoin,
tuo = 0.4
Marginal Damages
(1990 dollars/ton carbon)
Figure 1. Net efficiency gain under the Pigouvian rule.
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Policy Applications for the Patuxent
Watershed Ecological-Economic Model
Jacqueline Geoghegan
Department of Economics, Clark University, Worcester, MA
The spatial distribution of land-use/land cover
change (LUCC) as a cause of other environmental
change is well documented in the natural sciences. The
spatial modeling of anthropocentric land-use change
within the domain of the social sciences, especially
economics, has been much more limited. Although it is
true that two of the major LUCC categories: urbaniza-
tion and tropical deforestation, have been extensively
studied by economists, these are rarely spatially dissag-
gregated or spatially explicit. LUCC is a spatial process
and must be modeled as such. To explain and predict
LUCC, models must be developed to address where,
when, and why LUCC happens.
This project extends work begun under an Envi-
ronmental Protection Agency cooperative agreement in
which a preliminary spatial econometric model of land-
use change was developed for the Patuxent Watershed
in Maryland that focuses on the large majority of land-
use changes in the study region: open uses (forestry
and agricultural) to residential uses. The first extension
to the original spatially explicit hedonic model of
residential land values is to include detailed infor-
mation on the different types of open space around a
residential land parcel, in addition to location and other
attributes of the parcel. Two types of open space are
included: publicly owned parks and privately owned
forest land as well as agricultural land.
The investigators hypothesize that individuals will
value these "permanent" open spaces differently than
"developable" open spaces in their valuation of residen-
tial land. Preliminary results show that homeowners are
willing to pay a premium to live near permanent open
space. This estimated hedonic model is then used to
create predicted spatial maps of value of undeveloped
land if it was to be put in residential use, given the
existing set of the natural, human, and regulatory land-
scape.
The second stage of modeling and the second
research innovation currently under way involve esti-
mating a duration model of historical land-use conver-
sion decisions. In this stage, historical decisions of
land-use change are modeled as functions of the
expected returns and expected costs at each point in time
from the conversion of land-use from agricultural and
forestry uses to residential development. These expec-
tations will be a function of the value in original use,
predicted value in residential use (derived above), and
costs of conversion, which include regulatory costs.
Once the parameters of these two stages of the
model are estimated, the model is used to generate the
relative probabilities of conversion of different devel-
opable parcels in the landscape. A spatial pattern of
relative development pressure is obtained as a function
of characteristics of the parcels and their locations.
Because the explanatory variables used to predict
the values in residential and alternative uses and the
costs of conversion are all functions of ecological fea-
tures, human infrastructure, and government policies,
the effects of changes in any of these variables on land-
use change can be simulated.
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Valuation of Risks to Human
Health; Insensitivity to Magnitude?
James K. Hammitt and John D. Graham
Center for Risk Analysis and Department of Health Policy and Management, School of Public Health, Harvard
University, Boston, MA
Phaedra Corso
Center for Risk Analysis and Division of Health Policy, Harvard University, Boston, MA
The validity of contingent-valuation (CV) based
estimates of willingness to pay (WTP) have been
criticized on the basis that estimated WTP is not
sufficiently sensitive to the magnitude of the good being
valued. In contrast to other contexts, where the WTP
for different quantities of a good often should be less
than proportional to the quantity offered, conventional
economic theory predicts that WTP for reductions in
period-mortality risk should be proportional to the
magnitude of the risk increment (except for a small
income effect). This project's goals are to: (1) deter-
mine the extent to which inadequate sensitivity to mag-
nitude is a barrier to eliciting valid estimates of WTP
for reduction of risks to human health, and (2) develop
and test (using split samples) alternative methods for
communicating risks that may promote consistency
between empirical and theoretical estimates of WTP.
A series of CV studies of WTP for reductions in
health risk are being undertaken. These studies differ
in the format (i.e., telephone vs. telephone/mail/tele-
phone vs. in-person), the health risks presented (e.g.,
automobile accident, food-borne illness, blood transfu-
sion), and the materials used to describe changes in
health risks.
A series of verbal "probability analogies" were
developed for use in telephone surveys. Focus groups
and pilot tests were used to identify the most promising
analogies, which were subsequently tested in a split-
sample telephone survey. Visual risk communication
devices (i.e., risk ladders, colored graph paper) are cur-
rently in development and will be tested using in-person
and telephone/mail/telephone surveys. Risk-communi-
cation materials are evaluated by the extent to which
they facilitate or impede obtaining estimated values that
are consistent with theoretical predictions of the
sensitivity of WTP to the magnitude of risk reduction.
