Non-market Benefits Research Articles

The Non-Market Benefits of Education and Ability

This paper analyzes the non-market benefits of education and ability. Using a dynamic model of educational choice we estimate returns to education that account for selection bias and sorting on gains. We investigate a range of non-market outcomes including incarceration, mental health, voter participation, trust, and participation in welfare. We find distinct patterns of returns that depend on the levels of schooling and ability. Unlike the monetary benefits of education, the benefits to education for many non-market outcomes are greater for low-ability persons. College graduation decreases welfare use, lowers depression, and raises self-esteem more for less-able individuals.

The Non-Market Benefits of Expanding Organic Waste-to-Energy Facilities: A Choice Experiment Study

정부는 온실가스 감축을 위해 유기성 폐기물 에너지화 시설 확대를 계획하고 있다. 유기성 폐기물 에너지화란 유기성 폐기물을 전용 보일러나 발전소에서 전기나 열을 생산하는 데 연료로 사용할 수 있도록 고형연료 또는 바이오가스로 제조하여 에너지로 전환하는 것이다. 본 논문은 선택실험법(choice experiment)을 적용하여 국내에서 배출되는 유기성 폐기물의 에너지화 비중을 현재의 26%에서 2020년까지 100%로 확대하는 정책 시행으로 발생하는 비시장적 편익을 추정하고자 한다. 이를 위해 전국 1,000가구를 대상으로 일대일 면접조사를 시행하여 자료를 수집하였으며, 중첩로짓모형(nested logit model)을 적용하여 자료를 분석하였다. 유기성 폐기물 에너지화 시설 확대의 속성별 가치(가구당 연간 한계지불의사액)를 추정한 결과, 에너지 자급률이 1% 상승할 때 237원, 매립지의 수명 두 배 연장될 때 148원, 1개의 일자리가 창출될 때 15원으로 나타났다. 이러한 결과는 유기성 폐기물 에너지화 시설 확대 사업을 평가하고 계획하는 데 있어서 유용한 정책 자료로 활용될 수 있다.

The Tradeoffs between Market Returns from Agricultural Crops and Non-Market Ecosystem Service Benefits on an Irrigated Agricultural Landscape in the Presence of Groundwater Overdraft

Groundwater overdraft has consequences in the long-run for the economic and ecological sustainability of an agricultural landscape. In response to aquifer depletion, we examine the tradeoff of non-market ecosystem service benefits (e.g., groundwater supply, greenhouse gases, and surface water quality) and market returns from crops in the Lower Mississippi River Delta. Farmers may turn to conjunctive water management using on-farm reservoirs and tail water recovery when groundwater pumping becomes expensive. We use separate objectives for market returns from crops and the non-market benefits of ecosystem services to study whether on-farm reservoirs are built with optimal cropping and irrigation choices. The use of reservoirs enables the landscape to attain up to 10% higher market returns for a given level of all non-market ecosystem service benefits by lowering the costs of irrigation, increasing groundwater levels, and reducing fuel combustion and associated greenhouse gas (GHG) emissions from groundwater pumping. A landscape that internalizes both non-market ecosystem service benefits and market value from crops has 30% greater social value than a landscape where only market returns or only non-market value is optimized.

To transfer or not to transfer? Evidence from validity and reliability tests for international transfers of non-market adaptation benefits in river basins

The attempt to design cost-effective adaptation policies incorporating non-market values to inhibit climate change impacts on water resources may increase the interest in applying the Benefit Transfer method. Benefit Transfer is a practical way to consider non-market values using functions and estimates acquired through primary valuation methods from other sites. Among the primary methods, Choice Experiments appear to particularly accommodate Benefit Transfer. Nevertheless, validity and reliability of international value transfers obtained from Choice Experiments have not been adequately examined. To this end, two identical Choice Experiments were conducted in Greece and Italy in the context of river services adaptation, testing validity and reliability of Benefit Transfer. The application of validity and reliability tests for different types of transfers is supportive for the use of Benefit Transfer, at least for the value transfer types. In particular the reliability of value transfer was higher when income adjustments were taken into account. Overall, Benefit Transfer can be attentively considered to evaluate cost-effective adaptation policies across countries experiencing similar climate change trends. The latter gains more importance given that an international Benefit Transfer setting as regards the non-market benefits of adaptation to climate change for river services is absent in the relevant literature.

