Environmental values and valuation over time

Abstract

The natural environment produces a range of goods and services that are valuable to society but not bought and sold in markets. Non-market valuation methods facilitate the estimation of the values society attaches to such non-marketed environmental goods and services. Considering such values in policy decisions has the potential to reduce inefficiencies introduced by incomplete property rights structures. Policy decisions concerned with the natural environment often have long-term and irreversible consequences. Failing to account for changes in the values society attaches to non-marketed environmental goods and services over extended time periods may result in biased estimates of long-term benefits and costs. Grounding policy decisions on biased value estimates may reduce potential improvements in economic efficiency. However, little is known about either the temporal value variability over extended time periods or the impact of the ongoing methodological evolution on value estimates used in cost-benefit analysis. The study presented in this thesis addresses this gap by making comparisons of marginal value estimates and the evolution and performance of stated preference valuation methods over a 30-year time period. Both the original stated preference valuation method (open-ended contingent valuation) and a state-of-the-art stated preference valuation method (discrete choice experiment) are used to make these comparisons with reference to the preservation value of Nadgee Nature Reserve, a protected natural area on the far south coast of New South Wales. The results suggest that the marginal value respondents from Canberra attach to the preservation of Nadgee Nature Reserve in 1979 was not significantly different from comparable estimates made in 2009. One possible explanation for this apparent value stability across time is that proportional shifts in supply and/ or demand side factors might have cancelled each other out. Alternative explanations for this observed temporal value stability are related to the elicitation format of the open-ended contingent valuation method used to estimate the preservation value of Nadgee Nature Reserve in 1979 and 2009. The findings indicate that this elicitation format might have stabilised value estimates across time through prominence in response. That is, the preservation value of Nadgee Nature Reserve might have changed from 1979 to 2009, but the elicitation format did not reveal this change. These findings stress that the use of marginal value estimates obtained in the past by the open-ended contingent valuation method for current policy decisions might not be sound. The findings further suggest that changes in the incentive compatibility properties of elicitation formats, and the associated potential changes in strategic response and strategic learning, which accompanied the evolution of stated preference methods, might confound an analysis of temporal value variability. In general, this thesis argues that the possibility of value change across extended time periods questions the current practice of using snap-shot value estimates adjusted by a discount rate to predict future values. This research has provided first insights into the variability of marginal values related to non-marketed environmental goods and services over extended time periods. These insights warrant future research, which will be required to draw further policy relevant conclusions. -- provided by Candidate.