This project's results reflect substantial variation
between topics and details of the elicitation process. In
telephone interviews, statistically significant differences
were found consistently in WTP for automobile accident
risk using an alternative elicitation format (in which the
risk reduction required for a specified cost increment is
elicited) instead of the conventional format. No differ-
ence was found in WTP to reduce the risk of food con-
tamination, despite an order-of-magnitude difference in
the risk. A comparison of WTP for qualitatively dif-
ferent risks of viral infection transmitted by blood trans-
fusion indicates some sensitivity to risk magnitude. In
all three risk contexts, use of the probability analogies
to convey risk had a modest effect on improving the
consistency of estimated and theoretical sensitivity to
scope. Initial results suggest that verbal communication
of small risk changes is challenging and casts some
doubt on the validity of prior studies that elicited values
for risk reduction using verbal descriptions.
Materials are being developed for a mixed tele-
phone/mail/telephone format survey. This format will
allow us to use visual aids for communicating risk mag-
nitudes to respondents. In contrast to the limited means
of communicating risks that are available in a telephone
survey, these visual materials may lead to improved
respondent understanding of the specific risk changes
and greater consistency of estimated WTP with theore-
tical expectations.
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Updating Prior Methods for Nonmarket Valuation: A Bayesian
Approach To Combining Disparate Sources of Environmental Values
Joseph A. Herriges and Catherine L. Kling
Department of Economics, Iowa State University, Ames, I A
This project uses a Bayesian framework to
provide a systematic approach to integrating and
interpreting data from disparate sources. For data
integration and benefits transfer problems, the Bayesian
paradigm provides a natural and internally consistent
way of framing the problem and for developing meth-
odological solutions. The framework is being applied
to the combination of contingent valuation and travel
cost data, the combination of travel cost and contingent
behavior data, and to the transfer of travel cost or
contingent valuation data from a set of studied sites to
an unstudied policy site. This project's objectives are
to: (1) develop and test Bayesian procedures for com-
bining disparate sources of nonmarket valuations, (2)
develop and test Bayesian procedures for benefits
transfer, and (3) estimate the value of wetland restora-
tion in the State of Iowa.
To explore the Bayesian methods in nonmarket
valuation, the investigators proposed to undertake
primary data collection via mail surveys. Specifically,
2,000 current fishing and hunting license holders in the
State of Iowa are being randomly sampled as well as
4,000 Iowa residents drawn from the general popula-
tion. A pretest of 600 Iowa residents was completed in
the fall of 1997, and the full-blown study is being
administered. The survey elicits several kinds of infor-
mation from respondents. First, a series of questions is
posed concerning the various visits that these individuals
made during the past year to wetland areas across the
state. For this task, the state is divided into 15 wetland
regions. The number and location of the trips are
elicited as well as information on the types of activities
undertaken while at these sites (e.g., hunting, fishing,
biking/hiking, nature viewing). After establishing their
current usage pattern, the survey respondents are then
asked a contingent behavior question. In particular, the
respondent is asked whether he or she would have taken
at least one visit to a specific location if the price of
visiting that location was higher (this amount is the
"bid"). Both the bid amount and the "location" are
varied from survey to survey. The respondent is asked
then how many trips he or she would have taken to each
of the wetland areas, assuming that this new, higher cost
of taking the trip was in effect. A protest question
completes this portion of the survey.
The next major section of the survey collects
information on a variety of issues related to current
knowledge about wetlands and opinions about how these
areas should be managed. This section is intended
primarily to provide information for policy analysts in
the state and for private and public agencies with
interests in the amount of public awareness regarding
wetland issues. The third component of the survey
contains a detailed scenario concerning one of two
major wetland areas in the state. One of the scenarios
concerns the Prairie Pothole Joint Venture, a program
that has restored wetlands in several states in the upper
Midwest, including Iowa, as well as in portions of
Canada. This restoration has been accomplished both
by purchasing land outright from willing sellers and by
developing a variety of easements where landowners
retain die ownership of these lands, but agree to restore
the land to its original prairie pothole wetland state. In
this scenario, the Prairie Pothole Joint Venture is
described, and a single-bounded contingent valuation
question is asked concerning the respondent's willing-
ness to pay for increased conversions of land via this
program.
