Non-market Goods Research Articles

Endogenous Preference for Nonmarket Goods in Carbon Abatement Decisions

Long-term decisions, such as decisions about carbon abatement, are usually based on the implausible assumption of constant social preference. This paper focuses on a specific case of market and nonmarket goods, and it investigates the optimal climate policy when social preference for them is also changed by climate policy in a seminal climate-economy model: the Dynamic Integrated Model of Climate and the Economy (DICE) model with a single objective to maximize market goods consumption. We amend DICE to study an optimization problem that trades off the values of market and nonmarket goods, considering endogenous preferences. The relative price of non-market goods grows over time because of increases in both relative scarcity and the appreciation that represents the preference of it. As nonmarket goods are increasingly valuable relative to market ones, climate damages on nonmarket goods are increasingly expensive. The social cost of carbon, which aggregated climate impact on both goods, is consequently higher. Because abatement decision affects the valuation of nonmarket goods in the utility function, unlike previous climate-economy models, we solve the model iteratively by taking the obtained abatement rates from the last run as inputs in the current run. The results in baseline calibration advocate a more stringent climate policy, where endogenous social preference to climate policy raises the social cost of carbon further by roughly 12%–18% this century. Moreover, neglecting changing social preference leads to an underestimate of nonmarket goods damages by 15%. Climate policy is self-reinforced if it favors the more expensive consumption good. The proposed method can be applied to other long-term problems with endogenous preferences. Funding: H. Liao appreciates the funding from the National Natural Science Foundation of China [Grants 71925008, 72293603, and 72488101].

A choice experiment economic valuation of cultural heritage tourism ecosystems

Economic valuation studies of non-market goods in culture and tourism have a long and recognised track record. Many studies focus on evaluating well-defined examples such as monuments, institutions or events, leaving the valuation of cultural heritage tourism ecosystems as an important and less explored challenge. This work addresses the evaluation of a cultural tourist ensemble in which factors such as the natural landscape, elements of tangible historical heritage and intangible technological knowledge are integrated, all referring to a specific territorial demarcation, which acts as a driver of tourist appeal. Choice experiment methodology is applied to obtain the value allocated to different attributes of the ensemble by various groups of visitors, according to their origin or type of stay: first, local, national and foreign visitors; and second, the canonical distinction between excursionists and tourists. In general, locals report a greater contribution to preserve cultural expressions while nationals and foreigners do so for tourism services. Tourists report greater appreciation for cultural consumption while excursionists do so for drivers of cultural and territorial brand. Our approach and results can provide a better basis to implement strategies of management and preservation of cultural ecosystems as niches for tourism activity and economic impact.

Small‐sample properties of robust willingness‐to‐pay estimators

AbstractThe small‐sample properties of robust, binary choice willingness‐to‐pay (WTP) estimators are analyzed. A Monte Carlo simulation compares the bias and mean‐squared error of marginal and expected WTP estimates from probit, zero‐centered (“robit”), logit, and a generalized Tukey lambda distribution called a “pregibit” regression under normal and nonnormal distributional assumptions. Robust binary choice estimators allow for variation in tail thickness (the robit and pregibit) or tail asymmetry (the pregibit). No previous studies have compared the performance of these WTP estimators. The findings will interest researchers who use contingent validation methods to estimate WTP for nonmarket or hypothetical goods.

Characterizing Community Forests in the United States

Abstract Research on community forests (CFs), primarily governed and managed by local forest users in the United States, is limited, despite their growth in numbers over the past decade. We conducted a survey to inventory CFs in the United States and better understand their ownership and governance structures, management objectives, benefits, and financing. The ninety-eight CFs in our inventory are on private, public, and tribal lands. They had various ways of soliciting input from, or sharing decision-making authority with, local groups, organizations, and citizens. Recreation and environmental services were the most important management goals, but timber production occurred on more than two-thirds of CFs, contributing to income on many CFs, along with a diversity of other income sources to fund operations. We discuss the difficulties in creating a comprehensive CF inventory and typology given the diversity of models that exist, reflecting local social and environmental conditions and the bottom-up nature of community forestry in the United States. Study Implications: Despite their small footprint in the United States, community forests are a rapidly developing model of forest ownership, governance, and management that helps protect forestlands and open space and demonstrates how market and nonmarket forest goods and services can be produced for broad and enduring community benefits. This study inventories and characterizes community forests in the United States to increase understanding of this model, its prevalence, and its potential. It provides a baseline of information that serves as a foundation for further exploration and research on the impacts and contributions of community forests.

