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Forest Finance > Module 5.3a > Flashcards

Module 5.3a Flashcards

1
Q

Economic value is defined in terms of?

A

trade-off

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2
Q

If 1X = 100Y for some individuals, this means that no ___ and no ___ than the individual would be willing to exchange X for 100 units of Y.

A

more, less

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3
Q

According to Dupuit (1844), the “maximum sacrifice expressed in money which each consumer would be willing to make in order to acquire an object provides the measure of what?

A

Object’s utility

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4
Q

According to Marshall (1879), that which a person would be just willing to pay for any satisfaction rather than go without it is the economic measure of what?

A

Satisfaction

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5
Q

2 ways to define trade-off between X or Y

A
  1. Willingness to Pay

2. Willingness to Accept

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6
Q

The minimum amount of Y the person would be willing to accept as compensation to forego X

A

Willingness to accept

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7
Q

The maximum amount of Y the person would give to obtain X

A

Willingness to Pay

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8
Q

Cost is measured in terms of what?

A

Opprotunity cost

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9
Q

What does the price measure?

A

Cost

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10
Q

Refers to estimation of economic value

A

Valuation

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11
Q

3 things that shape costs

___ costs vs. ___ costs

A
  1. Policies
  2. Market Mechanisms
  3. Other events

Private, social

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12
Q

Efficient choice in the use of scarce resources. Compare the worth of various options. Economic valuation is about being able to judge the relative value of alternatives

A

Benefit Cost Analysis

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13
Q

Other term for BCA

A

Resource Allocation Decision

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14
Q

What is the assessment for resource pricing

A

Natural Resources Damage Assessment

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15
Q

Give one design of economic instruments

A

Payment for Ecosystem Services

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16
Q

Change caused by awareness raising

A

Behavioral change

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17
Q

Measure opportunities from the environment change

A

Valuation

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18
Q

What are the two distribution impacts?

A

Gainers and Losers

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19
Q

6 reasons to do valuations?

A
  1. BCA
  2. Resource Pricing
  3. Natural Resource accounting
  4. Designs of economic instruments
  5. Awareness raising
  6. Distribution impacts
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20
Q

2 types of economic values?

A
  1. Use value

2. Non-use value

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21
Q

3 types of use value?

A
  1. Direct
  2. Indirect
  3. Option
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22
Q

2 types of non-use values?

A
  1. Existence

2. Others

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23
Q

Direct Consumption of Primary Goods

A

Direct use

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24
Q

Secondary Goods and Services, Including Ecological

A

Indirect use

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25
Q

Future Consumption of Goods and Services

A

Option

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26
Q

No Consumption of Goods and Services

A

Existence

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27
Q

Others?

A

Bequest values

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28
Q

2 types of valuation methods

A
  1. Physical/production linkages (market valuation technique

2. Behavioral linkages

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29
Q

2 types of behavioral linkages

A
  1. Revealed preferences

2. Stated preferences

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30
Q

5 valuation methods under Physical linkages

A
  1. Market prices
  2. Replacement costs
  3. Damage costs
  4. Net factor income
  5. Production function approach
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31
Q

2 methods under revealed preferences

A
  1. Hedonic pricing

2. Travel cost

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32
Q

2 methods under stated preferences

A
  1. Contingent valuation method

2. Choice experiment method

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33
Q

Other term for physical linkages

A

Dose-response functions

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34
Q

In physical linkages, the value can be determined by observing the quantity of an _____ and multiplying it by its _____

A

environmental service/good, market price

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35
Q

Straightforward and inexpensive, but rarely sufficient as a stand-alone valuation technique and ignores costs of other inputs

A

Market prices

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36
Q

Not a “correct” measure of economic value, as it is not based on people’s preferences for the goods and services valued.

A

Replacement cost

37
Q

In replacement costs, it is difficult to find ___ replacements of the goods and services valued.

A

exact

38
Q

What method do these steps belong to?

  1. Identify services provided by the ecosystem.
  2. Assess the extent to which services are used.
  3. Identify man-made replacements to provide an equivalent level of service.
  4. Estimate costs of replacement through secondary sources or expert consultation)
A

Replacement cost

39
Q

Useful for valuing ecosystems that provide some form of natural protection

A

Damage cost avoided

40
Q

Most cases of avoided damage remain ___

A

hypothetical

41
Q

What method do these steps belong to?

1) Identify protective services provided by the ecosystem.
2. Assess the extent to which protection would decline with ecosystem loss.
3. Identify the infrastructure, property, etc. that is affected by the change in protection.
4. Estimate the cost of damage.

A

Damage cost avoided

42
Q

Identify the method pertained to
Pros:
1. Data sometimes easy to obtain
2. Straightforward, “easy” implementation and analysis

A

Cost-based approaches

43
Q

Identify the method pertained to
Cons:
1. Limited to cases where market/shadow prices are available
2. Benefit is not equal to cost – second-best approach
3. Is the restored/replaced environment equivalent?
4. Is the value lower because it is no longer authentic?
5. Avoidance cost: damage is often hypothetical

A

Cost-based approaches

44
Q

Values ecosystem services as an input in the production of a marketed good.

