Lecture 2: CBA Valuing costs and benefits Flashcards
What is WTP and WTA?
For an enviromental improvement, thinking about CV, what is the WTP for an enviromental improvement?
Thinking about an enviromental improvement, using EV what is the WTP/WTA for a consumer?
What is the Hammit hunters example for WTA/WTP? What does it say about property rights?
What is the general guidance on CV vs EV?
How do estimates of WTP and WTA differ? Why do they differ?
What are the two different types of demand curves that can be used to calculate WTP? Which is the correct one to use?
Doing CBA is we knew the shapes of all demand curves would be easy. Why might this not be the case?
Give an eample of what happens if a government was trying to estimate how demand would change in response to a change in bus prices (linear vs constant elasticity demand curve)
When might market prices not be useful for CBA?
What are the 6 broad types fo valuation as set out in the green book?
What is the Total Economic Value framework?
Total Economic Value (TEV) is a framework developed to assess why and how individuals value the benefits received from the environment
Describe the main economic valuations methods
What is the market analogy method for value estimation?
Give an example of the market analogy method
What are revealed preferences?
Market prices may reflect valuation of non-market goods and services
OECD (2018) describes this as seeking to ‘quantify the market ‘footprint’ of non-market goods or bads’
What are the three types of revealed preferences?
Give an overview of the 3 types of revealed preference methods. Describe:
1. Revealed behaviour
2. Conceptual framework
3. types of application
Explain the travel cost method
give an example of how travel cost method is used in the UK?
What are the challenges with the travel cost method?
Explain what hedonic pricing is? Explain how it can be used in house pricing?
Give examples of what house prices say about the value of green space?
What are the challenges fo hedonic pricing?
Explain what defensive expenditure method is?
What are the challenges with the defensive expenditure method?
Summarise the strengths and weaknesses of revealed preferences techniques?