The second scenario is based on the Iowa River
Corridor Project, a second major wetlands restoration
effort in the State of Iowa. The Iowa River Corridor is
an area of saturated soils that experiences frequent
flooding and encompasses approximately a 50-mile
stretch along the Iowa River in central Iowa. As a
consequence of the 1993 floods in the region, many
landowners became interested in alternatives to
traditional farming practices. As a result, the Natural
Resource Conservation Service initiated the Iowa River
Corridor Project, where landowners were giveri the
option of enrolling their land in the Emergency
Wetlands Reserve Program and would receive a one-
time payment equal approximately to the value of their
farm crops in exchange for a permanent easement on the
land. The Natural Resource Conservation Service then
restores the land to wetlands. In this version of the
survey, the Iowa River Corridor Project is described to
respondents. Respondents are asked about their willing-
ness to pay for an additional 7,000 wetland acres in the
region. Further, respondents are asked how many
additional visits they would take to wetlands in the area.
The final section of the survey is common to both
the Prairie Pothole and the Iowa River Corridor
versions and gathers information concerning socioeco-
nomic variables such as age, education levels, gender,
and income. During the remainder of this project,
efforts will turn towards the development and testing of
Bayesian procedures for combining the various revealed
and stated preferences obtained through the mail survey.
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Optimal Experimental
Design for Conjoint Analysis
Barbara J. Kanninan
University of Minnesota, Minneapolis, MN
To assess the total value, including use and
nonuse values, of nonmarket goods such as envi-
ronmental amenities, researchers often apply survey
techniques that allow them to explore public preferences
for hypothetical goods or services. The standard survey
technique for this purpose has been the contingent
valuation (CV) method. Recently, conjoint analysis has
been used in several environmental contexts. Conjoint
analysis is a marketing technique that can be used to
assess values for attributes of market or nonmarket
goods based on survey respondents' willingness to
trade-off different bundles of these attributes.
In a conjoint analysis survey, respondents are
presented with a set of scenarios that differ in terms of
a series of attributes and are asked to rank the
alternative scenarios, or choose their most preferred.
The scenarios in the choice set differ by the levels of the
different attributes. A major cost consideration in
conducting surveys for environmental valuation is the
per unit cost of survey administration. At current costs,
sample sizes are often limited to the smallest that
researchers feel is necessary for a particular problem.
By employing optimal survey design techniques, prac-
titioners can increase the informational content of each
observation, producing the equivalent effect of a larger
sample size.
This project's goal is to determine optimal
attribute levels and choice sets for conjoint analysis
questions that, given a fixed number of observations,
will provide the most information possible about para-
meter estimators of interest such as mean or median
willingness to pay.
This project will extend the existing literature on
the optimal design of conjoint analysis surveys in two
ways: (1) it will consider attribute levels as well as
choice sets as variables in the optimization problem, and
(2) it will derive "optimal" designs as opposed to
"efficient." The focus will be on deriving "D-optimal"
designs, that is, designs that maximize the determinant
of the information matrix.
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Mortality Risk Valuation and Stated
Preference Methods; An Exploratory Study
Alan Krupnick, Maureen Cropper, Anna Alberini, Robert Belli, and Nathalie Simon
Resources for the Future, Washington, DC
Recent analyses of the benefits and costs of
environmental regulations, such as EPA's Retrospective
Cost-Benefit Analysis of the 1970 Clean Air Act and the
Regulatory Impact Analyses for Ozone and Particulates,
pivot around the estimates of the benefits from reducing
mortality risks. Each of these studies relies on valua-
tion literature that, being based primarily on hedonic
labor market studies of accidental workplace deaths and
on contingent valuation studies of reducing accidental
death risks, is not necessarily applicable to the popula-
tion and type of risk reduction appropriate to the case of
pollution-induced mortality.
This project is designed to begin filling some of
the gaps in the mortality risk valuation literature,
focusing on the effect of current age and age of life
extension on willingness to pay. The investigators have
developed two unusually explicit contingent valuation
instruments that are administered in-person and with
visual aids—one presenting the "commodity" to be
valued in terms of risk reductions, the other presenting
the "commodity" in terms of life expectancy changes.
These instruments have been developed using a "think
aloud" protocol to help reveal how individuals process
and interpret key concepts in valuing mortality risk
reductions. These concepts include: small probabili-
ties, tradeoffs, mortality risks, the hazard rate, the rate
of time preference, conditional probabilities, and fram-
ing. Also, a protocol for identifying individuals who
demonstrate a lack of understanding of some of these
concepts is being tested.
The beginning section of the mortality risk survey
is designed to educate and familiarize the subject with
key concepts and the idea that he or she may already
pay money to reduce death risks faced in daily life. The
heart of the survey includes three sets of willingness-to-
pay questions addressing a product or action that causes
the following: (1) a reduction in their chance of dying
of 5 in 1,000 over a 10-year period beginning now, (2)
the same, but for a 1 in 1,000 risk reduction, and (3) a
reduction in the chance of dying of 5 in 1,000 over a
10-year period beginning at age 70. The concluding
section contains extensive debriefing material to test
whether our scenarios and commodity descriptions were
credible to the subject.
