Environmental Valuation & Cost-Benefit News

This paper develops and applies a space-based strategy for overcoming the general problem of getting at the demand for non-market goods. It focuses specifically on evaluating one form of environmental quality, distance from EPA designated environmental hazards, via the single-family housing market in the Puget Sound region of Washington State. A spatial two stage hedonic price analysis is used to: (1) estimate the marginal implicit price of distance from air release sites, hazardous waste generators, hazardous waste handlers, superfund sites, and toxic release sites; and (2) estimate a series of demand functions describing the relationship between the price of distance and the quantity consumed. The analysis, which represents a major step forward in the valuation of environmental quality, reveals that the information needed to identify second-stage demand functions is hidden right in plain site — hanging in the aether of the regional housing market.

Results:
Because sales price and the distances from ... five environmental hazards are all expressed in natural log form, the distance parameters are elasticities. On average, these elasticities reveal that preferences for this form of environmental quality are ordered as follows: superfund sites (0.06) greater than toxic release sites (0.02) greater than air release sites (0.017) greater than hazardous waste generators (0.01) greater than hazardous waste handlers (0.003). And, as the marginal implicit prices ... reveal the average transaction contributed: (1) $1.36 for an additional foot of distance from the nearest air release site; (2) $2.89 for an additional foot of distance from the nearest hazardous waste generator; (3) $0.00 for an additional foot of distance from the nearest hazardous waste handler; (4) $0.76 for an additional foot of distance from the nearest superfund site; and (5) $0.99 for an additional foot of distance from the nearest toxic release site. These are the mean values of the estimate of marginal implicit price required for the second stage demand functions. Note, however, that these estimates are average prices per foot of distance across all distance consumed and that, because of diminishing marginal utility, the first foot of distance from an environmental hazard is far more expensive than, say, the 40,000th foot. A clearer picture emerges, then, from the total implicit expenditures ... [which show] that the average home, which sold for $383,440, involved a total implicit expenditure of: (1) $5,988.21 on distance from the nearest air release site; (2) $5,514.45 on distance from the nearest hazardous waste generator; (3) $18.99 on distance from the nearest hazardous waste handler; (4) $23.871.92 on distance from the nearest superfund site; and (5) $6,909.00 on distance from the nearest toxic release site.

by John I. Carruthers 1 and David E. Clark 2
1. U.S. Department of Housing and Urban Development, Office of Policy Development and Research; University of Washington, Department of Urban Design and Planning; University of Maryland, National Center for Smart Growth Research and Education (e-mail: john.i.carruthers@hud.gov)
2. Marquette University, Department of Economics (e-mail: david.clark@marquette.edu)

U.S. Department of Housing and Urban Development working paper # REP 07-01
Marquette University School of Business Administration www.busadm.mu.edu
http://www.busadm.mu.edu/mrq/workingpapers/wpaper0702.pdf
Working Paper 0702, 2007
via REPEC www.REPEC.org

Abstract: This paper analyses the macroeconomic costs of environmental regulation in European energy markets on the basis of existing macroeconomic simulation studies. The analysis comprises the European emssions trading scheme, energy taxes, measures in the transport sector and the promotion of renewable energy sources. We find that these instruments affect the European economy, in particular the energy-intensive industries and the industries that produce internationally tradeable goods. From a macroeconomic point of view, however, the costs of environmental regulation appear to be modest. The underlying environmental targets and the efficient design of regulation are key determinants for the cost burden.

Keywords: Environmental regulation; Energy market; Macroeconomic costs

by Astrid Dannenberg, Tim Mennel and Ulf Moslener; all of the Centre for European Economic Research (ZEW), L 7, 1, 68161 Mannheim, Germany; Tel.: +49 621 1235 332; fax: +49 621 1235 226.

