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The free riding incentive has been a major obstacle to establishing markets and payment incentives for environmental goods. The use of monetary incentives to induce private provision of public goods has gained increasing support to help market ecosystem services. Using a series of lab experiments, we explore new ways to raise money from individuals to support private provision of multi-unit threshold public goods. In our proposed mechanisms, individuals receive an assurance contract that offers qualified contributors an assurance payment as compensation in the event that total contributions fail to achieve the threshold provision cost. Contributors qualify by contracting to support provision with a minimum contribution. Evidence from lab experiments shows that the provision probability, group demand revelation, and social welfare significantly increase when the assurance contract is present. Coordination is improved by the assurance payment especially for agents with values above the assurance level, leading to significantly higher aggregate contributions. A medium level of assurance payment used on units with medium and high value-cost ratios is observed to induce the largest improvement on social surplus. Our approach contributes to the private provision of environmental and other types of public goods.

We introduce a double hurdle latent class approach to model choice experiments, where serial non-participants and clustered preference patterns are present. The proposed approach is applied to a recent stated preference study in which the residents of the Eastern Shore of Virginia answer choice questions about alternative coastal climate change adaptation plans. While the double hurdle latent class model avoids self-contradictory assumptions, estimates and tests show that, compared with an unrestricted latent class model, it achieves a significantly better statistical fit and maintains the capability to link the heterogeneity of participants’ preferences to their attributes. Moreover, the double hurdle latent class model also provides important implications in how to conduct welfare analysis based on different behavioral patterns of different groups, which leads to nontrivial changes in welfare measures. The empirical results highlight that certain ecosystem services may increase the willingness to pay for coastal climate change adaptation plans.

The relative performance of public and private enterprises has been long debated. We construct a comprehensive violation dataset based on the EPA's Safe Drinking Water Information System to empirically investigate the compliance behavior of publicly and privately owned Public Water Systems (PWSs). Our results show that publicly owned PWSs commit significantly more Maximum Contamination Level, Treatment Technique, and Health-Related violations but fewer Monitor and Reporting violations than privately owned PWSs. We also find that municipal-level heterogeneities explain a substantial amount of variation in violation behaviors among PWSs, suggesting water supply quality depends crucially on location-specific regulations and local economic conditions.

We present experimental results on the provision of multiple units of a threshold public good using individualized price auctions (IPA). The IPA asks each individual to pay the same price f...

We experimentally compare the performance of two multi-type environmental credit trading markets. The first trading market is called the multiple market (MM) institution, which allows the providers to sell jointly produced credits of all types. The second trading market is called the single market (SM) institution, where the providers of jointly produced credits can only choose one type of credit to sell. We investigate several key indicators, including the trading price, quantity, and net social benefit, to compare the performance of the SM and MM institutions. We find that the trading prices are significantly lower in MM compared to SM, indicating that MM potentially benefits the credit buyers. We also find that SM leads to more credit productions. Since not all credits can be traded in SM, the increase in the production cost outweighs the increase in the total social benefit. As a result, the net social benefit is lower in SM compared to MM. We expand the literature by firstly designing a market platform for multi-type credit trading and then assessing their performance with lab experiment evidence.

We report a two-year field experiment that solicited residents of Jamestown, Rhode Island, USA, to fund contracts with farmers willing to provide public goods associated with improving the nesting success of grassland birds, particularly the Bobolink. This experiment explores the potential to leverage valuation research for the purpose of enhancing charitable contributions in a manner consistent with developing markets for ecosystem-service public goods; we focus on individuals' willingness to contribute revenue. The direct-mail marketing experiment collected over $16,000 through four provision point, money-back guarantee mechanisms: a voluntary contribution mechanism with a proportional rebate; a pivotal mechanism based on the Clarke tax; and two novel uniform price mechanisms, each presented in discrete choice and open-ended response formats. We find that citizens do respond strategically: consistently lower offers in the open-ended format suggest a high incidence of cheap riding, but also a significant effect of higher suggested offer thresholds. These framing effects dominated differences among mechanisms, as revenue generated from the proportional rebate and one of the uniform price mechanisms approached the potential for revenue generation estimated under the incentive compatible pivotal mechanism.

