Grantee Research Project Results
Final Report: Innovation in the Valuation of Ecosystems A Forest Application
EPA Grant Number: R824699Title: Innovation in the Valuation of Ecosystems A Forest Application
Investigators: Russell, Clifford , Dale, Virginia
Institution: Vanderbilt University , Oak Ridge National Laboratory
EPA Project Officer: Chung, Serena
Project Period: October 1, 1995 through September 1, 1997
Project Amount: $139,327
RFA: Valuation and Environmental Policy (1995) RFA Text | Recipients Lists
Research Category: Environmental Justice
Objective:
The three objectives of this research project were to:
- Devise a general method of describing an ecological system that: (a) is connected to underlying ecological indicator measurements in a well-defined way; (b) relates both to the multiple system functions that lie at the root of human valuations of the system and to the principles that mediate the response of individuals to those functional capabilities; and (c) reduces the problem of dimensionality without taking the draconian step of describing an ecosystem only in terms of suitability for one function.
- Flesh out and apply the method of value elicitation (or "construction"), based on the multi-attribute utility (MAU) approach to decision making (following the suggestion of Gregory, et al., 1993).
- Apply the above techniques in a forest ecosystem case study context and comparing the performance of the MAU method with the more traditional alternative of a take-it-or-leave-it (discrete choice) elicitation method, first, with the description to be valued based on the "dimensions" as above in (1) and, second, with the description of a summary that attempted to "smear" the dimensions.
Summary/Accomplishments (Outputs/Outcomes):
The use of willingness-to-pay (WTP) survey techniques based on MAU approaches has been recommended by some authors as a way to deal simultaneously with two difficulties that increasingly plague environmental valuation. The first of these is that, as valuation exercises come to involve less familiar and more subtle environmental effects, such as ecosystem management, lay respondents are less likely to have any idea, in advance, of the value they would attach to a described result. The second is that valuation questions may increasingly be about multidimensional effects (e.g., changes in ecosystem function) as opposed to changes in visibility from a given point.
MAU has been asserted to allow the asking of simpler questions, even in the context of difficult subjects. It is, as the name suggests, inherently multidimensional.
This project asked whether MAU techniques can be shown to "make a difference" in the context of questions about preferences over, and valuation of differences between, alternative descriptions of a forest ecosystem. Making a difference was defined in terms of internal consistency of answers to preference and WTP questions involving three 5-attribute forest descriptions.
The method involved first asking MAU-structured questions attribute-by-attribute. The responses to these questions allowed us to infer each respondent's preferences and WTP. Second, the same respondents were asked directly about their preferences and WTPs.
Our positive findings were:
- It is possible to construct an MAU-based survey instrument, embodying multiple independent dimensions of a complex valuation problem (in our case, forests). The questions about preferences over the scale of each dimension, relative importance of the dimensions (numerically expressed), and WTP to alter one of the dimensions can be answered, even by people with limited education.
- Participants, who ranged in age from high school students to volunteers from a nursing home, were generally quite willing to work through the tasks given to them and to think about valuation in the context of multiple attributes for a forest ecosystem. This positive result underlies the appeal of a constructive approach to valuation (Payne, et al., 1992) and its fundamental assumption that our notions of value are built up, piece-by-piece, much as a building is constructed. Of course, some buildings are built better than others, and protocols for the design of multi-attribute environmental evaluation efforts are still at an early stage (Gregory and Slovic, 1997). Nevertheless, the willingness of diverse respondents to undertake this rather lengthy task, and to stick with it through to a monetary valuation, suggests a fit between the way the questions were posed and how many participants naturally think about the types of policy questions that might affect management of a forest ecosystem.
- Their answers, combined with a quite restrictive linearity assumption, allow the derivation of a "subwillingness to pay function" for each dimension or attribute. These functions can, in turn, be used to infer at least relative values for the particular multidimensional good at issue described by combinations of the attributes. In particular, it is possible to make judgments among alternative possible goods, either on the basis of "votes" (aggregating ordinal preferences) or total WTP.