A

net factor income

45
Q

Net factor income is the value of ____ minus ___ of other inputs.

A

output, costs

46
Q

Net factor income is only a ___ approximation of value

A

rough

47
Q

Net factor income suggests that all producer surplus is due to ______.

A

Ecosystem input

48
Q

The approach in which environmental resource services are inputs in production (often unpaid for)

A

Production function

49
Q

Values ecosystem services as inputs in production of commercially marketed goods

A

Production function

50
Q

What is the method pertained to by the following steps

  1. Identify ecosystem service
  2. Identify production-related processes
  3. Determine the statistical relationship between inputs and output
  4. Estimate net revenues using the above production function “with conservation”
  5. Estimate net revenues using the above production function “without conservation”
  6. Calculate the change in net revenues
A

Production function method

51
Q

Production function approaches reveal ___ environment

A

actual

52
Q

Production function approaches are only useful for the valuation of ecosystem services that are ____ in the production of marketed goods (not for ____ values)

A

inputs, non-use

53
Q

An approach in which method can be complicated since the price of marketed goods depends on many other factors

A

Production function approach

54
Q

An indirect approach that looks at decisions people make in reaction to changes in environmental quality – in markets.

A

Revealed preference valuation methods

55
Q

What type of use values does revealed preferences measure?

A

Direct use

56
Q

The monetary value of environmental attributes

can be valued by comparing house prices with different surroundings

A

Hedonic pricing

57
Q

Method pertained?

  1. Identify ecosystem service
  2. Collect data on sales and characteristics of associated good
  3. Estimate hedonic price function relating price with characteristics
A

Hedonic pricing method

58
Q

2 Applications of hedonic pricing

A
  1. Property

2. Wages

59
Q

Hedonic pricing looks at ___ behavior

A

actual

60
Q

Prices for houses often readily available –

____ to obtain!!!

A

costly

61
Q

Hedonic pricing can only value environmental services that affect ____ of marketed goods.

A

prices

62
Q

Hedonic pricing captures _______ in environmental attributes

A

perceived differences

63
Q

Hedonic pricing requires ____ level statistical expertise

A

High

64
Q

For valuing recreational sites.

A

Travel cost method

65
Q

Travel cost to a site can be regarded as the price of ____ to the site

A

access

66
Q

Method pertained?
1. Identify ecosystem service
2. Define set of distance zones around the recreational site
3. Collect visitor information for each zone
4. Calculate average travel cost /time per
zone
5. Estimate statistical demand function
6. Collect (secondary) information from
each zone about visits
7. Estimate total benefit by calculating
the consumer surplus

A

Travel cost method

67
Q

Travel cost method only measures ____ use value

A

direct

68
Q

Elicit values directly through survey methods. Approach in which WTP is asked.

A

Stated preference valuation methods

69
Q

Stated preference valuation methods is done in a _____ setting

A

Hypothetical

70
Q

Stated preference valuation methods measure _____ value

A

non-use

71
Q

Method of surveying respondents for their willingness to pay

A

Contingent valuation

72
Q

5 Elicitation formats of contingent valuation

A
  1. Open-ended
  2. Payment card
  3. Referendum
  4. Single bounded dichotomous choice
  5. Double bounded dichotomous choice
73
Q

Contingent valuation can value _____ goods

A

future

74
Q

In choice modeling, the monetary value of ES can be estimated from the trade-offs people make between ____ and ___

A

environmental attributes, income

75
Q

Determine individual preference across different levels of characteristics of a multi-attribute choice

A

Choice models/experiments

76
Q

In choice models/experiments, consumers state choices over two or more ____ goods with ____ characteristics

A

hypothetical, different

77
Q

Statistical analysis to establish a relationship

between characteristics and preference

A

Choice Models/Experiments

78
Q

Method pertained:

  1. Identify ecosystem to be valued and relevant population
  2. Design the experiment (survey type, choice set, payment vehicle, pre-testing)
  3. Survey implementation
  4. Statistically analyze the results
A

Choice experiment

79
Q

Choice experiments can measure what value/s?

A

use and non-use

80
Q

Choice experiments can measure ____ economic values for many changes

A

marginal

81
Q

In choice experiments, ___ knowledge is necessary

A

Econometric

82
Q

Applies a value from one study site to a different policy site.

A

Value transfer

83
Q

Value transfer is ___ and not as ____ as primary valuation.

A

difficult, accurate

84
Q

4 types of value transfer

A
  1. Unit value transfer
  2. Adjusted unit value transfer
  3. Value function transfer
  4. Meta-analytic function transfer
85
Q

Multiply the unit value from ‘study site’ by the quantity of environmental good or service at ‘policy site

A

Unit value transfer

86
Q

Parameter values of the policy site are plugged into the value function

A

Value function transfer

87
Q

Make simple adjustments to the transferred unit values to reflect differences in site characteristics.

A

Adjusted unit value transfer

88
Q

Uses a value function estimated from multiple study results

A

Meta-analytic function transfer

89
Q

What are the issues of monetary valuation?

A
  1. Technical issues
  2. Ethical issues
  3. Moral issues

Forest Finance (6 decks)

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