Day 2 at the AAEAs

Here is my AAEA meeting schedule for today:

10:30-12:00 - I finished up my presentation [Download AAEA072907.ppt] this morning so I'm running late. These sessions   have already started so I'll find something interesting on the fly. The uncertainty adds to the excitement.

1:30-3:00 Symposium: Economics of Beach Management and Coastal Hazard Mitigtation (see below)

3:30-5:00 Symposium: Dynamic Interactions Between Residential Development and Natural Amenities: Reflections on Experiences in Lake-Rich Landscapes

5:30-7:30 AERE Reception

11:30 - redeye flight back to NC

I'm participating in the beach management symposium and it promises to be fun AND entertaining. Here is the symposium proposal.

Economics of Beach Management and Coastal Hazard Mitigation

Organizers: Martin D. Smith, Duke University, Craig E. Landry, East Carolina University

Participants: Ju-Chin Huang, University of New Hampshire
Craig E. Landry, East Carolina University
George Parsons, University of Delaware
Sabina Shaikh, University of Chicago
Martin D. Smith, Duke University
John C. Whitehead, Appalachian State University

Introduction

As coastal zone populations expand, more people are deriving value from coastal resources but also putting more pressure on those resources. At the same time, sea levels are rising and storm patterns are changing. These trends point to inevitable conflicts involving coastal development, resource degradation, and an encroaching shoreline. Thus, to contribute to policy analysis for coastal management, economists must provide a wide range of information. Specifically, we are charged to provide values of coastal amenities and values of coastal hazard mitigation. Since beaches and coastal waterways are dynamic systems, we are also charged to provide information about the optimal timing and spatial configuration of shoreline modifications.

Valuation of non-market commodities and services is largely the purview of environmental economics, while timing of human interventions in natural systems is primarily in the realm of natural resource economics. The goal of this symposium is to bring together economists working on these different aspects of coastal resources and develop strategies for meeting the research needs of coastal managers. Coastal management is just one example of the need to integrate research across sub-fields of environmental and resource economics in order to address contemporary policy questions. The emergence of ecosystem-based management, for instance, calls for the consideration of dynamics, consumptive values, and non-consumptive values over multiple spatial scales. By focusing on coastal systems, our symposium will provide a model for thinking about these challenging research demands.   

Format

This symposium will use short presentations as a springboard to generate discussion. These presentations are meant to provide some common material for discussion on two broad themes: 1) valuation of coastal resources and 2) dynamic issues in coastal resource management. For each theme, there will be two short presentations followed by a short comment and synthesis. The session will conclude with a round table discussion (45 minutes). The round table discussion will focus on how to integrate the non-market valuation literature on beach recreation demand with the emerging dynamic resource economics literature on beach management.

Introductory Comments (3 minutes): Martin Smith

Smith will briefly lay out the themes of the symposium including the integration of non-market valuation and dynamic resource economics for informing beach and coastal management decisions.

Valuation Presentation 1 (7 minutes): John Whitehead, “Estimating the value of beach nourishment with a comparison of a multiple-site revealed preference model and a single-site revealed and stated preference model of beach recreation demand”

Whitehead will discuss approaches for quantifying the recreational benefits of widening beaches through beach nourishment, the practice of building out a beach with sand dredged from another location. Focusing on North Carolina beaches, he compares welfare estimates from a single site model (using both revealed and stated preference data) with those from a multiple-site revealed preference model. Methodologically, the analysis strives to understand whether either approach can produce consistent welfare estimates. Each approach also has different data collection costs and thus the chosen strategy has implications for developing an integrated coastal management strategy for multiple beaches. Whitehead also highlights that the recreational values of wider beaches are separate from the storm protection values that might be recovered from a hedonic model of coastal properties.

Valuation Presentation 2 (7 minutes): Sabina Shaikh, “Valuing Swim Bans and Beach Closures with Truncation and Overdispersion Corrections in Count Data Models”

Shaikh will explore the effects of swim bans on beach visitation in a count data model for Chicago beaches. She uses GIS to compute travel costs, and the model accounts for truncation, censoring, and endogenous stratification. Swim high bacterial levels that are attributed to shoreline erosion, runoff from parking lots, and waste management. As in Whitehead’s analysis, improvements to beach quality are costly, so quantifying the recreational benefits of beaches is an essential component of policy analysis. Also, like Whitehead’s analysis, Shaikh combines revealed preference data with stated preference data from a contingent valuation survey.

Valuation Comment and Synthesis (7 minutes): Ju-Chin Huang

Huang will compare the site choice and single-site count data approaches in the two valuation papers. She will explore the advantages and disadvantages of these modeling strategies with an eye towards informing coastal management over large numbers of sites.  Huang will also discuss the two per-trip values that emerge from the analyses and the total values of beach improvements that account for the vastly different nearby population densities.

Dynamics Presentation 1 (7 minutes): Martin Smith, “Beach Nourishment as a Dynamic Capital Accumulation Problem”

Smith will develop a conceptual dynamic model of beach nourishment decisions. For tractability, the decision in the model is framed as choosing an optimal rotation length for a periodic nourishment, much like the literature on optimal forest rotation. This simplification allows the model to generate sharp predictions about how often nourishment will occur as a function of property values, project costs, erosion rates, and discounting. The model also incorporates features of geomorphology that economists previously have left out.

Dynamics Presentation 2 (7 minutes): Craig Landry, “Optimal Management of Coastal Erosion on Developed Barrier Island Beaches”

Landry will examine the dynamics of beach nourishment using numerical dynamic programming. Like Smith, he incorporates features of geomorphology into the model that economists have previously left out, but he focuses on a different subset of these processes. Landry parameterizes the dynamic programming model for a particular location based on hedonic values of storm protection/recreation, a joint revealed-stated preference model of recreation demand, and geophysical conditions. 

Dynamics Synthesis (7 minutes): George Parsons

The models in Smith and Landry are competing approaches to understanding the dynamics of beach management. Parsons, who has written extensively on beach nourishment, will compare and contrast the approaches with an eye towards how each approach can be used to inform coastal management directly and how each approach can integrate information on static non-market valuation.

Round Table Discussion (45 minutes): All participants, Chaired by John Whitehead

While the short presentations are all closely connected to beach and coastal policy, bringing together analyses that focus on valuation and on natural resource dynamics is an important element of this symposium. As Selected Papers, these analyses would not likely appear in the same session. However, contemporary coastal management demands a synthesis of dynamic modeling and non-market valuation. The second half of the symposium will be a round table discussion that engages this juxtaposition. The round table will address critical questions on integrating valuation and management models, such as: 1) How can economists inform coastal management decisions that traditionally rely most heavily on civil and environmental engineering? 2) How do dynamic models of beach management inform the ways in which we should formulate non-market valuation questions about hazard mitigation and beach amenities? 3) What insights can recreation remand, hedonic property models, and other representations of preferences for coastal resources provide to dynamic management models?  The round table will also allow the audience to participate in the discussion and pose questions to the panelists.