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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.

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 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.

This paper reports on a real money, economic experiment in which a broad group of ecological scientists were challenged to consider their own values within an economic framework, by considering whether to contribute financially (i.e., to donate) to support a global research initiative designed to investigate the implications of global change for grassland ecosystems. We use this experiment to illustrate the basic approach of economics as might apply to choices about and individual values for ecosystem services, particularly using an application to the potential to enhance scientific knowledge regarding grassland responses to the global distribution of nutrients. While scientists' choices and values were not significantly influenced by economic incentives embedded in the donation solicitation, donations were significantly associated with ecologists' specializations and career stages.

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.

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.

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.

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. …

The rural public may not only be concerned with the consequences of land management; residents may also have systematic preferences for policy instruments applied to management goals. Preferences for outcomes do not necessarily imply matching support for the underlying policy process. This study assesses relationships among support for elements of the policy process and preferences for management outcomes. Preferences are examined within the context of alternative proposals to manage growth and conserve landscape attributes in southern New England. Results are based on (a) stated preferences estimated from a multi-attribute contingent choice survey of rural residents, and (b) Likert-scale assessment of strength of support for land use policy tools. Findings indicate general but not universal correlation among policy support indicators and preferences for associated land use outcomes, but also confirm the suspicion that policy support and land use preference may not always coincide. Key Words: choice experiment, conservation, land use control, policy support, rural development, stated preference The rural public may not only be concerned with the consequences of land management, they may also have systematic preferences for policy procedures applied to management goals (Abdalla, 2001; Johnston, Swallow, and Weaver, 1999; Northeast Regional Center for Rural Development, 2002; McLeod, Woirhaye, and Menkhaus, 1999). There is no guarantee respondents will support policies that are consistent with their stated preferences for land use outcomes. Indeed, respondents may possess strong preferences for management outcomes (e.g., wildlife habitat, public access) while being unwilling to accept the management processes required to generate those outcomes (Johnston, 2002). Despite this possibility, the literature provides little information indicating whether preferences for management outcomes are correlated with support for policies associated with those outcomes. Consider the example of a scenic, rural viewshed. Residents may have strong preferences for the preservation of scenic amenities, and indeed may be willing to pay to preserve these attributes. However, they may be unwilling to accept changes in zoning or alternative land use regulations required to ensure these outcomes (e.g., required setbacks, increases in required road frontage). Despite a positive willingness to pay (WTP) for the management outcome, a lack of support for associated management tools may preclude welfare-improving policy change. This study examines relationships among the rural public's support for the policy process and the public's preferences and goals for land management and conservation outcomes. Preferences are considered within the context of alternative proposals to manage residential growth and conserve landscape attributes in southern New England. Results are based on (a) stated preferences estimated from a multi-attribute choice survey of rural residents,1 and (b) a Likert-scale assessment of strength of support for 21 growth management and conservation tools. Data are drawn from the Rhode Island Rural Land Use Survey-a survey developed and designed by the authors to assess rural residents' tradeoffs among attributes of residential development and conservation. Description of the Model and Analysis The choice experiment section of the Rhode Island Rural Land Use Survey asked respondents to consider and choose between two alternative development options for a hypothetical, 400-acre tract of forested land located in their town of residence, an area comprising just over 1% of the land area in each of the four towns sampled. Each presented option could differ across a set of spatial and nonspatial attributes. Analysis of these results provides insight into preferences for development and conservation tradeoffs-or management outcomes. A subsequent section of the survey asked respondents to indicate their degree of support for, or opposition to, 21 different land use management policy options. …

Ecosystem management may extend multiple use management, where economists identify and value a complex mix of ecosystem outputs. The dominant theme in conservation biology favors “safe minimum standard” (SMS) constraints on ecosystem attributes, which respond to complex and purely uncertain ecological knowledge and lead economists toward valuation questions that identify “tolerable” constraints. A hierarchical SMS constraint raises substitution possibilities among ecosystem-level components. Economists may identify unavoidable resource tradeoffs, such as in allocating land among elements of a reserve network, particularly when ecological wealth differs among geographically dispersed human communities. Economic and ecological ironies obfuscate intuitive contributions to ecosystem management policy.

Despite the many important uses (and potential abuses) of focus groups in survey design, the CV literature presents few guidelines to aid moderators in their interaction with focus group participants. This paper draws on the theory and practice of ethnographic interviewing to introduce general guidelines that can improve focus groups as an aid to CV research. The proposed guidelines illustrate types of questions that should reduce speculation and moderator-introduced bias in focus group responses, and improve the correspondence between focus group responses and actual behavior. The paper illustrates these ethnographic guidelines through a CV application concerning watershed resources.