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Policy, Norms, and Values in Forest Conservation:
Protected Area Buffer Zone Management in Central America
Max/. Pfeffer and John W. Schelhas
Cornell University, Department of Rural Sociology and Graduate Field of Development Sociology, Ithaca, NY
This project focuses on human forest conservation
behaviors that contribute to patterns of forest cover that
enhance the conservation benefits of parks and protected
areas. The norms and values that may motivate forest
conservation behavior in economically less developed
countries are changing in important ways. Surprising
findings from recent research indicate that people in
poorer countries value the environment as much as their
counterparts in wealthier parts of the world. Exposure
to an expanding array of sometimes conflicting values
can lead to social fragmentation, value conflicts between
individuals, and uncertainty about socially appropriate
environmental behaviors. This situation leads to the
following theoretically derived empirical questions about
subjectively held environmental values or value
orientations: (1) What is the incidence of such value
orientations in society? (2) What is the degree of
heterogeneity among value orientations? and (3) What is
the social and political content of environmental value
orientations?
This project is evaluating the role of values in
environmental behavior and focuses on the following
objectives: (1) to determine the sources of environmen-
tal norms and values in economically less-developed set-
tings, focusing on hypotheses posed in recent literature;
(2) to specify relationships between environmental
norms and values and forest conservation behaviors in
protected area buffer zones; (3) to evaluate outcomes of
self-reported forest conservation behaviors with objective
measures of forest management and change; and (4) to
develop policy recommendations on protected area buffer
zone management based on research findings. Research
is being conducted in the Central American countries of
Costa Rica and Honduras. In Costa Rica, tropical re-
search and ecotourism have drawn substantial attention
to environmental issues. Costa Ricans are heavily
exposed to a variety of environmental messages. In
contrast, Honduras is one of the poorest countries in the
Western Hemisphere. Although deforestation and envi-
ronmental destruction are widespread, there is little
infrastructure for the dissemination of environmental
messages. Each country has a national park system, and
both the management of parks and adjacent lands pose a
variety of practical policy questions related to the values
of rural people and their forest conservation behaviors.
This project is using a quasi-experimental design on
selected communities in each country with different
exposures to forest conservation policies. This project's
three main components are: (1) data collection involving
semi-structured interviews, a survey of individuals and
households, and followup semistructured interviews and
focus groups; (2) land cover classification from satellite
images; and (3) a policy-oriented workshop.
Semistructured interviews have been conducted in
both countries to identify study sites and to begin dis-
tinguishing locally held conceptual models about forest
conservation. Initial interviews suggest that some con-
ceptual orientations are only loosely related to empirical
facts. The investigators will continue to identify com-
mon models guiding forest conservation behavior and to
assess their behavioral consequences. Work with satel-
lite images of Honduras and Costa Rica to determine the
location and extent of deforestation also have begun.
The Geographic Information System analysis will be
integrated into our site selection and analysis of socio-
economic data.
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Aggregative and
Deliberative Contexts for Valuation
Mark Sagoff
Institute for Philosophy and Public Policy, University of Maryland, College Park, MD
Policy decisions concerning environmental re-
sources typically engage a decisionmaker (e.g., the
Environmental Protection Agency (EPA), Forest Ser-
vice, or other federal agency) and a group of client
"stakeholders,"(i.e., parties whom those decisions af-
fect). Social science research often seeks to improve
methods on which decisionmakers may rely to gather
and aggregate data concerning the preferences of these
concerned individuals. For example, contingent valu-
ation (CV) methods seek to capture the "non-use"
values of members of society to improve cost-benefit
calculations undertaken by the EPA and other agencies.
In this framework, social science research may improve
agency decisions by making them more sensitive to the
preexisting preferences of members of the client society.
For many reasons, a new framework for environ-
mental decisionmaking has emerged that reverses the
direction of the flow of scientific information. On this
model, stakeholder and other citizen groups representing
diverse views and interests become responsible for mak-
ing the decisions—or solving the problems—associated
with the management of a particular forest, wetland,
watershed, or, indeed, any environmental asset. For
example, the Forest Service may convene represen-
tatives of environmental, industry, and community
groups, along with other interested citizens, to serve as
a council with power as "trustees" to make local forest
management decisions for which that group is then
accountable. In this framework, those most affected by
a decision—or their representatives—resolve controver-
sies on the basis of information and advice that may be
provided by the federal agency and by other, perhaps
competing sources.