Communities in exurban areas increasingly rely on land preservation as a strategy to balance sprawling land development with maintaining environmental amenities. Based on a review of existing approaches for preserving land, we consider a conceptual model of environmental impact fees (EIFs) coupled with conservation payments for managing private land of ecosystem value. In this framework, conservation payments are intended to cost-effectively target fair market value compensation for heterogeneous land for preservation that sustains ecosystem health. EIFs serve as a financial instrument to augment conservation payments and to allow flexibility for landowners with private information to pursue development opportunities while accounting for environmental impacts. Using a bioeconomic model of nature-reserve design, we develop an empirical illustration of how to estimate the EIF of development damage to critical habitat in southern Rhode Island in an effort to preserve land as an environmental infrastructure that maintains ecosystem health.

We introduce two novel mechanisms for provision point public goods, motivated by the design of uniform price auctions: The uniform price auction mechanism (UPA) collects an endogenously determined uniform price from everyone offering at least that price, while the uniform price cap mechanism (UPC) collects the uniform price from everyone offering at least that price, plus the full offer of everyone offering less. UPC has the same undominated perfect equilibria as standard provision point (PPM) and proportional rebate (PR) mechanisms, and UPA a somewhat broader set. However, our mechanisms' different marginal penalty structures may facilitate equilibrium selection and lead to higher contributions and more frequent provision. Through laboratory experiments, using both homogeneous (symmetric) and heterogeneous induced values, we show our mechanisms improve upon PR and PPM: UPC generates higher aggregate contributions than PR and PPM, leading to higher provision rates than PPM; UPA attracts much higher contributions, although it provides less frequently. This ranking emerges because high offers are more common (especially among high value people in the heterogeneous environment) in the uniform price mechanisms, where higher offers only increase the payment when needed for provision.

We introduce two institutions that provide multiple public good units, assuming that a market-maker has the ability to establish groups of contributors. We set up an experiment where either all N individuals form one group to provide two units (aggregated approach), or divide the N participants into two groups, and each group provides one unit separately, with all individuals benefiting from any unit(s) provided (disaggregated approach). Our results show that the disaggregated approach produces higher contributions on average. We also find that the rebate of excess contributions has a larger influence in increasing contribution under the aggregated approach. (JEL D71, H41)

This paper develops a method that incorporates the public value for environmental cobenefits when a conservation buyer can purchase water quality credits based on nonmarket valuation results. We demonstrate this approach through an experiment with adult students in a classroom laboratory environment. Our application contributes to the study of individual preference and willingness to pay for cobenefits associated with the production of water quality credits in relation to the Ohio River Basin Trading Project. We use three different methods to elicit individuals' willingness to pay (WTP), including (1) a hypothetical referendum, (2) a real referendum lacking incentive compatibility, and (3) a real choice with incentive compatibility. Methodologically, our WTP estimates suggest individuals are more sensitive to the cost changes and reveal the lowest value in the real choice with incentive compatibility. Practically, we find individuals value certain cobenefits and credits as public goods. Incorporating public value toward cobenefits may improve the overall efficiency of a water quality trading market. Based on our specification of a planner's welfare function, results suggest a substantial welfare improvement after identifying an optimal allocation of a buyer's budget across credits derived from agricultural management practices producing different portfolios of cobenefits.

China recently introduced a national policy initiative called sponge city development as a holistic, ecosystem-based approach integrated with urban planning and development to address storm-induced pluvial flooding as well as other urban water and environmental issues. The initiative, while following the U.S. low impact development with a concept also similar to the U.K. sustainable drainage systems and Australian water sensitive cities, is subject to a major design issue in practice with infrastructure projects of similar types adopted unanimously across regions despite spatially diverse and heterogeneous hydrological and biophysical conditions. The ecosystem services framework as applied to the urban setting, particularly its holistic consideration of ecosystem structure and management intervention in relation to services or benefits delivery, can and should guide the planning, design, development, and evaluation of relevant projects or nature-based practices for carrying out the policy initiative, a perspective of practical value with foreseeable transformative impact that has received little recognition in China's current green urban movement toward water resilience and sustainability.

Innovative market mechanisms are being increasingly recognized as effective decision-making institutions to incorporate the value of ecosystem services into the economy. We present a field experiment that integrates an economic auction and a biophysical water flux model to develop a local market process consisting of both the supply and demand sides. On the supply side, we operate an auction with small-scale livestock owners who bid for contracts to implement site-specific manure management practices that reduce phosphorus loadings to a major reservoir. On the demand side, we implement a real money, multi-unit public good auction for these contracts with residents who potentially benefit from reduced water quality risks. The experiments allow us to construct supply and demand curves to find an equilibrium price for water quality improvement. The field experiments provide a proof-of-concept for practical implementation of a local market for environmental improvements, even for the challenging context of nonpoint pollution.

