Environmental Economics

I presented a paper in both Alaska and Hawaii this year

It was the same paper. I was excited to boast that I might be the only person who has ever presented the same paper in the same year in the 49th and 50th states. As it turns out, I wasn't the only one who has ever done that. Another person presented the same paper at the same two places at almost the same times! Ugh.

In June we attended the 2023 Summer Workshop at the University of Alaska Anchorage and presented during the same session.

In September we both presented in the Workshop on Energy and Environmental Research at the University of Hawaii just one week apart. Also, my presentation was virtual (not sure about Renato's). 

But still, the population of economists who have presented a paper in both Alaska and Hawaii within a 4 month window has to be small. Maybe n=2. In that way, I'm special.

Here is the abstract and the presentation (PDF):

We estimate economic benefits of avoiding reductions in drinking water quality due to sea level rise accruing to North Carolina (NC) coastal tourists. Using stated preference stated preference methods data with recent coastal visitors, we find that tourists are 2%, 8%, and 11% less likely to take an overnight trip if drinking water tastes slightly, moderately, or very salty at their chosen destination. The majority of those who decline a trip would take a trip to another NC beach without water quality issues, others would take another type of trip, with a minority opting to stay home. Willingness to pay for an overnight beach trip declines with the salty taste of drinking water. We find evidence of attribute non-attendance in the stated preference data, which impacts the regression model and willingness to pay for trips. Combining economic and hydrology models, annual aggregate welfare losses due to low drinking water quality could be as high as $401 million, $656 million and $1.02 billion in 2040, 2060 and 2080.

What the abstract doesn't describe is the funnest part. We get to use old-fashioned contingent valuation for valuing these trips ... and it works (it always works!)! The literature review starts with Brown and Hammock (REStat 1973), spends some time in the 1980s and 1990s and then skips to 2017. 

A working paper should be out in about a week (incorporating comments from the paper posted at WEER). 

Footnote:

And hey, if you are doing stated preference research you probably have attribute non-attendance on your cost variable which biases your WTP estimates upwards. Even if you follow all of the guidelines in Johnston et al. (JAERE 2017) (which would make your study a multi-year, multi-million dollar endeavor).

A revised contingent valuation entry in the Elsevier Encyclopedia of Energy, Natural Resource and Environmental Economics

The second edition of the Encyclopedia of Energy, Natural Resource, and Environmental Economics is in the works. Me and Tim have revised our entry on the Contingent Valuation Method. Other than annoying required format changes from the first to the second editions (e.g., adding references), we didn't do much. But there is one substantive change in the validity section*: 

*ANA and CVM is my theme for the next 12 months.

 

Free Webinar: Valuing Environmental Catastrophes (with an impressive lineup of experts if I do say so myself!)

Feel free to promote far and wide. Intended for a non-expert audience (my goal is to get a spot in the sequel to this blockbuster).

If you don't like QR codes, you can register here.

 

 

 

 

My comment on the Desvousges, Mathews and Train (2015) adding-up test article has been published at Ecological Economics

I first wrote about this in September 2016. I then submitted the comment to Land Economics. The editor sent me the results of an internal review and I revised it accordingly. Then he sent it out for external review and it received a favorable review in February 2017. But, the referee took issue with the reply to my comment. Apparently, the referee suggested that s/he would write a comment on the reply if it was published. The editor decided to reject the comment/reply because he said it is Land Economic's policy to only publish comments AND replies. That policy seems strange to me as I think it creates an incentive to write an objectionable reply to comments at Land Economics.

Next I sent it to the Economics: The Open Access, Open Assessment E-journal replication section in 2017. Again, I revised the comment before it was sent out for review. Once it was sent out for review I received three supportive reviews (based on my experience, I'm fairly sure they all supported a revision based on tone and suggestions). I revised and resubmited the paper several times from December 2018 through 2019 in response to referees and a few rounds of editor comments. Finally, I felt that the editor, who was "unconvinced by [my] argument as [I] were presenting it, was pushing me in directions that I didn't want to take the comment and I withdrew it from review in November 2019.

I next submitted the paper to Ecological Economics in December 2019. I received three reviews, each of which were thorough and supportive of publication (again, if my experience reading reviews is correct). I revised the paper and it was accepted for publication. Then, the editors sent it to Desvousges et al. for their reply. I have not yet read the reply. I imagine I'll have more to say when I have read it. 

This has been a very frustrating process. It is difficult to get a comment published, especially after it was rejected at the journal where the original article was published. But, I'm glad that the paper is published since I don't think the Desvousges et al. data supports their conclusions. 

The link to the paper is https://authors.elsevier.com/a/1bTdB3Hb~0IaFx. 

A comment on Balmford et al. "The Value of Statistical Life for Adults and Children ..."

Bamford et al. (2019), in the context of estimating the value of a statistical life (VSL), say (emphasis added):

Concerns regarding responsiveness to scope in CV studies are not novel; indeed, instances of scope insensitivity are widespread within the literature (Ojea and Loureiro, 2011). However, investigations into the causes of such problems remain an active area of research (Borzykowki et al., 2018). Despite this, and the crucial importance of scope sensitivity to CV based estimates of VSL, implausibly small sensitivity to scope often appears to be considered acceptable in the field literature (Amrian [sic] and Hagen, 2010; Whitehead, 2016) ...

