Special Issue on Experimental Methods in Environmental, Natural Resource, and Agricultural Economics

Abstract

Nearly two decades ago, Jason Shogren spoke at the Northeastern Agricultural and Resource Economics Association (NAREA) annual meeting about how the burgeoning field of experimental economics might be useful in addressing questions of interest to environmental and resource economists (Shogren 1993). At the time he spoke, in 1992, experimental economics was a niche field that primarily focused on nonmarket valuation techniques, social dilemma games, bargaining experiments, and testing game-theoretic models. As demonstrated in this special issue of the Agricultural and Resource Economics Review (ARER), things have certainly changed in ways that would have been hard to predict two decades ago, including the 2002 Nobel Prize awarded to Vernon Smith, the 2009 Nobel Prize awarded to Elinor Ostrom, publication of a field journal dedicated to experimental economics, and significant expansion in the range of topics and methodological approaches. The changes that have occurred during the field's rapid growth, which started in the mid- 1990s and continues today, are evident in this issue's 14 papers that were written by 40 researchers from 27 institutions located in 9 countries on 5 continents. This special issue of ARER features primarily the papers presented at a methods workshop that sought to introduce young scholars to experimental economics techniques and to showcase examples of high quality research that addressed environmental, natural resource, and agricultural economics issues. Tim Cason and Shogren, two leaders in the field, delivered invited presentations. This workshop, which followed the NAREA annual conference, was held in Burlington, Vermont, on June 9th and 10th, 2009. Financial support for the workshop and for publication of these papers in ARER was provided by the U.S. Environmental Protection Agency, the Farm Foundation, and the U.S. Department of Agriculture's Economic Research Service. The papers in this special issue not only contribute to the classic experimental economics literature, but also illustrate how far the field has grown since the early 1990s. The papers cover a wide range of topics, from emissions auctions under the Regional Greenhouse Gas Initiative (Shobe et al. 2010) to managing a multispecies fishery (Anderson 2010), and use a variety of methods, including traditional laboratory experiments, field experiments, and hybrid approaches, such as Knapp and Murphy's (2010) field-in-thelab approach. What is common in these studies is the use of what Shogren, Parkhurst, and Hudson (2010) refer to as an experimental mindset which seeks to better understand the behavior of individuals, businesses, and organizations within the context of various institutional settings. Shogren, invited to return as a keynote speaker for this workshop, notes how experimental methods have expanded from controlled laboratory settings with undergraduate students to include field experiments, neuroeconomics, and virtual reality. He discusses how behavioral economics has grown as a field and is now not only challenging parts of the traditional rational choice framework, but is also influencing economic policymakers at the highest levels. In addition to this methodological growth, the application of experimental methods to environmental and natural resource issues also underwent significant expansion in the mid- to late 1990s. Shogren's 1992 talk roughly coincided with two significant events in environmental policy that helped broaden experimental research to include more applied policy issues. The 1989 Exxon Valdez spill substantially expanded the existing literature on nonmarket valuation techniques, particularly regarding hypothetical bias and the development of calibration techniques to mitigate its effects. A key component of the 1990 Clean Air Act Amendments was the implementation of the U.S. Environmental Protection Agency's sulfur dioxide emissions trading program, one of the world's first successful large-scale cap-and-trade programs, leading to a surge in experimental research related to the design of emissions trading programs and, more broadly, on laboratory testbedding of new environmental policy initiatives. …