In discrete choice experiments, survey participants are often asked to consider stated cost, to themselves, as a source of funding of an environmental project. An open question remains whether participants would consider an additional source of funding, such as public or federal support. We examine the impact of federal funding availability on the marginal utility of management attributes and on respondents’ private willingness to pay (WTP) for watershed management plans. Our results suggest that availability of public funding does not significantly alter the preferred tradeoffs among management attributes for active management plans, but alters the utility difference, and therefore the WTP, between an active plan and the status quo alternative. A latent class model further suggests that classes with relatively similar preferences may nonetheless show heterogeneity in how availability of public funds affects WTP for management plans against the status quo, depending on individuals’ sociodemographic profiles and environmental attitudes. Public funding affects WTP through both crowding-in and crowding-out effects. Our results suggest that private responses to public funds may be more complex than previous studies on public goods have suggested, as public funds may neither attract contributions nor crowd out private support uniformly.

The United States has been experiencing extensive rural land conversion associated with suburbanization and urban sprawl in many local areas. Among the social and economic issues associated with urban sprawl is the potential negative impact of rural land conversion and low-density development on local environmental amenities. With effectively irreversible residential growth, how could land managers maintain local ecosystem health while accommodating residential development? In this paper, we propose a landscape planning framework that integrates market-based land conservation programs, conservation subdivision, and landscape-level ecosystem management. We use an empirical example to illustrate the possibility of organization and application of conservation biology, urban planning, and market-based approaches to provide an ecologically sound community landscape at the urban–rural fringe.

Using the concept of PES, the Bobolink Project moves environmental economics research beyond measuring values and into the development of efficient markets to capture those values and maximize their ability to support ecosystem services (ES). Beginning in Rhode Island and then expanding to Vermont, the project employed a novel approach, where crowd-sourced pledges for ecosystem services were matched with landowner bids. Specifically, hayfield owners with nesting habitat for grassland birds were invited to participate in a uniform price auction to adopt “bird-friendly” haying practices in exchange for compensation. Simultaneously, private citizens were asked to engage in an innovative pledging process, inspired by Lindahl pricing, where funds would be used to compensate landowners. Resulting ES included viewscapes, flora, fauna and sounds generated from the contracted hayfields. After three pilot seasons supported by a research grant that resulted in 1089 acres of safe habitat for ground-nesting birds in Vermont, the project administration transitioned to Audubon Societies and expanded to include Massachusetts, Connecticut, New Hampshire, Maine, and New York. The success of the project suggests that this approach may be appropriate in other contexts where targeted ES include flagship species, and landowner-sellers can enter into contracts to deliver clearly-defined outcomes valued by donor-buyers.

The conversion of natural areas to human-dominated land uses results in loss, degradation, and fragmentation of wildlife habitat which often lead to species endangerment and local extinction. The risk of endangerment may be particularly acute for species that exist as metapopulations in which viability of the species is contingent upon dispersal of individuals among local sub-populations. This paper uses an optimization framework to investigate the problem of conserving metapopulations residing in areas at the urban–rural fringe. We compare the optimal allocation of preservation to outcomes of four other policy alternatives including the reserve-site-selection option that fully preserves habitat patches while allowing full development of the intervening dispersal matrix. In general, the optimal allocation includes some amount of preservation in both habitat patches and dispersal matrix, with the level of protection typically greater in habitat patches. The reserve-site-selection conservation option is optimal in only a few cases. Heterogeneity in terms of land use and landscape structure adds complexity to the optimal solution such that no one policy works well across all land units and in situations where the landscape structure is skewed, full protection of some land units and full development of others becomes more common.

We consider the choice experiment approach to valuation, due to its focus on tradeoffs between alternatives. Our study is not hypothetical, but implements a real-payment choice experiment (CE) for a multi-attribute good. We use two real wetland parcels to create over 18 descriptions of parcels for conservation under a 10-year development-rights contract. Our payment protocol mitigates incentives to understate willingness to pay through a provision point with a rebate of excess funds. Real choice questions captured significant values for spatial attributes of wetland conservation. Average respondents positively valued 73-acre parcels surrounded by woodland, but required 100 acres for parcels surrounded by residential or farm land, and accepted a 19-acre smaller parcel in exchange for full public access.

