valuation of resources Flashcards
instrumental
value of resource is derived from its usefulness in achieving a goal
intrinsic
value that exists independent of any contribution to a goal
biocentric
assumes certain resources have value even if no human thinks they have a value
utilitarian
value stems from ability to provide welfare to the overall wellbeing of a group
deontological
a resource with intrinsic value is irreplaceable
general techniques for revealed preferences
household production function models
production function models
travel cost method random utility model
- people know their utility function but research cannot observe all components
- value recreational resources a specific site
-variable expenditures are used as a proxy for a nonexistent market price
because users commonly travel different distances expenditures vary enough to allow for the estimation of a demand relationship
-limitations: travel is a prerequisite for use, difficult to use if travel involves little cost, use only people who travel to the site, costs are not necessarily benefits
hedonic
- some types of natural resources and environmental amenities are enjoyed in a complementary manner with market goods usually residential land
- collect sales data including attributes of the house and location
statistically estimate sales price as a function of the attributes
mathematical manipulations - the increment sales price is the present value of the time stream of benefits per household from a one unit increment in the environmental good
- limitations: only those buying/selling are counted, best when used on large ticket items, pole spend a substantial portion of time away from their home - may underestimate WTP to improve the environmental good
averting behavior
- people will change their behaviors and invest money to avoid undesirable outcomes
- problem: costs are not benefits, underestimate values
labor market method
- life and health are fundamental sources of utility to individuals and households
- wage premium required to introduce a worker to accept a hazardous job
- statistical techniques
provides a method to estimate compensation for marginal changes in expected health / safety - limitation: does not provide for expected present value of an individuals life, limited to only those people in the market
production function models
- an environmental good or service serves as a factor input into the production of a market good that provides consumer utility
changes in the environmental good or service affects the cost and supply of the market good, the retirees to other factor inputs, or both - determine effect of physical change
determine change in market output
CVM
- preferences are state and not actual preference
- refers to any approach of valuation which relies on individual responses to contingent circumstances posed in an artificially structured market
data - hypothetical instead of market based in nature
use of surveys
statistical techniques - advantages over RPT: can get WTP or WTA directly, hypothetical markets applicable to most circumstances
- limitations: hypothetical in nature people might have not experience in the situation, potential for pole to behave strategically, WTP and WTA may differ
conjoint analysis
difference from CVM:
CVM: aims to measure the value of a particular environmental amenity as a whole or changes to the amenity
conjoint: aims to develop valuation for the components attributes
pooling revealed and states preferences
using data from various techniques and use them in a new application
value transfer
take existing benefit/cost estimates and use them in a new application