This project seeks to understand the role that
social science research, particularly that associated with
CV methods, may play in the framework in which
representative stakeholder groups or councils become
responsible for many decisions concerning the manage-
ment of environmental assets, such as forests, water-
sheds, and wetlands. This project hypothesizes that
social science research into group processes can be
useful in this context by serving not so much as a
diagnostic but rather as a constructive function. Rather
than seeking to plumb ever more reliably the pre-
existing preferences of citizens, researchers would exa-
mine how group processes can help civic environmental
associations work through evidence and argument to
solve particular environmental problems. The emphasis
would change, then, from aggregating over preferences
to deliberating over solutions. The goal would not be to
maximize the satisfaction of preexisting preferences but
to develop democratic institutions to resolve local and
regional environmental controversies.
Recent literature in political theory can be joined
with that of social science in determining what counts as
a suitably diverse, representative, and deliberative body
to which agencies may democratically "devolve" certain
management decisions. Problems for further research
include identifying guidelines for convening stake-
holder groups and for identifying the conditions most
favorable to negotiation, deliberation, and consensus
building. Two papers representative of the output of
this project—one a theoretical essay concerning the
move from aggregative to deliberative methods, the
other an analytic case study—will be available to
workshop participants.
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Distinguishing Values From
Valuation in a Policy-Relevant Manner
Theresa Satterfield
Decision Science Research Institute, Eugene, OR
This project is rooted in current efforts to identify
environment-centered values not amenable to economic
frameworks. We argue that some some values are ex-
pressed discursively, embedded in the contextually,
emotively, and morally rich stories and narratives
through which we define ourselves and our actions in
relation to natural systems. This project's goal is to
develop tools that contribute both theoretically and
empirically to construct narrative values. Narrative pro-
cesses offer new opportunities to express and elicit core
values that reflect the visceral and varied ways in which
stakeholders are invested in certain natural systems.
A series of narrative-based tasks for interview
and paper-and-pencil contexts have been conducted.
These include the use of nature photography to evoke
value information in a storied form; the use of environ-
mental-conflict narratives to initiate a series of values
reflection tasks; and the use of story-completion tasks to
elicit value-based justifications for proposed actions.
Insight from a series of interviews with professional
nature writers also has been drawn.
Some of the values elicited as part of this project
are similar to those emphasized in other social and
economic evaluations. Other values elicited as part of
this project have a distinctly noneconomic cast, as
realized by the ability of narrative to summon such
things as embodied values (expressed as sensory ex-
periences that emphasize affect, express interdepen-
dencies between the human and biotic community, and
juxtapose objective and subjective valuations of natural
phenomena); recovery values (expressions that place the
historical-temporal evolution of biotic life at the center
of judgments about natural resource uses); embedded
values (the recognition that some values defy verbal
characterization; they are buried in imagistic descrip-
tions but are otherwise unnamed and unnameable); and
creativity values (valuations of nature as the source of
human thought and ingenuity). Finally, the investiga-
tors have found that narrative forms are especially
proficient for motivating values reflection because
stories tend to focus on concrete, vivid detail told
through the eyes of a character with whom the reader
can identify.
Succeeding research efforts will clarify the
strengths and weaknesses of narrative frames by com-
paring them to logical-justificatory frames and to tools
used by economic and decision analysts (e.g., multi-
attribute utility theory, contingent valuation, and cost-
benefit analyses). A staged design—the comparative
framing exercise shown in Figure 1—will be tested in
both focus group and multiple-subject contexts.
The application of technical approaches to
valuation (e.g., CVM, CBA, etc.) is often frustrated by
the fact that so many lay stakeholders, especially those
in smaller resource communities, do not think about
values in a manner amenable to the technical approaches
currently in use or are critical of valuation approaches
for embracing overly narrow conceptions of value.
There is a tension between policy initiatives aimed at
incorporating public values and the discursive frame in
which those values are expressed by lay persons. We,
as policy researchers, hope to begin closing that gap or
ameliorating that tension by developing narrative tools
for the expression, elicitation, and incorporation of values.
10
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Stage 1
Natural Resource Conflict Scenario
Stage 2
Cost-Benefit
Frame
Stage 3
Stage 4
Stage 5
MAUT:
Multi-Attribute
Utility Frame
I
Logical-Justificatory
or
Reasoned Dialogue
Frame
Values Clarification Task
1) Identify values using provided schema
2) Rate values using Affective Salience
and Strength of Commitment Scales
I
Policy Choice Task
Respondent Evaluation Task:
'Did the frame employed permit articulation
of values that were pertinent, preferable,
comfortable, inclusive, etc.?"