Exurban areas have increasingly become zones of conflict as conservation and development compete for the same finite land resources. Conversion of natural areas to land dominated by human use results in loss, degradation, and fragmentation of wildlife habitat which often lead to species endangerment or even extinction. Recently, reserve site selection models have begun to integrate spatial attributes in order to design more compact and connected reserve networks that are thought to improve long-term species persistence. While these models are a good step forward to designing conservation reserve networks, they might not be adequate for use in exurban areas that consist of heterogeneous mosaics of land uses where habitat fragmentation already exists and not all parcels are available for preservation. This paper presents a species conservation framework that expands upon traditional reserve site selection models in three ways. First, because of the focus on exurban areas, the framework used here allows for land conversion within core habitat patches. Second, the framework provides a more robust assessment of connectivity among patches by accounting for land-use heterogeneity in the dispersal matrix. And third, the framework explicitly incorporates species population dynamics. We apply our conservation framework to the case of pond-breeding salamanders in an exurban community in Rhode Island, USA. Comparisons are made between the outcomes for uniform conservation policies and more flexible policies that accommodate ecological and economic heterogeneity. As expected, policies that offer more flexibility in the decision-making process are less costly in terms of foregone development. Conservation planners should consider core habitat patches, dispersal matrix, and spatial scale in their decision making. By not assessing the potential impact of dispersal barriers, reserve site selection models will result in conservation plans that may not protect species over the long term, particularly for species residing in highly fragmented landscapes such as those found in many exurban communities.

An effective nature reserve network design should reflect the ecological requirements of target species, while simultaneously considering costs. In this study, we propose a design method that considers the ecological role of the spatial arrangement of reserve sites in relation to the long-term persistence of metapopulations of the target species. We apply our design method to an amphibian metapopulation, which illustrates how varying the emphasis on the importance of design factors can affect estimated metapopulation persistence. Comparisons among reserve design methods show that considering the ecological function, rather than generic spatial rules, of the spatial location of reserve sites may be more likely to support species survival. A piecemeal treatment or mechanistic application of spatial rules in reserve design may be subject to the risk of not producing the most effective reserve network, and in some cases may even compromise the conservation objective which could be achieved otherwise.

Alternative funding approaches affect stated preferences. An individual’s willingness to reallocate existing tax dollars exceeds willingness to pay new taxes to conserve land. However, stated preferences also imply a non-zero opportunity cost to existing tax dollars; different income groups reveal statistically equivalent marginal utilities both for income and for reallocating tax dollars. Yet individuals with lower income show a relatively larger increase in their willingness to support land conservation, when the choice shifts from new taxes to reallocation of existing tax dollars. The paper encourages consideration of equity implications that may be obscured when analysts focus on willingness to pay.

States and municipalities have committed over $24 billion in bond issues for land conservation in recent years, yet the structure of the land conservation industry and markets is poorly understood. Using a stated choice experiment survey, we examine the role of public access in willingness to pay (WTP) for coastal land conservation. We identify complex patterns in WTP, as related to level of access and to attitudes toward access and environmental protection. Our findings contribute to understanding market segments that may motivate heterogeneity in land conservation agents and that reveal opportunities to optimize conservation programs that serve heterogeneous populations.

Benefit transfer has been an important, practical policy tool appealing to government agencies, especially when time or budget is constrained. However, the literature fails to support convergent validity of benefit transfer using the stated-preference method. This empirical study conducts four convergent validity assessments of benefit transfer using the choice modeling method and data from Rhode Island and Massachusetts, regarding coastal land management. The comparisons evaluate how individual characteristics improve benefit transfer and yield insights relevant to research specifications to produce studies adaptable for transfer applications. Empirical tests show benefit transfer using choice modeling may be acceptable, and even empirically valid, depending on the policy objectives and the context.