Early Pioneers in Natural Resource Economics

This review focuses on four key scholars who were instrumental in helping to launch the field of natural resource economics: Siegfried von Ciriacy-Wantrup, James Crutchfield, John Krutilla, and Anthony Scott. Their contributions include recognizing natural resources as renewable capital, thereby altering the important dynamic dimensions of an efficient allocation. The introduction of irreversibility was a key element for decisions involving unique natural assets. Introducing uncertainty into these choices required consideration of appropriate public attitudes toward risk that led to the concept of a safe minimum standard. Identifying and emphasizing the salience of nonmarket values, particularly existence and bequest benefits, gave rise to the contingent valuation and the development of stated preference methods as a cottage industry. Setting forth and evaluating alternative management policies for open access resources in a dynamic context were other achievements. The backgrounds of these four scholars shaped their professional orientation; their contributions, in turn, have shaped the evolutionary path of resource economics research.

Measuring the Non-market Benefits of Expanding Organic Waste-to-energy Facilities using the Contingent Valuation Method

Measuring the Non-market Benefits of Expanding Organic Waste-to-energy Facilities using the Contingent Valuation Method

Graft is good: the economic and environmental benefits of grafted naranjilla in the Andean region

AbstractNaranjilla cultivation is highly profitable in many parts of the Andean foothills in Colombia and Ecuador. Its susceptibility to soil-borne diseases, however, lowers its economic benefits, reduces sustainability of production and increases its contribution to environmental degradation. This paper presents an analysis of the potential market and non-market benefits of research that developed and tested the grafting of common naranjilla onto disease-resistant rootstock. Grafting reduces the need for pesticide application and increases the longevity and sustainability of the plant. An economic surplus approach, carefully calibrated to reflect the realities of naranjilla production, was employed to show the large benefits from such research. Environmental and health benefits are very close in magnitude to market-mediated surplus gains. The results show substantial potential benefits from an outreach program to diffuse the new technology.

As Time Goes By: Examination of Temporal Stability Across Stated Preference Question Formats

We evaluate the temporal stability of willingness-to-pay values obtained from two identical stated-preference surveys undertaken in 2004 and 2012. The surveys employ two discrete-choice elicitation formats to value reductions in two health endpoints related to tap water consumption, and are explicitly designed to make direct comparisons between formats. We find no significant differences in real willingness-to-pay between the two surveys for either format—a result that is robust to the structure of heterogeneity used to model respondent preferences. Findings lend support, at least within the context of tap water quality, to the temporal transfer of nonmarket benefits over extended time periods.

Assessing Non-market Benefits of Seagrass Restoration in the Gulf of Gdańsk

Seagrass meadows (Zostera marina) are an important ecosystem in the coastal environment of the Baltic Sea. This study employs a discrete choice experiment to value a set of non-market benefits provided by seagrass meadows in the Gulf of Gdansk, Poland. The benefits valued in this study are a reduction of filamentous algae in the water and on the beach; access to seagrass meadows for boaters and divers; and improved water clarity. Results show significant willingness to pay for each attribute and differences of value estimates across different groups of survey respondents. It is discussed how to link choice attributes and estimated values with established ecosystem benefit categories in order to facilitate value transfer.

Valuing the benefits of an urban park project: A contingent valuation study in Thessaloniki, Greece

This paper aims to estimate the non-market benefits derived from the potential development of a new urban park in the city of Thessaloniki (Greece). The city of Thessaloniki has up to now a very low rate of proportional green space per capita. On this context a large metropolitan park was announced, as part of a large-scale redevelopment project, but the final decision has not been made yet. In order to help policy makers to their final decision, an ex-ante valuation of the potential benefits of the park is carried out in this study. A contingent valuation survey was designed and implemented aiming to estimate the willingness to pay of local residents for the provision of this park, as well as to determine the spatial scale at which these values are assessed. The main finding of this study is that people living within 20min from the reference site are willing to contribute a significant amount of money to support this project. Another interesting outcome is that the willingness to pay for this project was not considerably modified during a period of economic recession (2010–2013), which is mainly due to the growing public awareness of the importance of green spaces, as well as of the benefits of the planned park.

The use of cost–benefit analysis in environmental policies: Some issues raised by the Water Framework Directive implementation in France

This paper aims to practically contribute to the literature on the use of cost–benefit analysis (CBA) and economic evaluation in environmental decision-making through a practical case study: the implementation of the Water Framework Directive (WFD) in France, for the first cycle (2010–2015). The WFD requires that Member States achieve “good status” for all water bodies in 2015. However, exemptions can apply, if justified, on natural, technical or economic reasons. For the latter, EU guidance documents recommend to use CBA. In France, the water agencies carried out 710 CBAs on proposed restoration projects for water bodies. This article reports on this experience. Issues concerning these analyses are discussed, especially the assessment of non-market benefits. Finally, this article questions the use of economic analysis in the implementation of environmental policy.