Reforming the Federal Regulatory Review Process

For decades, the Office of Information and Regulatory Affairs (OIRA) has overseen the development of federal regulatory policies with a strong emphasis on benefit-cost analysis. Despite its conceptual appeal, this analytic tool consistently shortchanges environmental and public health protection, with especially negative consequences for environmental justice communities. In this article, we address some of those shortcomings, focusing in particular on the standard agency practice of arithmetically discounting regulatory costs and benefits that accrue in the future. We propose that the OIRA abandon this practice as it relates to non-market goods, such as human lives saved, and instead work toward a more flexible and holistic approach to regulatory review. In addition, we urge the OIRA to better address environmental justice concerns by placing greater emphasis on distributional and cumulative impacts, highlighting numerous analytic tools that the OIRA could use or adapt in service of that goal. Finally, we discuss ways in which the OIRA could foster a more inclusive and accommodating administrative culture—one more attuned to the needs of environmental justice communities—by reforming both its external and internal processes.

Contingent Valuation of Forest Produce in High Altitude Zone of Andhra Pradesh, India

The present study aims at estimating compound annual growth rate of forest area in the high altitude zone of Andhra Pradesh state. The study was based on secondary data, which were collected from various published and unpublished sources. The data related to forest area was collected for the period of 1990-91 to 2020-21. For detailed analysis, the whole period was divided into two sub-periods i.e., period I (1990-91 to 2004-05), period II (2006-07 to 2020-21). The overall compound growth rate of forest area under high altitude zone of Andhra Pradesh was positive (0.54 per cent). But negative growth rate (-0.0048 per cent) was found in area for the HAT Zone in period-I (1990-91 to 2005-06) and positive growth rate (1.74 per cent) was found in area for the HAT Zone in period-II (2006-07 to 2020-21). Compound annual growth rate of forest area was found positive in overall period for the high altitude zone. Contingent Valuation (CV) and its two arms like Willingness To Pay (WTP) and Willingness To Accept (WTA) are survey methods that were supposed to measure the value of non-market goods mainly for minor forest products. Willingness To Accept usually consists of getting the information from the producers on how much they are willing to accept to avoid a negative or to accept a positive outcome. The results showed that willingness to accept was significant for all minor forest products like beedi leaves (Diospyros melanoxylon), soap nut (Sapindus trifoliatus), honey, bamboo (Bambusa vulgaris), tamarind (Tamarindus indica), firewood, vegetables, mushroom, fruits and cashew nut (Anacardium occidentale). The empirical results revealed that producers were willing to accept a premium for these forest products but lack of store availability, lack of credit facilities and middlemen exploitation were the major problems faced by the producers for which a reliable regulatory system is necessary to mitigate the quality constraint problem of forest products.

Economic Viability of Developing Passive Recreational Opportunities in Puerto Rico: Insights for Sustainable Forest Management

Forests offer a diverse range of ecosystem services for humans. For example, forests provide the space for passive recreational activities such as camping, hiking and bird watching. These activities are appealing to residents of all ages and in particular to those who cannot engage in more active recreational activities involving substantial expenditure of physical energy. The literature that examines the economic viability of developing passive recreational activities in forest ecosystems in developing countries is limited. Thus, using the Rio Hondo Community Forest in Puerto Rico as a case study, this study seeks to (1) estimate the benefits and costs of passive recreational opportunities, some of the nonmarket goods and services this forest offers, and (2) conduct a cost–benefit analysis to determine the economic viability of developing passive recreational activities. The results from this paper show that, in general, the residents prefer passive recreational activities demanding less effort. The development of such activities is economically viable. This study seeks to encourage inclusive forest management, ensuring that all groups of residents benefit from the forest, while simultaneously emphasizing sustainable practices.

Art for policy and policy for art

ABSTRACT The intersection of arts and public policy is three-dimensional. A multitude of direct subsidy, regulatory, and support programs are advocated and managed as “arts policy,” but a wide variety of non-arts-targeted realms such as tax law, public education, public health, and urban development and housing programs importantly influence artists and their encounters with their audiences. These interactions, and the complexity and thorniness born of the difficulty of clearly categorizing the arts as either market or non-market goods, as well as our difficulty in their valuation, make a particularly good area for teaching about public policy generally. And finally, policy of all kinds is too important to be made without the insights and guidance of artists, whose job is to show us the society we live in and who we are. Our “Arts and Cultural Policy” course explores this landscape for students in both fields.

