2-3 April 1998
          Washington, DC
Sponsored by the NSP/EPA Partnership for Environmental Research

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           2-3 April 1998
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Sponsored by the NSF/EPA Partnership for Environmental Research

                                        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

      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.

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
      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

i     »

                                               Carbon Tax
                                               or Quota,
                                                                                                     Carbon Quoin,
                                                                                                     tuo = 0.4
                                                     Marginal Damages
                                                  (1990 dollars/ton carbon)
                                            Figure 1. Net efficiency gain under the Pigouvian rule.

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-
      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.

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.

 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
       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.

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.

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.

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
       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.

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.

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.

                Stage 1
                     Natural Resource Conflict Scenario
Stage 2
                Stage 3
                Stage 4
                Stage 5
 Utility Frame
Reasoned Dialogue
                         Values Clarification Task

                  1) Identify values using provided schema
                  2) Rate values using Affective Salience
                     and Strength of Commitment Scales
                            Policy Choice Task
                       Respondent Evaluation Task:

                 'Did the frame employed permit articulation
                  of values that were pertinent, preferable,
                       comfortable, inclusive, etc.?"
                               Figure 1. Proposed comparative framing exercise.

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.

 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.

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
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.

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.

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.

 Percentage   20%
 of Couples
  Infertility *   15%
                   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.

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