Narrative
Frame
Figure 1. Proposed comparative framing exercise.
11
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Decision-Making Under Uncertainty
in the Conservation of Biological Diversity
Andrew R. Solow
Woods Hole Oceanographic Institution, Woods Hole, MA
Stephen Polasky
Oregon State University, Corvallis, OR
Jeffrey Camm
University of Cincinnati, Cincinnati, OH
Raymond O'Connor
University of Maine, Orono, ME
Blair Csuti
University of Idaho, Moscow, ID
This project's goal is to develop and evaluate
methods for setting species conservation priorities when
information is incomplete. This project is organized
around the general problem of selecting a subset of
potential sites for the establishment of biological
reserves. The research will focus on three specific
issues: (1) estimating the probability that a species is
present within a particular site; (2) based on these
probabilities, identifying the subset of potential reserve
sites with maximal expected species coverage; and (3)
exploring the extent to which species number serves as
a reasonable proxy for more refined measures of bio-
logical diversity.
Alternative approaches will be evaluated in a
sequence of experiments using a modified version of the
North American Breeding Bird Survey data set. This
project is expected to result in a set of practical methods
that can be used to guide conservation decisionmaking.
12
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Stated Preference Valuation Using
Real Money for Real Forested Wetlands
Stephen K. Swallow, Michael A. Spencer, and Christopher J. Miller
Department of Environmental and Natural Resource Economics, University of Rhode Island, Kingston, RI
Peter Paton and Robert Deegen
Department of Natural Resources Science, University of Rhode Island, Kingston, RI
Jason Shogren
Department of Economics and Finance, University of Wyoming, Laramie, WY
This project is developing a model of public
preferences for forested wetland attributes in Rhode
Island by integrating methods from environmental eco-
nomics with guidance from conservation biology. The
project's objectives are to: (1) identify critical ecosys-
tem attributes of forested wetlands, considering both the
impact on residents' quality of life and factors identified
as important by conservation biologists; (2) develop a
model of public preferences for alternative attributes of
forested wetlands, using Rhode Island as a case study;
and (3) estimate money-measures of economic value for
forested wetland attributes by conducting a survey of the
public and comparing survey responses based on
hypothetical dollar costs to responses based on questions
that require respondents to contribute real money.
The survey method will ask respondents to review
descriptions of two or more parcels of land with wetland
attributes and to choose a parcel, if any, for which the
respondent would be willing to pay a specified price to
guarantee some level of protection of ecological servi-
ces. Some of these parcel descriptions will pertain to
land that belongs to private landowners who have agreed
to cooperate with the research.
Prior to the actual wetland survey, a review of
conservation biological guidance has been completed for
the selection of lands for priority preservation, as prac-
ticed by private and public organizations in New Eng-
land. Preliminary surveys are being developed to serve
as extensive pretests of the format and presentation of
choice questions involving either real or hypothetical
monetary payments for wetland conservation. These
preliminary surveys involve the use of a closely related
good, the provision of water-quality monitoring services
on freshwater bodies in Rhode Island.
Conservation biological guidelines used by state
environmental management officials and nonprofit con-
servation groups focus on criteria that include (but are
not limited to) the role of a wetland in expanding exis-
ting conservation reserves or in completing a connecting
corridor between reserves; the relative rarity of the wet-
land type; the size of the parcel (e.g., > 10 ha.); the
surrounding land-use matrix and potential impacts from
external land uses; and species diversity. Focus group
discussions reveal, anecdotally, that many Rhode Island
residents consider similar factors, albeit in laymen's
terms, when attempting to identify whether a parcel
deserves a high priority for conservation funding.
Residents also consider the potential for public access to
newly protected parcels, and they may give greater
weight to the diversity of species that may be more
visible (e.g., birds, mammals). These findings support
the working assumption that respondents will have some
preexisting experience with evaluating wetlands along
criteria that parallel factors considered by conservation
biologists. One preliminary survey involving water
quality monitoring is complete (Spencer, Swallow, and
Miller, Agricultural and Resource Economics Review,
forthcoming April 1998). This experiment produced no
statistically significant difference between the estimated
value of water quality monitoring services based on real
or hypothetical dollar payments. However, the hypo-
thetical-dollar estimate did exceed the real-dollar esti-
mate by a factor of four; statistical insignificance of the
difference could be attributed to the wide standard error
on hypothetical estimates (see Table 1). In this experi-
ment, the hypothetical survey presented choice ques-
tions in a format that paralleled the real money survey
by including a hypothetical version of the details neces-
sary in the real-money survey. Investigators are de-
signing the next pretest to examine whether this addi-
tional detail generated an unanticipated hypothetical bias
that may account for the high standard errors in the
hypothetical survey.
