Non-Market Valuation

Question 1

What are the types of use values?

Answer 1

direct, indirect and option

Question 2

what are the types of non use value

Answer 2

bequest and existence

Question 3

What are revealed preference methods

Answer 3

They are methods that can be used to estimate the value through using market behaviour such as travel cost, hedonic price/wage

Question 4

Name 3 travel cost method techniques

Answer 4

zonal single site
signle site
multi-site

Question 5

What is the intuition behind tcm

Answer 5

We need to travel to a site to enjoy it (gain welfare) so we pay to reach and enter a site and we can record how many visits to site in order to estimate the lower bound of the use value of the site

Question 6

What are some general assumptions for TCM

Answer 6

Need to know the demand for site visits
The cost and time of the travel as proxy for the value of the recreational experience
Importance to take into account only visits which last the same amount of time, i.e. do not mix 1 day visits with multi-day visits

Question 7

What is a requirement specific for zonal TCM

Answer 7

we need to use aggregate data such as postcodes

Question 8

What is a requirement specific for single site TCM

Answer 8

avoid visitors that in one day visit several sites

Question 9

What is a requirement specific for multi-site TCM

Answer 9

need to define the available choice sets per respondent

Question 10

Explain the the weak complementarity assumption

Answer 10

we are assuming that the env quality is affecting many visitors there are and how far they are travelling.
Through this assumption we can link our private good (travel cost) to the public good

Question 11

when is zonal single site TCM ideal

Answer 11

Ideal when visitation data from zones are available

Question 12

How would we carry out zonal single site TCM

Answer 12

Obtain the number of visits from different zones (e.g. post codes)
Determine travel cost from each zone
Use travel time, travel costs to determine the TC (add fee if applicable)

Question 13

What makes up ‘cost of travel’

Answer 13

the direct costs (e.g. fuel) plus cost of time

Question 14

What is the standard approach for valuing travel time?

Answer 14

To assign a proportion of a person’s net wage e.g. a third or a half

Question 15

Why is the standard approach for valuing travel time debated

Answer 15

This approach is not appropriate for those who have flexible job or no job at all.

Question 16

What was the Office of National Statistcs solution to the issue around assigning a proportion of a person’s net wage to value time of travel

Answer 16

They suggest ¾ of the average wage

Question 17

for zonal single site tcm, what would you plot on a scatter graph

Answer 17

Plot price (pz) against visitation rate (vz)

Question 18

for zonal single site tcm, how do you calculate visitation rate

Answer 18

vz = The number of visits (Sz) / the population of the zone (Pz)

Question 19

If people are valuing a site more than they are paying to enter it, what could land management do

Answer 19

They could increase the price of entering the park

Question 20

describe the single site model for tcm

Answer 20

The single site model describes the demand for recreation of a person during a season (12 months)

Question 21

What is the intuition behind the single site model

Answer 21

for equal levels of Y (other variables), people living closer to the site, will visit more often than others

Question 22

What represents the demand and the price in the single site model

Answer 22

The quantity demanded is the number of visits

The price is the cost per visit

Question 23

How is the multi-site travel cost model different to the others

Answer 23

The multi-site model is not based on a “quantity demanded approach” and instead is focused on how agents choose among alternatives

Question 24

What are the assumptions of the multi-site travel cost model

Answer 24

Choices are explained by the characteristics of the sites

We assume that respondents choose the sites that give them the highest level of utility.

Question 25

Explain the hedonic price method

Answer 25

The hedonic price method uses the value of a surrogate good or service to measure the implicit price of a non-market good. For example, house prices can be used to provide a value of particular environmental attributes. Individuals may be willing to pay a premium for a house located close to a country park, while they may wish to have a discount on a house which is located close to a open cast mining site.

Question 26

Why is the hedonic price method a revealed preference method

Answer 26

Because it uses data gathered from the market to see how much people are willing to pay for a house with different characteristics

Question 27

What is the new theory of consumer demand

Answer 27

Consumers do not seek to acquire goods themselves (e.g. cars or houses) but the characteristics or ‘attributes’ they embody. e.g the house price will include structural, neighbourhood, accessibility and env quality attributes

Question 28

What are the advantages of hpm

Answer 28

uses market data | real transactions

Question 29

What is the intuition behind hdm

Answer 29

uses the systematic variation in the price of a good that can be explained by an environmental characteristic

Question 30

How do buyers choose houses

Answer 30

Buyers choose houses that maximise their utility – given the constraints of income, the price of the house and the level of taxes

Question 31

Why do we use non-market studies in a different setting

Answer 31

Unless you have a lot of time and money, you tend to use other peoples data. Take data from a similar place and apply it you your own place. But then again, these studies might not be great, having a few to triangulate would be better

Question 32

What is a benefit transfer?

Answer 32

is a quick and inexpensive approach a degree of error exists in the estimates provided, therefore a range of values is often presented.

Question 33

What is another term for survey based methods

Answer 33

“direct” valuation methods, since individuals are asked to state their preferences

Question 34

What is a disadvantage of survey based methods

Answer 34

More time-intensive, expensive and statistically complex

Question 35

What are the 7 steps of contingent valuation

Answer 35

``` Define the good and the property rights Define the population of interest – sampling Set up the hypothetical market Survey design Pretesting and delivering Data quality control Data analysis and WTP report ```

Question 36

example of willingness to pay vs willingness to accept

Answer 36

WTP - you want to purchase extra environmental protection | WTA - you want to receive compensation for inadequate env protection

Question 37

What is the issue with WTA

Answer 37

WTA is unbounded by income, so it is less suitable than WTP

Question 38

In CVM, what are sampling strategies for public goods and club goods

Answer 38

public goods - should sampl the population of beneficiaries | club goods - the population or users

Question 39

How is sampling carried out in CVM

Answer 39

Both stratified random-sampling and truly random sampling should be adopted but in reality a quota sample is the most common method

Question 40

Why is it important to set up a hypothetical market in CVM

Answer 40

to determine validity of the value distribution that one obtains to have a clear start (status quo) and endpoint

Question 41

Examples of forms of hypothetical payment

Answer 41

Taxes Water bill Donations Entrance fees

Question 42

Why do we have to be careful with what type of hypothetical payment we choose

Answer 42

Results are not vehicle-independent. E.g. many people do not regard extra income taxes in the same way as they do fees or payment to a trust. Therefore payment vehicle issues must be investigate in focus groups and pilot studies

Question 43

Survey methods in CVM

Answer 43

``` Telephone Postal In-person Online Combined methods ```

Question 44

What types of elicitation mechanisms are used in cvm

Answer 44

Open ended – this is challenging for non-market goods Bidding games Payment cards Discrete responses to bids

Question 45

Where is CE particularly popular

Answer 45

CE very popular in transportation and marketing studies

Question 46

What is the difference between cvm and choice experiments

Answer 46

In CV two-scenario comparison: “no-policy-no-pay” to the “with-policy-and-pay” In CE several scenarios: comparisons in term of money and policy characteristics

Question 47

when are multi attribute behavioural models useful

Answer 47

If there is a new circumstance where there is no revealed preference sata available Cases in which the surrogate markets are thin revealed preference methods are time consuming and expensive, decisions may need to be taken sooner than their availability.

Question 48

What do we need to compare for benefit transfer

Answer 48

correspondence of sites (including both environment and people) comparability of things correspondence of the quality of the study