Logistics Session 4 Flashcards
What is the central assumption of road pricing, and generally all external cost schemes?
When the ‘true’ cost of doing an activity (like driving) is built into the costs that people pay to do those activities, people will do it less. I.e. higher costs for drivers will mean less people driving
What are the two main principles for dealing with external costs?
PPP –> polluter pays principle (self-explanatory)
CCAP –> cheapest cost avoider principle
What are the 7 primary external costs discussed?
Accidents, noise, air pollution, climate change, up/downstream principles, upstream energy production, congestions
What are the 5 external costs related to vehicle fleets?
Use of public space Up/downstream processes (maintenance, building, disposal, etc...) Transport infrastructure Visual intrusion (subjective, can be either positive or negative) Negative externalities (air/noise pollution, GHGs, congestion, accidents, etc...)
What are the differences between direct and indirect use values?
direct use values –> actual use of a resource in either a consumptive (i.e. fishing) or non-consumptive way (i.e. bird watching)
indirect use values –> benefits from ecosystem functions (i.e. flood control, better air quality, etc…)
What are the 3 kinds of non-use values?
Existence values –> willingness to keep a resource in existence even though it has no actual/direct value for you
Altruistic values –> ensuring the resource will be there for the next generation
Bequest values –> reflects concerns that the next and future generations should have the option to make use of the resource
What is the difference between revealed and stated preference techniques?
Revealed –> observable, actual and market-based information. Only relevant for use values
stated –> collected through questionnaires, hypothetical, and can be used both for use and non-use values
What are the direct revealed preference techniques?
Market prices, replacement cost
What are the indirect revealed preference techniques?
Travel cost method, discrete choice models, averting behavior, hedonic pricing
What are the stated preference techniques?
Contingent valuation, conjoint analysis/choice modelling
Explain a market prices valuation
Physical impact is multiplied by the market price of the affected good to estimate the economic value of the non-market good. Example: the impact of air pollution from transport in the reduction of crops can be measured by multiplying the crop’s market price by the estimate of how much was lost due to air pollution
Explain replacement or restoration cost
Starts from the assumption that the economic cost of a non-market good can be estimated by the market price of a substitute market good. Main drawback is that an arbitrary value is used, and does not equal the true social value
Explain the travel cost method
Key question: how much are you willing to pay to go somewhere? This can be used as a proxy for the value of a site and its environmental attributes. Issues arise with multi-purpose trips, and there are lots of sensitivities
Explain the random utility/discrete choice model
It is an extension of the travel cost method, but allows for surveyors to understand in more detail what an individuals does at any given location. Focuses on explaining the choices between two or more goods with their varying attributes as a function of their characteristics.
Explain the averting behavior model
Key question: how much do people pay to avoid a risk? Ex: how much would someone pay to insulate their homes from noise pollution? Potential drawback: there are neglected additional/overlapping benefits. Insulating your home from noise pollution might also make it more energy efficient