Socio-economic impacts of agricultural land conversion: A meta-analysis

Land use change (LUC) is one of the main factors of economic development, and humans have been changing land use for many years. Agricultural land conversion (ALC) is determined as a major process in many developing countries. The aim of this study was to investigate the widespread ALC and its main socio-economic impacts in developing countries during the last 50 years. This study was conducted through a meta-analysis of 56 original articles that identified the main impacts of the ALC from the 19th century onwards in four continents, including Africa, Asia, Europe, and America. The findings of meta-regression showed that spatiotemporal impacts had significant influences on socio-economic impacts, and the most important spatial impacts were related to the continents of America and Asia. In addition, the results of ALC’s rate coefficients in meta-regression indicated that the greatest social impacts were related to crime (2.17%) and the greatest economic impacts were related to endangering households’ revenue (2.98%). Therefore, it is concluded that the rapid conversion of agricultural land to achieve economic development leads to socio-economic impacts, and such economic development cannot be sustainable. Accordingly, it is suggested that the ALC consider such things as planning detailed investigations for the ALC, assessing the value of goods and services provided by agricultural land, monitoring unauthorized ALCs, and imposing fines and taxes on the unplanned ALC. Agricultural land provides important non-market goods and services with good management. Improper conversion of agricultural land to non-agricultural land makes it unproductive and endangered, leading to global warming and climate change.

Influence of survey engagement and multiple-choice heuristics in the estimation of the value of a statistical life

Estimating the value of non-market goods, such as reductions in mortality risks due to traffic accidents or air pollution, is typically done using stated choice (SC) data. However, issues with potential estimation biases due to the hypothetical nature of SC experiments arise, as protest choices are common and survey engagement is not constant across respondents. Further, if respondents choose to use different choice mechanisms and this is not considered, the results may also be biased. We designed an SC experiment to estimate the willingness to pay (WTP) for mortality risk reductions, that allowed us to simultaneously estimate the WTP to reduce the risk of traffic accident deaths and cardiorespiratory deaths due to air pollution. We formulated and estimated a multiple heuristic latent class model that also considered two latent constructs: Institutional Belief, to consider protest responses, and survey Engagement as a class membership covariate. We found, first, that individuals with lower institutional belief gave a higher probability of choice to the status-quo alternative, shying away from programs involving governmental action. Second, that not identifying respondents who do not appropriately engage in the experiment, biased the WTP estimators. In our case WTP decreased up to 26% when two different choice heuristics were allowed for in the model.

The Journal of Forest Business Research to support sustainable forest investments for economic, social, and environmental benefits

The forest sector plays an important role in sustainable development for market and nonmarket goods and services. Investors and policy makers are increasingly seeking to rely on forests to provide both commercial forest products and nature-based solutions that will meet consumer demands and contribute to bioenergy, climate change amelioration, and biodiversity. To meet the expectations of climate and energy policies, forecasts estimate that more than US$70 billion of investments are needed annually by 2050. To achieve this level of investments, these increasing demands for investments in forests must be based on scientific research, reliable data, and credible business applications. In the era of information overload, access to peer-reviewed open-access journals has never been more critical than it is now. We summarize the role of our new Journal of Forest Business Research in providing improved applied research for practitioners seeking to achieve better outcomes relative to investment, finance, and economic goals for sustainable development.

Individual Time Preferences for Well-Being Allocation between Present and Future Generations

Despite the utopian nature of the socialist societies of the 20th century, the public legitimacy of temporarily sacrificing current prosperity for the sake of a better future remains a notable characteristic of a society’s potential for modernization. This study focuses on measuring individual discount rates for the reallocation of two experimental types of non-market merit goods in favor of future generations—“saved lives” and “healthy and prosperous life-years”. In the case of “saved lives”, the experimental situation inherits the logic of similar foreign research, while in the case of “healthy and prosperous life-years” the experimental situation departs from the theoretical foundations of similar foreign approaches, which use the category of “healthy and prosperous life-years” to solve problems in the field of healthcare economics. In our case, the experimental situation gives data about individual political and economic decisions of the price at which additional current well-being might be allocated for the sake of the future generations. In particular, it provides an analysis of intertemporal choice when respondents vote for one of two programs: the first, with a rentier effect, provides society with the above-mentioned goods immediately, but does not impact the well-being of future generations, while the second requires a rejection of additional prosperity in the present and postpones access to those goods for several decades, but eventually allows the society to receive the goods in larger amounts or for a longer period of time. It is shown that the discount rates for “saved lives” in Russia are higher than for Europe and the US in similar experiments and amount to 20.4% and 11.8% for time periods of 25 and 50 years, respectively. Discount rates were calculated for “healthy and prosperous life-years” (6.1% and 3.9% for the same time periods). It is also shown that the share of respondents who prefer present-oriented programs (the distribution of benefits in favor of those living today) for Russia exceeds 75%. The main motives of this orientation towards the redistribution of benefits in favor of the present, rather than future generations, are identified, among which the main ones are the current standard of living, the limited forecast horizon, the principle of generational self-responsibility, the scientific and technological revolution factor, and the “time loop” factor.

