Policy context as a factor of bias in the valuation of environmental goods – a dual-process theories perspective

When ecosystem services value estimates are applied in the economic assessment of environmental policies, high accuracy of these estimates is required. One of the directions in the scientific discussion on biases in stated preference (SP) valuation surveys builds on dual-process theories of judgment. The paper contributes to this literature by presenting an experiment where two types of judgment were induced via separate versus joint valuation of environmental goods. The results demonstrated that policy relevance of environmental issues, e.g. the need for conservation measures increases emotional response, causing a larger bias in the separate design as it involves ‘valuation by feeling.’ This finding suggests that the context of a specific policy, which is often the reason for conducting SP surveys, influences the answers, thereby making the results less reliable for use in cost–benefit analysis.     

The Effects of Irrigation and Climate on the High Plains Aquifer: A County‐Level Econometric Analysis

The High Plains Aquifer (HPA) underlies parts of eight states and 208 counties in the central area of the United States (U.S.). This region produces more than 9% of U.S. crops sales and relies on the aquifer for irrigation. However, these withdrawals have diminished the stock of water in the aquifer. In this paper, we investigate the aggregate county‐level effect on the HPA of groundwater withdrawal for irrigation, of climate variables, and of energy price changes. We merge economic theory and hydrological characteristics to jointly estimate equations describing irrigation behavior and a generalized water balance equation for the HPA. Our simple water balance model predicts, at average values for irrigation and precipitation, an HPA‐wide average decrease in the groundwater table of 0.47 feet per year, compared to 0.48 feet per year observed on average across the HPA during this 1985–2005 period. The observed distribution and predicted change across counties is in the (?3.22, 1.59) and (?2.24, 0.60) feet per year range, respectively. The estimated impact of irrigation is to decrease the water table by an average of 1.24 feet per year, whereas rainfall recharges the level by an average of 0.76 feet per year. Relative to the past several decades, if groundwater use is unconstrained, groundwater depletion would increase 50% in a scenario where precipitation falls by 25% and the number of degree days above 36°C doubles. Editor’s note : This paper is part of the featured series on Optimizing Ogallala Aquifer Water Use to Sustain Food Systems. See the February 2019 issue for the introduction and background to the series.     

Maximizing Returns from Payments for Water‐Based Ecosystem Services: Incorporating Externality Effects of Land Management

Given the expansion of payments for water‐based ecosystem services (PWES) worldwide, two relevant issues are as follows: (1) determination of efficient allocations of payments among land managers, and (2) how this might change when paying one manager to implement a best management practice (BMP) to enhance an ecosystem service impacts the cost‐effectiveness of BMPs considered by other land managers not currently involved in PWES. Such externalities may be negative if diminishing returns dominate, or positive if mechanisms such as “social diffusion” dominate. We analyze how a planner should optimally allocate payments, depending on whether the expected externalities are negligible, negative, or positive. We employ (1) an optimal control model to gain insights on the problem’s dynamics, and (2) stochastic dynamic programming to determine optimal funding strategies using a specific application. The study contributes to the literature by identifying dynamically optimal PWES payment patterns, and illustrates how they should change when one accounts for externalities induced by the program. Because such impacts have not been addressed previously in a rigorous way, this treatment provides useful value added for PWES design and implementation.     

Water Transactions for Streamflow Restoration,Water Supply Reliability,and Rural Economic Vitality in the Western United States

Across the western United States, environmental water transaction programs (EWTPs) restore environmental flows by acquiring water rights and incentivizing changes in water management. These programs have evolved over several decades, expanding from relatively simple two‐party transactions to multiobjective deals that simultaneously benefit the environment and multiple water‐using sectors. Such programs now represent an important water management tool and provide an impetus for collaboration among stakeholders; yet, most evaluations of their effectiveness focus exclusively on environmental outcomes, without adequate attention to impacts on other water users or local economies. To understand how these programs affect stakeholders, a systematic, multiobjective evaluation framework is needed. To meet this need, we developed a suite of environmental and socioeconomic indicators that can guide the design and track the implementation of water transaction portfolios, and we applied them to existing EWTPs in Oregon and Nevada. Application of the indicators quantifies impacts and helps practitioners design water transaction portfolios that avoid unintended consequences and generate mutually beneficial outcomes among environmental, agricultural, and municipal interests.     

The market and shadow value of informal fish catch: a framework and application to Panama

Fisheries catches are known to be widely underreported, and much of their value flows in informal markets. Goods and services that are not directly sold in a market also have a corresponding economic value, here termed ‘shadow value’, which can apply to discarded fish—or those that are consumed but not sold (e.g., subsistence catches). Here, we estimate the monetary value of fisheries catches in Panama that are landed but not reported, or that are discarded at sea; this includes catches from artisanal and industrial fleets, as well as recreational and subsistence fisheries. Based on available data, we estimate that the market and shadow value of unreported catches in Panama in 2010 was around US$92 million, equal to approximately 43% of the total reported landed value. In the case of discarded fish, the shadow value represents the potential but entirely unrealized economic benefit of landing such fish; in the case of unreported landings, unreported market value represents only the first link in the potentially sophisticated informal seafood economy. One must be careful in considering these results for policy. It is possible that, rather than seeking to capture these ‘lost’ benefits, fish that are discarded or unreported should not have been caught at all, for example, if they are juveniles or of threatened species; conversely, unreported subsistence catches are crucial for food security throughout the world. These results help contextualize the scale of unreported fisheries in economic terms, and can inform subsequent policies and strategies to ensure social, ecological, and economic sustainability.     