The last pretest survey is under way for spring of
1998. Various mechanisms will be evaluated to dis-
courage free-riding in the real-money survey, including
the use of "provision points" (or "funding targets" and
"money-back guarantees." The pretest is focused on
using the discrete choice format because our focus
group results suggest that this format focuses respon-
dents' attention on tradeoffs among choice attributes.
The surveys will be conducted in a field format. These
plans also allow for comparisons with hypothetical for-
mats that parallel the real formats to varying degrees.
Based on these comparisons, the survey concerning
forested wetland attributes will be conducted using the
hypothetical survey format that matches the real-money
willingness-to-pay figures most closely.
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Table 1. Willingness-to-pay estimates for the average respondent, based on Spencer, Swallow, and Miller (Agricultural and Resource Economics
Review, forthcoming April 1998),
Pond A
$42.69
($38.24)
$9.15*
($1.79)
PondB
$63.23
($58.67)
$13.55*
($2.42)
Difference
(WTPB-WTPA)
$20.54
($21.78)
$4.40|
($1.76)
Note: Parentheses denote standard errors.
* Significant at P< 0.001 for a one-tailed test of H(): WTPk = 0 versus HA: WTPk> 0.
t Significant at P< 0.01 for a one-tailed test of H(): WTPB = WTPA versus HA: WTPB > WTPA.
14
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The Transition to "Green" Technology:
Implications of Irreversibility and Nonconvexity
Michael Toman
Resources for the Future, Washington, DC
In the ongoing debate over how to mitigate long-
term pollution threats (e.g., climate change, accumu-
lative water pollutants) and promote long-term sus-
tainable economic development, all sides agree on the
importance of developing and disseminating new envi-
ronmentally friendly technologies. There is a signifi-
cant debate over how this is best done, with many
economists advocating the use of broad environmental
performance standards and economic incentives for
environmental protection that will induce technical
change, while others advocate a more proactive govern-
ment role in inducing the use of green technologies.
For the most part, the conceptual part of this
debate has been engaged using fairly simple analytical
frameworks that do not encompass a number of
important stylized facts, such as: (1) the process of en-
vironmental degradation is dynamic, as is the switch-
over to new technology; (2) there are uncertainties and
irreversibilities surrounding both the accumulation of
ecological damages and the costs of new technologies;
and (3) both environmental degradation and technical
change may exhibit nonconvexities (i.e., threshold ef-
fects, multiple ecological equilibria, and lumpy tech-
nology transition costs) that complicate the identification
of a socially efficient path and the realization of such a
path in practice through appropriate policy. In particu-
lar, a policy of simply "getting prices right" with
respect to environmental damages may not succeed in
inducing a socially efficient investment path with non-
convexities and irreversibilities.
This project's objective is to expand understand-
ing of these issues by extending existing dynamic mod-
els of production, investment, and pollution accumu-
lation. Of particular interest is the extent to which
efficient outcomes are realizable or can be approximated
in practice given a limited number of relatively "clum-
sy" policy tools, which are available in practice (e.g.,
it is impossible to implement complex dynamically opti-
mal pollution tax paths). The investigator will consider
the properties of socially efficient outcomes under con-
ditions of irreversibility and nonconvexity, and the
extent to which pollution internalization policies (e.g.,
emissions permits systems) need to be dovetailed with
other policies (e.g., information campaigns, demonstra-
tion programs, and subsidies for initial investments in
new technology) to overcome sunk cost barriers to the
adoption of socially efficient new products and pro-
cesses, particularly if there are multiple potential social-
ly efficient outcomes.
In addressing uncertainty and irreversibility, this
project will use recent theoretical advances in valuing
"technology options" to address how the value of wait-
ing versus investing is affected by nonconvexities. This
project will contribute to the ongoing debate about what
portfolio of policies is best suited to support socially
efficient technology transitions in addressing problems
such as climate change, accumulative pollutants like
methyl bromide and other ozone depletors, and the pro-
tection of water bodies from accumulative pollutants,
among other cases.
15
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Valuing Reductions in Environmental Sources of
Infertility Risk Using the Efficient Household Framework
George Van Houtven
Center for Economics Research, Research Triangle Institute, Research Triangle Park, NC
V. Kerry Smith
Department of Economics, Duke University, Durham, NC
In recent years, there has been growing concern
about potential threats from endocrine-disrupting chemi-
cals in the environment. These chemicals have the
potential to impact human health in various ways,
among them increased risks of infertility. This project
will develop and evaluate a methodology for applying
stated preference techniques to assess the value associ-
ated with reducing infertility risks. Previous research in
nonmarket valuation of health and environmental risks
has focused on individual decisions; however, infertility
risks clearly present a context where the household (i.e.,
the couple) is the relevant decisionmaking unit. This
project develops a conceptual framework for linking
collective (household) decisions to the preferences of the
individual members. It provides a method for demon-
strating how measures of economic welfare based on
households' observed or stated decisions relate to the
preferences of its individual members.