CVM을 이용한 부동산 중개서비스의 지불가능용의액 추정에 관한 연구

Consumers, real estate agents, and real estate platforms are in conflict as the burden of brokerage fees increases due to the increase in housing costs and the expansion of proptech services. This study focuses on resolving conflicts among parties of real estate transactions, and especially analyzes how consumers evaluate the value of brokerage fees incurred when using brokerage services and direct brokerage services, a core field of prop-tech. The research method employed the virtual valuation method, which is commonly used to measure the value of non-market goods such as difficult-to-measure goods and services. As an empirical measurement technique, the double bounded dichotomous choice question model was utilized in this case. A survey was used to collect analysis data and divided into five types to increase the validity of the research results. In addition, the secured sample was able to estimate the willingness to pay for real estate brokerage services using the logit model, a quantitative analysis model to measure the value and acceptability of such services. The analysis results revealed that the estimated willingness to pay for brokerage fees was 2,581,370 won for sales and 970,185 won for lease transactions.

Valuing Depression Using the Well-Being Valuation Approach

The continuously dramatic rise of the number of people suffering from depression is attracting an increasing demand for effective ways of preventing depression. Besides the need for new interventions, there is also a continuous call for a more robust framework for economic evaluation of public interventions. Taking into account people’s preferences for public goods is not straightforward to quantify, and therefore, in addition to designing a new technique for valuing nonmarket goods and services, it is equally important to use valuation methods that are not yet established as traditional. One less commonly used method to assess the cost of depression in monetary terms is the well-being valuation method or the life satisfaction approach, which requires answers to only a few questions that are significantly less time demanding for the respondents than more traditional approaches. We added a well-being question to a contingent valuation web-survey that describes hypothetical interventions aimed to prevent depression in Sweden and estimated that the loss in life satisfaction for individuals who experienced depression varies between approximately 350 and 45,000 euros per year. The monetary compensation would be, on average, higher for individuals who experienced own depression than for those who know someone near, family or friend, who experienced depression, for men than for women, and for middle-aged than for younger and older individuals, respectively.

ECONOMIC VALUATION OF "BEEJAY BAKAU RESORT (BJBR)" MANGROVE FOREST TOURISM PROBOLINGGO AND IT IS IMPACT TO THE ENVIRONMENT TOWARDS SUSTAINABLE RESOURCE MANAGEMENT

Economic growth often occurs at the expense of the quality of natural resources and the environment because of the impact caused by economic activity. These impacts create external costs that the public and future generations must bear. Internalization of external costs must be enforced to prevent damage to natural resources and the environment (ex-ante strategy) or repair the damage that has occurred (ex-post strategy). Therefore, economic valuation is needed to provide important information regarding the value of ecosystems and the resulting economic benefits, especially for non-market environmental goods that have important policy implications and as an effort to achieve the Sustainable Development Goals (SDGs). This study aimed to analyze and estimate the economic value and identify the ecological, social and economic impacts at BeeJay Bakau Resort Probolinggo. Types of descriptive research with data collection methods include interviews, observations, documentation, and questionnaires. The sampling method used 2 methods: the accidental sampling technique for tourists by determining the number of samples using the linear time function formula so that a total sample of 84 respondents was obtained and the purposive sampling technique for stakeholders with a sample of 40 respondents. The results of the analysis show that the economic value generated is Rp. 584,347,909,947/year. The output of identification of ecological, economic and social impacts which includes three dimensions, namely the ecological, economic and social dimensions, each of which has 4 defined attributes, then it can be concluded that the ecological dimension has a high category, this is because the manager of the BeeJay Bakau Resort mangrove forest tourism carry out various efforts in development that involve both stakeholders and the surrounding community, especially in maintaining and committing to environmental sustainability.