Non-market benefits of creative cultural projects in post-quake revitalization regions: A case study of the Nantou Jiji Station area

In contrast to previous post-quake revitalization initiatives in which urban redevelopment is emphasized, cultural projects and their non-market benefits have recently garnered increased attention. In the past, when post-quake revitalization cultural projects were evaluated, the non-market benefits of these projects were not considered. Consequently, we have adopted a contingent valuation method (CVM) as a process that can evaluate the non-market benefits of cultural projects. This article reports research on Jiji Township, which is the epicentre of the most severe earthquake recorded in Taiwan in the past 50 years. The study’s results verified that creative cultural projects generated numerous non-market benefits, and that local identity value is the key factor influencing residents’ valuation of the projects and the amount they are willing to pay. This study proposes an economic valuation process that helps establish a method for promoting creative cultural projects based on residents’ opinions and needs.

Valuing the non-market benefits of estuarine ecosystem services in a river basin context: Testing sensitivity to scope and scale

A large scale contingent valuation survey is conducted among residents in one of the largest river basins in Portugal to estimate the non-market benefits of the ecosystem services associated with implementation of the European Water Framework Directive (WFD). Statistical tests of public willingness to pay's sensitivity to scope and scale are carried out. Decreasing marginal willingness to pay (WTP) is found when asking respondents to value two water quality improvement scenarios (within sample comparison), from current moderate water quality conditions to good and subsequently excellent ecological status. However, insensitivity to scale is found when asking half of the respondents to value water quality improvements in the estuary only and the other half in the whole basin (between sample comparison). Although respondents living outside the river basin value water quality improvements significantly less than respondents inside the basin, no spatial heterogeneity can be detected within the basin between upstream and downstream residents. This finding has important implications for spatial aggregation procedures across the population of beneficiaries living in the river basin to estimate its total economic value based on public WTP for the implementation of the WFD.

Valuation and transferability of the non-market benefits of river restoration in the Danube river basin using a choice experiment

The objective of this paper is to estimate the non-market benefits of ecological river restoration and test their transferability across the second largest river basin in Europe. River restoration reduces flood risk and improves water quality, the welfare impacts of which are measured in an identical choice experiment conducted in three Danube river basin countries: Austria, Hungary and Romania. The estimated choice models differ in preference and scale parameters. Distance-decay effects are detected for water quality improvements in Austria and Romania and for a reduction in flood risk in Austria. Public perception of current water quality affects the value people attach to further improvements in water quality levels in all three countries. Controlling for these influencing factors, the estimated non-market benefits of river restoration policy scenarios appear to be transferable between Hungary and Romania, but not between Austria and Hungary and Austria and Romania. Given the role of location specific factors such as differences in population density and degree of urbanization, the use of a generally applicable research design seems a necessary, but insufficient precondition to reduce transfer errors when applying existing estimates of the non-market benefits of river restoration from the international literature to new river restoration contexts.

Estimating the non-market benefits of environmental flows in the Hawkesbury-Nepean River

ABSTRACTGrowth in competing demands for the services supplied to major urban centres by adjacent river systems provides an impetus for the estimation of the non-market benefits generated by flows specifically dedicated to maintaining or improving the environmental condition of those rivers. This paper presents the results of a choice modelling study aimed at addressing the complexities of estimating such environmental flow benefits. The context of the study is the management of the Hawkesbury-Nepean River system, the major water supply for Sydney, Australia. The complexities considered include establishing linkages between river management options and the environmental condition of the river, defining attributes that reflect environmental conditions in terms that are meaningful to survey respondents as well as river managers, modelling stated choices to reflect non-linearities in willingness to pay responses and identifying thresholds in peoples' preferences for specific environmental attributes.

Research Note: Estimation of the Welfare Benefit of Boating at Maduganga Ramsar Wetland in Sri Lanka

Maduganga is a Ramsar wetland in Sri Lanka, an area of high biodiversity and a unique ecosystem receiving high visitation (52,726 local visitors in 2012). Although tourism causes negative impacts on the environment, the welfare benefit it enjoys (in terms of consumer surplus) should be considered while taking natural resources management decisions on Maduganga. The study shows that the value of the annual welfare benefit at Maduganga is about SLR 19.96 million, but the total economic value could be many times higher than this. However, the present value of non-market benefits from preserving the site remains at a figure of SLR 199.6 million per year. The revenue from Maduganga could be maximized if the passenger boating fee were raised to SLR 378.56. It is estimated that this may reduce the present number of visitors by 45%, but enhance total revenue by 294%. The outcome of such a strategy would resolve the crisis caused by the insufficient allocation of manpower and funds for wetland conservation.