- The inferred preferences and WTP figures approximate, though they do not perfectly match, the stated preferences and WTP numbers obtained directly from respondents.
- The stated WTP answers themselves appear, in general, to be sensibly related to key socio-economic characteristics of the respondents.
A more skeptical person might question the importance of these findings by pointing to some awkward facts, such as:
It is not clear that the MAU process makes much difference in the chosen setting, multidimensional though it is, because:
- Subsample asked for blended forest preferences without the benefit of the MAU educational process exhibited even less cyclicity (taken as evidence of confusion about the vector comparisons).
- The mean WTP answers of this group for the differences between blended forests were in one case identical to the mean from the "educated" sample and in one case different.
- The stated preference orderings over the blended forests were not significantly different for the uneducated and educated samples.
Thus, it may be that MAU could be useful in more complex problem settings, for which the vector comparisons would be overwhelming if there were more dimensions, for example. However, a skeptic might well say, in addition, something along the following lines:
- Even granting that each question is quite simple, the facts are that: (1) the overall instrument took a long time to complete, so it was almost certainly not a good candidate for a mail survey, which in turn implies the technique may be expensive to use; and (2) only 75 percent of those who sat down to do the survey successfully (completely) finished.
- The several stated WTPs are about the only results that seem to "make sense," if the test is: Can we explain the variation across respondents by their characteristics and self-reported experiences (with forests)? In particular, there appears to be no straightforward explanation of variation in the matches between implied and predicted preferences and WTP numbers for the blended forests pairs.
So, it seems clear that the jury is still out on the promise of MAU as an alternative to the conventional contingent valuation technique for problems such as ecosystem valuation. The approach cannot be rejected as without promise, but it also cannot be embraced as the answer to the problems of cognitive challenges - especially multidimensionality - identified in the literature and likely to become more common as the boundaries of the search for dollar values in the environment are pushed out by the needs of policy makers.
References: Gregory R, Lichtenstein S, Slovic P. Valuing environmental resources: a constructive approach. Journal of Risk and Uncertainty 1993;7:177-197. Gregory R, Slovic P. A constructive approach to environmental valuation. Ecological Economics 1997;21(3):175-182.
Journal Articles on this Report : 2 Displayed | Download in RIS Format
Other project views: | All 5 publications | 2 publications in selected types | All 2 journal articles |
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Russell C, Dale V, Lee J, Jensen MH, Kane M, Gregory R. Experimenting with multi-attribute utility survey methods in a multi-dimensional valuation problem. Ecological Economics 2001;36(1):87-108. |
R824699 (Final) |
Exit Exit Exit |
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Schiller A, Hunsaker CT, Kane MA, Wolfe AK, Dale VH, Suter GW, Russell CS, Pion G, Jensen MH, Konar VC. Communicating ecological indicators to decision makers and the public. Conservation Ecology 2001;5(1):19. |
R824699 (Final) |
Exit |
Supplemental Keywords:
non-market valuation, psychological, preferences, ecology, integrated assessment;, RFA, Scientific Discipline, Economic, Social, & Behavioral Science Research Program, Ecology and Ecosystems, decision-making, Social Science, Economics & Decision Making, ecosystem valuation, multi-objective decision making, policy analysis, public resources, social psychology, deliberative policy, community involvement, valuation, decision analysis, environmental assets, incentives, public issues, valuing environmental quality, multi-attribute utility, environmental values, standards of value, Appalachians, environmental policy, psychological attitudes, public values, forests, interviews, willingness to pay, economic objectivesProgress and Final Reports:
Original AbstractThe perspectives, information and conclusions conveyed in research project abstracts, progress reports, final reports, journal abstracts and journal publications convey the viewpoints of the principal investigator and may not represent the views and policies of ORD and EPA. Conclusions drawn by the principal investigators have not been reviewed by the Agency.