Foreign Aid and Fiscal Policy in a Small-Open Economy with a Non-Market Sector

This study examines the macroeconomic effects of foreign aid and fiscal policy by employing a multi-sector growth model. Foreign aid may decrease the recipient country’s market activities by lowering its capital accumulation and shifting market labour and capital to the non-market sector. This market activity shifting can improve the recipient country’s foreign asset/debt position where real exchange rate plays a role. We examine fiscal policies’ long- and short-run impacts and the recipient country’s administration efficiency in handling aid. Efficiency improvements in the recipient country’s governance of foreign aid can lower its real exchange rate, thereby contribute to improving foreign asset/debt holdings. Although administration costs in foreign aid may cause losses, by raising both market and non-market goods consumption, foreign aid improves the welfare of the recipient country. Our numerical analysis demonstrates the comparative statics and comparative dynamics impacts of several fiscal policy experiments. We illustrate that capital and labour income’s taxation effects can be very different.

An empirical review of the effect of climate change on agriculture: a contingent valuation method

This study is an empirical review of the effect of climate change on agriculture: a contingent valuation method. The paper relied on content analysis of extant literature. The paper viewed contingency valuation or the Contingent Valuation Method (CVM) is an economic, non-market based valuation method especially used to infer individual's preferences for public goods, notably environmental quality and more precisely it is used to place a monetary value on nonmarket goods. Available of the literature investigated suggest that there is a paucity of empirical literature in this area of study. However, findings from the empirical literature showed that climate impact negatively on agricultural production which suggests the need for proactive a mitigation and adaptation policy measures to help address the consequences of extreme events of climate change.

47 c Assessment of Willingness to Pay for Sustainable Ecotourism Development in the Salt Range Wetlands, Punjab Pakistan

Wetlands are the source of vital ecosystems which provide human societies with essential and extremely valuable life-supporting functions. The rapid population growth and resultant exploitation of lands, water bodies, and forests have badly influenced wetland resources. Wetlands are non-market goods as they do not have market value. So, it is important to evaluate these resources economically to identify their significance. Therefore, this study aims to identify the visitors’ willingness to pay for the economic valuation of Salt Range wetlands comprised of Kalar Kahar, Uchali, Jhalar, Khabeki, and Namal Lakes. A qualitative method was used to gather relevant information from the respondents by using a questionnaire. By applying the willingness to pay (WTP) technique it was found that about 85.34% of tourists were agreed to visit these lakes because of their naturalness. Similarly, the mean WTP in Kalar Kahar lake was PKR. 1808, in Uchali lakes was PKR.1820 while in Namal lake it was PKR. 1848. It is concluded that all the lakes are equally important and economically valuable for the tourists as there was a frictional difference in mean WTP. It is suggested that these lakes should be conserved for future generations to sustain the long-term economic benefits for the concerned stakeholders through the initiation of ecotourism.

Developing ecological endpoints for valuation of semi-arid riparian ecosystem services

Creating measurable ecological accounting units has become a point of emphasis in valuing ecosystem services. Understanding which ecological endpoints, which emanate from biophysical production functions, are important to individuals could help to create measurable ecological accounting units. Using two semi-arid riparian ecosystems we create a suite of ecological endpoints and using benefits transfer techniques compare their ability to be transferred to similar riparian ecosystems. If clearly defined, ecological accounting units can be developed for ecosystem services. This could lead to ecosystem services being properly incorporated into benefit cost analyses that maximize economic product of both market and non-market goods and services.

Benefit transfer of climate change adaptation policies in island tourist destinations

Benefit transfer is a non-market valuation method that offers a quick and cost effective alternative to costly valuation methods for assessing the economic value of environmental goods and policies in tourism. This paper assesses the validity of the benefits transfer method for the policies to adapt to climate change impacts across tourist destinations. To do so, a discrete choice experiment is designed and conducted simultaneously across seven island destinations with similar sociological and environmental characteristics. The results show some climate change adaptation policies are more valued than others by tourists, and some destinations attract higher preferences for environmental actions. The tests give significant support to the validity of the transfer of benefits of adaptation policies across destinations, thereby providing an alternative for the economic assessment of the benefits of non-market goods and climate change adaptation policies in tourism, as worldwide information about the costs and benefits involved in tourism policy decision making become increasingly available.