The Future of Solar Power in the United Kingdom

We used detailed industry data to analyse the impacts of expected further cost reductions on the competitiveness of solar power in Britain, and assess whether the solar market can survive without support in the near future. We investigated three solar power markets: large-scale, ground-mounted “solar farms” (defined in our analysis as larger than a 5000 kilowatt system); commercial roof-top (250 kW); and residential rooftop (3 kW). We found that all three would be economic without support in the next decade. Such an outcome assumes progressively falling support under a stable policy regime. We found that unsubsidised residential solar power may be cheaper with battery storage within the next five to 10 years. Unsupported domestic solar battery packs achieve payback periods of less than 10 years by 2025. That could create an inflexion point driving adoption of domestic solar systems. The variability of solar power will involve some grid integration costs at higher penetration levels, such as more frequent power market scheduling; more interconnector capacity; storage; and backup power. These costs and responses could be weighed against non-market benefits including the potential for grid balancing; lower carbon and particulate emissions; and energy security.

The role of natural capital in sustaining livelihoods in remote mountainous regions: The case of Upper Svaneti, Republic of Georgia

In the Greater Caucasus of the Republic of Georgia, proponents of a new ski tourism zone and long-term timber concessions claim that new wage opportunities will benefit households. These developments will also limit access to common-pool resources (CPRs). This study uses the sustainable livelihoods framework to identify the conditions under which a development strategy will improve livelihood outcomes in the region. Analysis of original household survey data, in-depth interviews, and field observation reveals that households depend on CPRs for a range of market and non-market benefits. Low-income households depend on CPRs for up to 60% of their total income. OLS regression estimates show that households in villages farthest from market centers have a higher income dependence on CPRs and are more likely to participate in forest use activities. A majority of households report that there are few available substitutes. To improve livelihood outcomes, a development strategy should secure access to market benefits from CPRs, or wage income must increase in proportion to lost CPR income and affordable substitutes must be provided. Access to non-substitutable components of CPRs must be secured, and the distribution of changes in access to natural capital and new wage opportunities must be accounted for.

Valuation of the ecosystem services of beach nourishment in decision-making: The case study of Tarquinia Lido, Italy

Cost Benefit Analysis (CBA) is a systematic process commonly employed by the US Army Corps of Engineers (USACE) to assess primarily benefits stemming from storm damage reduction and recreation enhancement by beach protection. The USACE goal is to quantify federal money disbursement to local communities to counter the consequences of coastal erosion. The EU has recommended the use of CBA for shoreline management (both at regional and local scales), looking not only at the financial aspects of project assessment, but also at non-market benefits (ecosystem services of the beaches) and environmental costs, assessed on a broad time horizon in a given sediment cell. In this paper, several ecosystem services provided by beach protection are considered and some of them monetised to assess the local net benefits of a nourishment project carried out along the Tyrrhenian coast of Italy. The paper shows that free riding emerges by the public supply of coastal protection, and that it could be possibly partially removed charging the cost of beach maintenance to the local users. In addition, supply of coastal protection may generate negative environmental externalities. However, costs of environmental damage of the beach nourishment are not easy to be internalised. This suggests alternative market mechanisms (charges or insurance premiums) to reduce the development pressure on coastal areas subject to high rates of erosion or to explore the adoption of subsides such as payments for ecosystem services (PES) at seascape scales.

Nonmarket Benefits of Reducing Environmental Effects of Potential Wildfires in Beetle-Killed Trees: A Contingent Valuation Study

We estimated Colorado households’ nonmarket values for two forest management options for reducing intensity of future wildfires and associated nonmarket environmental effects wildfires. The first policy is the traditional harvesting of pine beetle-killed trees and burning of the slash piles of residual materials on-site. The second involves harvesting but moving the residual material off-site and converting it into biochar, thus reducing some of the risk and environmental effects associated with burning on-site. A contingent valuation method mail survey was used to evaluate these two management options. The survey achieved a 47% response rate. We used a nonparametric Turnbull estimator to calculate the willingness to pay (WTP) for burn on-site and off-site biochar conversion. The calculated WTP for burn on-site and off-site biochar conversion options (beyond the cost of the status quo level of forest treatment) is $411 and $470 per household per year, respectively.