That's not really what my paper or Amiran and Hagan say. I pointed out that Arrow et al. considered the magnitude of the scope effect (i.e., more is better in contingent valuation method estimates of willingness to pay) to be a matter of plausibility (is it reasonable or believable?) and not adequacy (is it satisfactory or acceptable). These are subtle differences but one might consider adequacy a more stringent (strident?) subjective threshold imposed by CVM critics (i.e., researchers funded by Exxon or BP or both). Note that Bamford et al. assert that we equate "implausibly small" with adequate (i.e., acceptable) in our papers. I find that an odd interpretation of the two citations. 

I'm curious to know what scope test estimates Bamford et al. find to be implausibly small. Note that the scope test in the VSL literature is different than in the environmental literature, being complicated by proportionality. I think that the authors might be mixing apples (scope elasticity) and oranges (proportionality) when thinking about how to assess plausible scope effects. 

And, I wonder where in my paper they find a statement that suggests I think that we should find "implausibly small" scope effects to be acceptable. When thinking about plausible scope effects I suggested that scope elasticity be measured. Typically, scope elasticity will range from 0 to 1. In the paper I re-estimated some scope effects with previously published data. At least one of these elasticities is about 0.10. In other words a 100% increase in scope leads to a 10% increase in willingness to pay. I really fail to see why a scope elasticity of 0.10 should be considered unbelievable. 

References

Balmford, Ben, Ian J. Bateman, Katherine Bolt, Brett Day, and Silvia Ferrini. "The Value of Statistical Life for Adults and Children: Comparisons of the contingent valuation and chained approaches." Resource and Energy Economics(2019).

New working paper: "Willingness Toupee"

Willingness Toupee

David M. McEvoy, O. Ashton Morgan and John C, Whitehead

No 19-01, Working Papers from Department of Economics, Appalachian State University

Abstract: In this paper we tackle the hairy problem of male pattern baldness. We survey balding men and elicit their willingness to pay to move from their current sad situation to a more plentiful one. Then we comb-over the results. What’s the average willingness to pay to move from a glistening cue ball to a luscious mane? About $30,000.

Key Words: mullet, skullet, comb-over, ducktail, Beatlemania, buzz cut, whiffle, pageboy, attribute non-attendance

JEL-codes: B12
Date: 2019

https://econpapers.repec.org/paper/aplwpaper/19-01.htm

My review of the BP-funded book critical of the contingent valuation method is online

Here is a link from 2017 with some background: BP has funded a book critical of the CVM. In that post I boasted that my review would be forthcoming in 2018. That boast was a commitment mechanism. I don't know if it would have worked unless Marit Kragt had not invited me to review the book for the Australian Journal of Agricultural and Resource Economics (thanks for the invitation!). Here is the link: https://doi.org/10.1111/1467-8489.12280.  

Here are two other reviews:

• Ute Barbara Thiermann. Journal of Environmental Assessment Policy and Management, https://doi.org/10.1142/S1464333217800035
• Silvia Ferrini and Kerry R. Turner, Journal of Economics, https://link.springer.com/article/10.1007%2Fs00712-018-0606-4

I knew the second review was out but I refrained from reading it until today. Ferrini and Turner point out a major concern:

In total, the book presents 11 chapters co-authored by 21 researchers. The majority of the authors (16) are established consultants, and with the exception of chapter 6 by McFadden, all chapters are partially funded by BP Exploration & Production Inc., as reported in the book acknowledgement. The book’s strength lies in the clarity and simplicity of the argumentation presented, with many chapters that do not get bogged down in details and technicalities. However, the reader might worry that BP sponsorship influenced the authors’ objectivity in testing SP failures. The authors are professional researchers and experienced consultants and readers might wonder whether researchers’ expectation (or preference) in poor results impact studies lay out [sic?]. Economists can easily spot a potential moral hazard here!

It concludes like this:

The key meritocratic conclusion that this book suggests is that ‘experts’ are the best judge of many environmental damages and the general public is often not capable of expressing a meaningful value. However, SP valuation economists do not seem to have a place in the ‘experts’ set.

The book is open access here: https://www.elgaronline.com/view/9781786434685.xml

Forthcoming book review

From the inbox:

Thank you! Your proof corrections for AJAR - AUSTRALIAN JOURNAL OF AGRICULTURAL AND RESOURCE ECONOMICS : 12280 : Contingent Valuation of Environmental Goods: A Comprehensive Critique, by Daniel McFadden and Kenneth Train (Eds.). Published by Edward Elgar Publishing, 2017, 319 pages, ISBN: 978-1-78643-468-5, AU$210 have been received.

My new working paper (with Giguere and Moore)

Valuing Hemlock Woolly Adelgid Control in Public Forests: Scope Effects with Attribute Non-Attendance
Chris Giguere, Chris Moore and John C. Whitehead

No 18-07, Working Papers from Department of Economics, Appalachian State University

Abstract: Sensitivity to the scope of public good provision is an important indication of validity for the contingent valuation method. An online survey was administered to an opt-in, or non-probability sample, panel in September 2017 to estimate the willingness-to-pay to protect hemlock trees from a destructive invasive species on federal land in North Carolina. We collected survey responses from 907 North Carolina residents. We find evidence that attribute non-attendance is a factor when testing for sensitivity to scope. When estimating the model with stated attribute non-attendance the ecologically and socially important scope coefficients become positive and statistically significant. Key Words:

Date: 2018
References: Add references at CitEc
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Downloads: http://econ.appstate.edu/RePEc/pdf/wp1807.pdf