Estimating the value of Australian environmental assets

Abstract

The estimation of non-market environmental values remains a challenge to economists seeking to provide relevant information to policy-makers. The demand for such information is increasing, especially in response to statutory requirements for economic analyses of policy initiatives. Studies undertaken in response to this demand continue to be criticised for producing biased results. Research into the use of Choice Modelling to estimate environmental values has sought to meet that challenge. Choice Modelling involves survey respondents revealing their values for environmental changes by making choices between numerous alternative future management scenarios. Through the choices made, inferences can be drawn about the trade-offs people are willing to make across environmental outcomes. By specifying one of those outcomes as a monetary cost, respondents' willingness to pay for different policies can be estimated. Recent research projects outlined here have estimated the value of catchment protection investments in New South Wales and Tasmania, alternative management of nature reserves, and climate change impacts. Key methodology issues confronted in these applications have been the design of choice experiment surveys to ensure that respondents have an incentive to answer without bias, the incorporation of uncertainty in the future management scenarios, the selection of appropriate attributes of environmental change, the integration of value information into decision support systems, and the determination of the impact of alternative scales and scopes of analysis.