Human activities continue to eliminate or degrade wetlands that provide rich habitat for many species. Compensatory mitigation, including creation of new wetlands, restoration of previously degraded wetlands, or preservation of existing wetlands, is one policy option that seeks to maintain no net loss of wetland habitat. Public support of wetland mitigation is essential because the public incurs the cost for many mitigation projects in the form of higher taxes. Therefore, public preferences should be considered when decisions are made about wetland mitigation options. We used a contingent-choice survey in Rhode Island to identify factors affecting public support for different types of compensatory wetland mitigation. Results were based on 640 survey responses. The amount of wetland lost during the original development project had no significant effect on the preferred mitigation alternative. Preferences for preservation, restoration, and no-action alternatives varied according to respondents' gender, education, and income. Certain general considerations applied, however, regardless of mitigation type. Respondents were willing to incur increases in taxes and fees for most mitigation projects. The larger the mitigation project and the lower the cost, the more likely it was to gain public support. The presence of endangered species contributed to public support, but less significantly than public access. Public access can be critical to public support, particularly if the size of the wetland is small or the cost is high. If the cost of providing public access, such as a boardwalk or viewing tower, is relatively small, the gain in public support for mitigation expenditures may well allow a substantial expansion of the area involved in mitigation projects and thus a greater increase in the amount of habitat conservation. Resumen: Las actividades humanas continuan eliminando o degradando humedales que proporcionan abundante habitat a muchas especies. La mitigacion compensatoria, incluyendo la creacion de humedales nuevos, la restauracion de humedales previamente degradados o la preservacion de humedales existentes, es una opcion politica que busca que no haya perdida neta de habitat de humedales. El soporte del publico por la mitigacion de humedales es esencial porque el publico incurre en los costos de muchos proyectos de mitigacion mediante impuestos mas elevados. Por lo tanto, las preferencias del publico debieran ser consideradas cuando se decida sobre opciones de mitigacion de humedales. Utilizamos una encuesta de eleccion contingente en Rhode Island para identificar factores que afectan el apoyo del publico a diferentes tipos de mitigacion compensatoria de humedales. Los resultados se basaron en 640 encuestas respondidas. La cantidad de humedales perdidos durante el proyecto de desarrollo original no tuvo efecto significativo sobre la alternativa de mitigacion preferida. Las preferencias por alternativas de preservacion, restauracion y falta de accion variaron de acuerdo con el genero, nivel educativo e ingresos del respondiente. Sin embargo, ciertas consideraciones generales se aplicaron independientemente del tipo de mitigacion. Los respondientes estaban dispuestos a incurrir en un incremento de impuestos y cuotas para la mayoria de los proyectos de mitigacion. A mayor extension y menor costo del proyecto de mitigacion, mayor probabilidad de ganar apoyo del publico. La presencia de especies en peligro contribuyo al apoyo del publico, pero menos significativamente que el acceso publico. El acceso publico puede ser critico para el apoyo del publico, particularmente si el tamano del humedal es pequeno o si el costo es elevado. Si el costo de proporcionar acceso publico, como una pasarela o una torre de observacion, es relativamente bajo, la ganar el apoyo del publico para los gastos de mitigacion bien puede permitir una expansion sustancial del area involucrada en proyectos de mitigacion y por lo tanto un mayor incremento de la cantidad de habitat conservado.

Laws concerning government accountability mandate that agencies weigh constituent interests in setting priorities. This study extends literature on the value of research by considering the public's stated preferences for scientist-effort allocated across an Agricultural Experiment Station's research portfolio. Over 75% of respondents expressed a willingness-to-pay exceeding $20 per household for allocations of at least 139 scientist-months. The mean household is willing to pay about $25 for a 25% increase in effort. Marginal analysis identifies topic areas where an additional scientist-month provides above- or below-average benefits. The distribution of effort across research topics significantly affects respondents' values. Copyright 2004, Oxford University Press.

New residents of rural communities are often assumed to have preferences for development and conservation that differ from those of longer-term residents. However, the literature offers little to quantify presumed preference heterogeneity. This article assesses whether stated preferences differ according to length of residency. Results are based on a conjoint (choice experiment) survey of Rhode Island rural residents. Heterogeneity—according to length of town residency—is modeled using dummy variables, multiplicative interactions, and Lagrangian interpolation polynomials. Results are compared across the three models, and identify a range of attributes for which willingness to pay depends on length of residency. Copyright 2003, Oxford University Press.

This paper examines whether and how survey respondents react to spatial factors in stated preference surveys, and the ways in which preferences for spatial factors may influence welfare estimation. Alternative proposals to develop rural lands for residential purposes in southern New England were studied. Results illustrate that spatial attributes can influence estimated willingness to pay for development plans, even in cases where spatial attributes are only presented as cartographic details of maps used to clarify survey scenarios. Moreover, we find that subtle, and potentially unintended, spatial features presented in choice questions may influence marginal valuation of non-spatial attributes.