The economics of land application of fresh and composted broiler litter with an environmental constraint

Land application of broiler litter is a common disposal method due to its value as a fertiliser substitute, but presents potential environmental problems because of nutrient runoff. Composting has been suggested as an alternative due to the formation of more stable organic components. The land application of fresh and composted broiler litter are compared as alternative disposal methods. The costs of land application of broiler litter are dominated by spreading because of low nutrient densities relative to commercial fertilisers. Composting broiler litter before land application appears to be substantially less economically attractive than land application of fresh broiler litter because of high costs of production and higher spreading costs due to even lower nutrient density. However, when environmental constraints are placed on the phosphorus concentration from hayfield runoff, composting becomes a more attractive alternative. Composting becomes more viable as the land base for application becomes smaller relative to broiler production; as alternative disposal costs for litter become higher; and as environmental constraints become stricter.     

INTEGRATING SOCIAL BENEFIT COST ACCOUNTING INTO WATERSHED RESTORATION AND PROTECTION PROGRAMS1

ABSTRACT: Successful watershed management requires consideration of multiple objectives and the efficient use of scarce public and private resources. One way to address these multi-faceted issues is through Social Benefit-Cost Accounting (SBCA). SBCA is a systematic method of addressing complex social and economic issues relevant to proposed watershed management projects. Benefits of using this technique include: benefits and costs of watershed projects are better understood; politically sensitive issues tend to be put into perspective; and stakeholders' interests are placed on a level playing field. An example from Bogota, Colombia demonstrates how SBCA can be used to value the benefits and costs of a proposed project. By addressing the benefits and costs to all stakeholders, the design of watershed management programs can be improved to achieve goals in a cost-effective manner.     

POTENTIAL EFFECTS OF CLIMATE CHANGE ON AGRICULTURAL WATER USE IN THE SOUTHEAST U.S.1

ABSTRACT: Climate change has the potential to have dramatic effects on the agricultural sector nationally and internationally as documented in many research papers. This paper reports on research that was focused on a specific crop growing area to demonstrate how farm managers might respond to climate-induced yield changes and the implications of these responses for agricultural water use. The Hadley model was used to generate climate scenarios for important agricultural areas of Georgia in 2030 and 2090. Linked crop response models indicated generally positive yield changes, as increased temperatures were associated with increased precipitation and CO2. Using a farm management model, differences in climate-induced yield impacts among crops led to changes in crop mix and associated water use; non-irrigated cropland received greater benefit since irrigated land was already receiving adequate moisture. Model results suggest that farm managers will increase cropping intensity by decreasing fallowing and increasing double cropping; corn acreage decreased dramatically, peanuts decreased moderately and cotton and winter wheat increased. Water use on currently irrigated cropland fell. The potential for increased water use through conversion of agriculturally important, but currently non-irrigated, growing areas is substantial.     

A COST‐BENEFIT ANALYSIS OF WATER QUALITY PROTECTION IN THE CATAWBA BASIN1

ABSTRACT: The primary objective of this study was to perform a cost‐benefit analysis of maintaining the current level of water quality in the Catawba River basin. Economic benefits were estimated using a stated preference survey method designed to value respondents' willingness to pay for a management plan to protect water quality in the Catawba basin over time. From the surveys conducted with 1,085 area residents, we calculated an annual mean willingness to pay of $139 for the management plan, or more than $75.4 million for all taxpayers in the area. Over the five‐year time horizon in which respondents were asked to pay for the management plan, this resulted in a total economic benefit of $340.1 million. The Watershed Analysis Risk Management Framework model was used to estimate the amount of management activities needed to protect the current level of water quality in the basin over time. Based on the model results, the total cost of the management plan was calculated to be $244.8 million over a ten‐year period. The resulting cost‐benefit analysis indicated that the potential benefits of this management plan would outweigh the costs by more than $95 million.     

基于经济学视角的职业健康规制问题研究

用经济学分析工具对现有的职业健康规制进行探讨,研究规制机构、企业和劳动者三方行为主体的博弈,通过分析存在的问题,提出解决职业健康规制的对策。在理顺职业健康规制体制,健全机构的同时不断完善法规体系。同时,加强对劳动者职业健康的保障,完善第三方介入机制,并且加大对违规企业的处罚力度,提高对劳动者的赔偿。不断强化企业作为职业健康责任主体的意识,推进职业危害防治技术创新,培养"以人为本"的职业健康安全文化观念。