The Importance of Methodological Choice in the Valuation of Environmental Goods and ServicesEPA Grant Number: U915024
Title: The Importance of Methodological Choice in the Valuation of Environmental Goods and Services
Investigators: Davis, Jennifer A.
Institution: University of North Carolina at Chapel Hill
EPA Project Officer: Jones, Brandon
Project Period: January 1, 1996 through January 1, 1999
Project Amount: $102,000
RFA: STAR Graduate Fellowships (1996) RFA Text | Recipients Lists
Research Category: Academic Fellowships , Economics and Decision Sciences , Fellowship - Economics
The objective of this research project is to develop a theoretically sound means of assessing individuals' use and nonuse values for biological resources by exploring alternative ways to estimate the value of these resources. Using a new approach to the contingent-valuation method, I will provide experimental evidence regarding this data collection tool's utility, as well as policy-relevant information regarding the value of the estuary's natural resources. By making the values of biological resources explicit, along with the scientific uncertainties associated with the study of biodiversity, I will create a framework in which resource-allocation decisions are made with more complete information.
It is my contention that respondents in contingent valuation surveys can understand and respond to complex scientific, economic, and legal information if it is presented in a coherent manner and with sufficient time for reflection and clarification. My research project will develop a new approach for contingent valuation research, which responds to critiques of the methodology's proven flaws, and which provides decision makers with some indication of the type and amount of information that the public needs to render an opinion about the value of biological resources. My research will focus on an environmentally sensitive area of eastern North Carolina, the Albemarle-Pamlico Estuary. Development on the barrier islands along this part of the United States has become more controversial over the last decade; real estate prices have climbed, and environmental groups have moved to block additional alternation of the natural environment.
I will use the multifaceted nature of this issue to design a contingent-valuation research project in which the value of preserving or improving the estuary's environmental quality is considered. Using census data, I will draw a sample of 800 residents of the Durham, NC area, and will send to each person a letter introducing my research project and asking for his/her participation. Each participant will be offered remuneration for his/her completion of three different assignments—an introductory interview, the viewing of five videos followed by five brief questionnaires, and a concluding interview. Response rates for well-designed mail surveys are generally in the range of 70 percent; the more demanding participation criteria for my research project likely will result in a significantly lower response rate. My objective is to have a minimum of 200 participants in the research project. During each respondent's first interview, he/she will be asked a series of questions about the socioeconomic and demographic characteristics of his/her household members. Each participant will hear a description of the management plan proposed by the Albemarle-Pamlico Estuarine Study, as well as the costs to taxpayers of the plan and commonly raised objections to its implementation. The respondent will be asked whether he/she favors development or conservation, and a series of questions about the level of tax the respondent would be willing to pay for enactment of the plan will follow. This first interview represents a typical contingent-valuation survey.
During the following 5 months, however, each respondent will be asked to visit a prearranged site (such as a university classroom or office space) to view five short (10- to 15-minute) videos about the proposed estuary management plan (one per month). Each video will feature an expert presenting one facet of the conservation/development controversy. After each video, the respondents will be asked to complete a one- to two-page questionnaire to determine how the provision of additional information has affected their views of the proposed project. Once each respondent has viewed all five videos, he or she will be asked to participate in an exit interview. During this interview, enumerators again will ask each respondent to indicate whether he/she favors the enactment of a management plan for the estuary, and will record his/her preference. A series of willingness-to-pay questions again will be posed to determine whether respondents' views have changed during the course of the research project. I will analyze the collected data using multivariate statistical analysis (largely logit and probit regressions). Determinants of willingness to pay will be explored, as will the factors associated with the (in)stability of views about the proposed development project.