International environmental organizations propose voluntary eco-labeling as a market incentive to promote industry to operate in an ecologically sustainable and environmentally friendly manner. A microeconomic analysis questions whether voluntary eco-labeling will cause producer profits in a competitive industry to decline and whether eco-labeling will necessarily generate different prices for labeled and unlabeled product. Using wood product as an example, results identify conditions that may exist when firms lose profits, even under a voluntary system, and where existing production constraints may lead to a single price, regardless of labeling.

Recent environmental regulations raise the importance of accurate, survey-based methods to estimate environmental values, while interviewing costs stimulate research to improve dichotomous choice survey methods. This paper proposes using strength-of-preference indicators along with dichotomous contingent response data. We model strength-of-preference indicators as quasi-cardinal measures using an ordered-response model. We find that strength-of-preference indicators provide substantial efficiency gains while increasing respondents' effort minimally, with evidence that interpersonal comparison of preference ratings induces no bias. The ordered response model of utility and willingness to pay is superior, even in predicting the binary choice results.

This study reports on a contingent choice survey in which respondents expressed their preferences for packages of watershed management outcomes, where these packages were assessed against alternative institutional characteristics of the funding mechanism. Specifically, this study addresses the issue of respondents' faith in the payment mechanism as an efficient and guaranteed funding source. Analyses of marginal willingness to pay for single variable changes, marginal rates of substitution among variable pairs, and willingness to pay for watershed management packages indicate the potential for significant impacts of payment mechanism attributes. Implications address ranking of policy packages and validity in estimating money-scaled welfare impacts.

This paper studies the preferences and willingness-to-pay of individuals for volunteer water quality monitoring programs. The study involves supporting water quality monitoring at two ponds in the state of Rhode Island. The paper uses both a hypothetical and a real-payment contingent valuation survey to directly measure individual preferences and willingness-to-pay (WTP) for volunteer water quality monitoring at the two ponds. The overall results of the study suggest that hypothetical WTP is not statistically greater than real WTP, and that the average survey respondent is willing to support water quality monitoring on one of the two ponds. The study also finds that the specified purpose of water quality monitoring and certain socioeconomic characteristics of a respondent significantly affect the respondent's decision to support volunteer water quality monitoring.

Coastal lands provide popular outdoor recreation opportunities including beach recreation, fishing, boating, and wildlife viewing. Published studies measuring the demand for access to coastal lands generally have focused on the recreational value of intensively used beaches, which comprise only a portion of the New England coastline. This article examines the recreational demand for coastal access to a local, free‐access site in southern New England. The study uses data obtained from on‐site interviews conducted during the summer of 1995 at Gooseberry Island, Massachusetts. The estimated average value of a visitor‐day during the summer season is $3.06 for weekdays and $4.18 for weekends and holidays. While these values are at the low end of the range of values published in existing literature addressing beach recreation, the aggregate value of recreation benefits derived from public access to undeveloped coastal areas likely are significant.

“Ecosystem management” complicates forest management considerably. In this paper we extend the economic analysis of forestry to capture both the temporal and the spatial dimensions, allowing optimization of timber harvest decisions throughout an ecosystem. Dynamic programming simulations illustrate the implications for the simplest ecosystem, consisting of two forest management units. Results indicate that explicit recognition of ecological interactions, even between identical forest stands, may prescribe specialization through time and across space. Such spatial and temporal specialization leverages opportunities to provide ecosystem goods that may be foregone through reliance on “rules of thumb” derived from models that focus on the single stand. Key nerds: ecological economics, forest management, Hartman, ecosystem management economics Present-day ecosystem management represents a structural shift in the philosophy of resource management. Public forest management and policy objectives have developed from initial interest in commercial products to broad mandates for multiple-use, multiresource management (Behan), as managers balance the consumptive needs of society with a desire to maintain biological diversity and functions of ecosystems (Swallow). Ecosystem management complicates policy decisions considerably. Existing economic models of forest management are inadequate because they fail to account for the spatial relationships that determine many ecosystem functions. The traditional forest management approach is primarily based on the stand-level harvest models of Faustmann as ex

Most land-use surveys of exurban residents focus on eliciting preferences for residential development and open space conservation. This article, in contrast, reports on a stated preference study of exurban residents that assesses the relative attractiveness of a variety of commercial and recreational land uses. Focus group participants and town planners proclaimed a demand for certain commercial services such as modern grocery stores and fine-dining restaurants, but survey respondents generally exhibit a strong preference for no additional development beyond the current rate of development. Results show that if additional development is to occur, then recreational services are generally preferred over more traditional commercial development. Combining two commercial services in a single development project are strongly preferred to stand-alone developments. Our approach illustrates how planners may uncover misconceptions about and priorities for land conversion through examining residents’ prefere...