The investigators are developing a model of
household decisions in which children are treated as a
nonrival good within the household, and the household
decision is whether to reduce the risks of infertility. In
contrast to the more traditional "unitary" models that
treat household decisions as if they were made by one
individual (i.e., a benevolent preference formulation),
this project's formulation is equivalent to assuming that
the household maximizes a weighted sum of the mem-
bers' preferences and that the members are not al-
truistic. This formulation, or "collective" model, is
equivalent to each member maximizing his or her
preference function subject to a budget constraint where
a sharing function describing the income available to
each member exists.
Observed choices for private and nonrival goods
within the household reflect both individual preferences
and the income-sharing rule. Information on household
consumption, individual choices (from the stated pre-
ference survey), and a priori assumptions allow us to
distinguish key dimensions of each individual's pre-
ferences along with the income-sharing rule. For the
problem of infertility risk, this process, along with our
pilot survey results, implies that reliance on a unitary
model may lead to misleading conclusions about
household willingness to pay for programs to reduce
infertility risks.
To support the development of the conceptual
model and to evaluate the use of a stated preference
technique for valuing reductions in infertility, the
investigators conducted two focus groups with childless
couples and, based in part on these groups, designed
and implemented a small-scale (200 respondents) pilot
survey, which was administered in a computer-assisted
format using mall intercept recruiting. Designed for
nonsingle but currently childless individuals between the
ages of 20 and 35 years, the survey describes how the
typical risks of infertility increase with the age of the
female partner. It then offers respondents, for a speci-
fied price that varies randomly across interviews, a hy-
pothetical medication to reduce their future infertility
risks, as shown in Figure 1.
Initial results suggest that female respondents, in
particular, provide answers that support die internal
validity of the instrument—the probability of accepting
the medication appears to increase with the risk reduc-
tion, their individual income, and their perceived risk of
experiencing infertility, and to decrease with the size of
the payment. Differential effects of their own and their
partner's income on the stated choice also contradict the
income-pooling hypothesis that underlies the more tra-
ditional unitary models of household decisions. This
suggests that a more appropriate model is one that expli-
citly accounts for the separate role of individual pre-
ferences within household decisions.
The investigators' plan is to use the results of this
initial survey to revise the instrument and collect addi-
tional survey data in a second pilot survey. In the fu-
ture, our sample will be restricted to female respon-
dents. Also, we will incorporate questions that better
address the timing dimension of the decision to purchase
the medication.
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30%
25%
Percentage 20%
of Couples
Experiencing
Infertility * 15%
10%
20 22 24 26 28 30 32 34 36 38 40 42 44
Start A
Medication Now ^
Age of Female Partner
Without Medication
Figure 1. Survey's graphical depiction of an infertility risk reduction scenario.
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Factors Influencing Participation of Local Government
Officials in Environmental Policymaking and Implementation
Thomas Webler, Seth Tuler, and Paul C. Stern
Social/Environmental Research Institute, East Otis, MA
This project will explore the factors influencing
the nature of the participation (whether or not they parti-
cipated and how they participated) of local government
officials in environmental policymaking initiatives spon-
sored by the Environmental Protection Agency. Partici-
pation by local government officials is not given the
same attention in the literature as that of citizens,
technical experts, or stakeholders. Yet, local govern-
ments are often a keystone to successfully implemen-
ting and enforcing environmental policies.
This project will examine three applications from
the National Estuary Program: New Hampshire Estua-
ries, Casco Bay in Maine, and Massachusetts Bays.
Maine and Massachusetts cases were selected because
they achieved very different levels of participation of
local government officials, and they used similar yet not
identical procedural structures. New Hampshire was
selected because it is in a much earlier phase of opera-
tion, yet it draws on the lessons learned in the Maine
and Massachusetts cases. The factors influencing the
decision of local government officials to participate in
national and regional policymaking and implementation
efforts will be examined through a direct interview
protocol and responses to hypothetical policy scenarios.
Once it is better understood how local government
officials interpret the messages they receive from
decisionmaking bodies, it will be possible to generate
prescriptive advice for how to approach and involve this
body of people in policymaking and implementation
efforts.
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