Environmental economists invest in measuring the value of the environment but putless efforttoward integrating that value directly into the economy. Experimental economists evaluate the performance of mechanisms to fund public goods but in some cases offer limited insight into practical implications for developing markets. This discussion presents initial insights into applying mechanisms for private provision of public goods based on demand-side values rather than regulatory- based market incentives such as cap-and-trade policies. Consideration of mechanisms to generate revenue inspires field tests that could direct experiments using threshold public goods and Lindahl's framework toward applications that transform value into revenue.Key Words: aesthetic value, auction, cultural ecosystem services, Lindahl pricing, nonmarket valuation, provision point, rebate, wildlife habitatThe concept of ecosystem services places emphasis on the benefits that nature provides for human well-being and has become a significanttopic in discussions of market-like or incentive-based approaches to provision of public goods. My purpose here is to stimulate further a research agenda regarding market-based approaches, an agenda at the frontier of environmental economics. This agenda comes, in part, from a simple observation exemplified by a comment by Geoffrey Heal as we took an academic break at the foot of the Front Range of Wyoming (about 1999], Professor Heal observed that our profession spends an awful lot of effort trying to estimate values for the environment and not much effort in attempting to integrate those values directly into the economy. So my purpose here is to offer some initial insights, to outline some conceptual challenges and example issues surrounding the potential for economists to expend effort toward incorporating individuals' environmental values into the economy.First, we should consider whether there is evidence that private markets for public goods will work. After all, we know that free-riding is a robust individual- level strategy. Yet we also know that philanthropic organizations exist and have a substantial impact for ecosystem services. Second, in an experimental marketto support grassland nesting habitat for birds, Swallow etal. (2008] and Swallow, Anderson, and Uchida (2012] generated around $9,000 in revenue despite not yet having the ability to optimize the price or marketing strategy. Third, Smith (Smith 2012, Smith and Swallow forthcoming) ran a successful field experiment in Virginia's two poorest counties and obtained substantial monetary support for restoration of sea grass and habitat for fall-migrating birds. The perspective I offer here comes from thinking about these latter experiences.Environmental policy and management for rural lands, including agricultural, forest, and wild lands, in the United States has moved from multiple-use management through ecosystem management as key foundational concepts, contributing to development of new, interdisciplinary fields such as conservation biology (Swallow 1996] and sustainability science (Hart and Bell 2013], Over the last decade or so, science and policy discussions have developed the concept of ecosystem services as a focus thatmotivates humans to support conservation. The ecosystem service concept might enable managers to leverage the power of self-interest by placing an explicit emphasis on the benefits that ecosystems and the environment provide to humans. This process led to the Millennium Ecosystem Assessment (2005], which produced a widely adopted taxonomy of ecosystem services. That system identified provisioning services (e.g., seafood, water, wood], regulating services (e.g., climate mitigation, wetlands buffering capacity for flood mitigation], cultural services (e.g., hunting, fishing, hiking landscape appreciation], and supporting services (e.g., ecosystem processes that support production of the other services].Recently, Johnston and Russell (2011] contributed explicit and flexible criteria linking ecosystem services to a general and delightfully parsimonious model of human utility. …

This paper introduces two new mechanisms for provision point public goods, motivated by the design of uniform price auctions: the uniform price auction mechanism (UPA) collects an endogenously determined uniform price from everyone offering at least that price, while the uniform price cap mechanism (UPC) collects the uniform price from everyone offering at least that price, plus the full offer of everyone offering less. UPA and UPC are compared with the provision point mechanism (PPM) and the proportional rebate mechanism (PR). We use undominated perfect equilibrium and the marginal penalty associated with overcontribution to provide benchmark predictions for an experimental comparison with heterogeneous induced values, and with different provision point treatments. We find UPA generates by far the highest group and individual contributions at all provision points and values, but has the lowest provision rate; UPC elicits higher aggregate contributions than PPM and PR, and has the highest provision rate, driven by higher contributions from high-value individuals, especially at moderate provision points. This is consistent with subjects offering more in mechanisms with lower expected marginal penalty, but the effect is most significant when marginal contributions are more likely to affect provision.

This paper addresses tradeoffs in wetland development using a framework that integrates economic theory of renewable and nonrenewable resources. The theory treats wetland development as use of a nonrenewable resource, while wetland preservation protects critical fishery habitat. The framework recognizes that wetland quality may vary for either development or fisheries. An illustrative application assesses tradeoffs in converting pocosin wetlands to agriculture rather than maintaining wetlands to protect salinity in estuarine nursery areas. Results reveal the marginal value of salinity protection may be substantial, while location may affect a wetland's value to an estuarine shrimp fishery. Comparisons between agricultural and forestry landuses show that ecological links may cause wetland values to depend upon the land-use chosen for the developed state. Future assessments of other development may reveal additional impacts through impacts on salinity.

In many studies of nonmarket resources, economists have data to disaggregate results according to subpopulations within the full study population. Disaggregated results can increase the usefulness of economic analyses, improve public confidence in the results, and permit public officials to assess equity concerns. We outline an approach to obtain disaggregated results when characteristics of individuals may identify distinct preferences. The approach is applied to public preferences regarding landfill siting decisions. The discussion explores the implications of disaggregated results for policy decisions, for bias in aggregate willingness-to-pay estimates, and for nonmarket research methodologies.

Resource managers often ignore economic information in decisions about recreational use of fish and wildlife resources. By evaluating within‐season harvest regulations, economists can identify strategies to improve recreational benefits without compromising management objectives represented in an annual harvest quota. Theoretical analysis raises a potential for bias in applied welfare analysis if regulations inefficiently trade off fishing quality and exogenous seasonality in anglers' demand. Simulations demonstrate that efficient regulations may limit daily harvests during the best fishing season or during the peak season of demand. Inadequate knowledge of recreationists' behavioral responses to quality and regulations currently limits policy assessments.

In discussing the preceding three papers, my assignment was to add the perspective of someone who uses contingent valuation methods. My view is that contingent valuation (CV) is one tool for economic analysis that offers unique opportunities to clarify the preferences of the public for environmental economic, policy, and management tradeoffs. I look to the lab for two reasons: (i) the lab offers opportunities to examine the assumptions and techniques of CV, and (ii) the lab offers an alternative approach to conducting CV. My intention is to stimulate thinking on the scope of the lab's value for CV research and to stimulate use of the

In a split sample design, we examine the impact of federal funding availability on Willingness to Pay (WTP) for watershed management program attributes and tradeoffs in a choice experiment. We also evaluate how presenting respondents with different sets of choice attributes, in alternative survey designs, affects the estimation of preference functions. We also compared preferences for watershed management attributes across sub-watersheds. These issues were evaluated using the Blackstone River Watershed Public Preference Survey, in Rhode Island, USA. Our results indicate that neither federal support nor geographically distinct sub-watersheds had significant impact on tradeoffs elicited among management attributes. However, survey design may induce respondents to show distinct preferences for watershed management. We examined these issues using a multinomial logit model in comparison with a Latent Class Model (LCM) to account for heterogeneity in preferences.

Forestry models often ignore spatial relationships between forest stands. This paper isolates the effects of stand interactions in multiple-use forestry through a straightforward extension of the single-stand model. Effects of stand interactions decompose into wealth and substitution effects and may cause time-varying patterns of resource use for a forest stand. Simulations illustrate that a stand′s role, even in steady-state, may alternate an emphasis on timber with an emphasis on nontimber. Optimal management plans differ substantially, depending on whether the manager values nonmarket goods from neighboring stands. The model offers insights for improving heuristic forest-level optimization models in current usage.

This paper develops a model that provides an objective framework for evaluating the concerns often cited by members of nearby communities and other state residents when potential sites for solid waste landfills are evaluated. An empirical version of the model is estimated using preference data collected in a paired comparison survey of Rhode Island residents, in which participants identify a preferred site and location for a landfill among two alternatives. The estimated model is used to assign scores to each characteristic describing the natural resources present at a site and the characteristics of the nearby community. The model estimates the proportion of voters who would choose each candidate site in a referendum that includes the complete set of alternatives. This simulated voting mechanism can be used to reduce a long list of technically desirable sites to a shorter list of sites that rank highly according to public preferences regarding natural resources and local community impacts.