Energy Policy via Elsevier Science Direct www.ScienceDirect.com
Volume 36, Issue 4; April, 2008; Pages 1318-1330
http://dx.doi.org/10.1016/j.enpol.2007.12.010

Abstract:
Objectives: Health state utilities play an important role in decision analysis and cost-utility analysis. The question whose utilities to use at various levels of health-care decision-making has been subject of considerable debate. The observation that patients often value their own health, but also other health states, higher than members of the general public raises the question what underlies such differences? Is it an artifact of the valuation methods? Is it adaptation versus poor anticipated adaptation? This article describes a framework for the understanding and study of potential mechanisms that play a role in health state valuation. It aims at connecting research from within different fields so that cross-fertilization of ideas may occur.

Methods: The framework is based on stimulus response models from social judgment theory. For each phase, from stimulus, through information interpretation and integration, to judgment, and, finally, to response, we provide evidence of factors and processes that may lead to different utilities in patients and healthy subjects.

Results: Examples of factors and processes described are the lack of scope of scenarios in the stimulus phase, and appraisal processes and framing effects in the information interpretation phase. Factors that play a role in the judgment phase are, for example, heuristics and biases, adaptation, and comparison processes. Some mechanisms related to the response phase are end aversion bias, probability distortion, and noncompensatory decision-making.

Conclusions: The framework serves to explain many of the differences in valuations between respondent groups. We discuss some of the findings as they relate to the field of response shift research. We propose issues for discussion in the field, and suggestions for improvement of the process of utility assessment.

by Anne M. Stiggelbout PhD, Elsbeth de Vogel-Voogt PhD; Department of Medical Decision Making, Leiden University Medical Center, PO Box 9600, 2300 RC Leiden, The Netherlands. E-mail: a.m.stiggelbout@lumc.nl

Value in Health via Blackwell Publishing www.Blackwell-Synergy.com
Volume 11, Issue 1; January/February, 2008; Pages 76-87
doi:10.1111/j.1524-4733.2007.00216.x
http://www.blackwell-synergy.com/doi/abs/10.1111/j.1524-4733.2007.00216.x

Abstract: While the world's transport energy matrix is still strongly linked to limited and heavily polluting fossil fuels, new markets are appearing for the production and use of alternative transport fuels, such as liquid biofuels. Due to an interconnected global economy, such markets today are developing on a global scale with actors looking to meet local as well as potential international demand. The aim of this paper is to describe and evaluate the emergence of markets for liquid biofuels in Argentina. It reveals that biodiesel production for international supply is likely to emerge in the short run (up to 2010), giving the opportunity to be switched back to local supply in the medium run (post-2010). It also suggests that a bioethanol market (demand and supply) does not seem to be likely in the short run, and it is highly uncertain in the medium run as the most influential actors oppose its development. On the other hand, the current constellations of the biodiesel market appear to leave many uncertainties regarding its sustainability, especially in regard to a limited role of small and medium sized enterprises, and a suitable and diversified biodiesel feedstock. Currently, the focus lies solely on (very) large-scale production of biodiesel derived from soybean oil for the export market.

Keywords: Biofuels; Bioenergy; Argentina

by Patrick Lamers 1, Kes McCormick 1 and Jorge Antonio Hilbert 2
1. International Institute for Industrial Environmental Economics (IIIEE), Lund University, P.O. Box 196, 22100 Lund, Sweden
2. Instituto Nacional de Tecnología Agropecuaria (INTA), CC 25 1712 Castelar, Provincía de Buenos Aires, Argentina

Energy Policy via Elsevier Science Direct www.ScienceDirect.com
Volume 36, Issue 4; April, 2008; Pages 1479-1490
http://dx.doi.org/10.1016/j.enpol.2007.12.023

Abstract: The main motivation of this paper is to identify how relevant the localization of a specific estate is in its market value. Furthermore, it aims to understand better how economic aspects influence and are influenced by urban space. In order to do so, a myriad of concepts is drawn from a variety of fields of science: from geography to architecture, from urbanism to economics, as well as methodologies, which are borrowed from statistics, econometrics and geoprocessing. The proposal of the paper follows the hedonic prices function literature, but suggests that a synthesis of the perception of urban amenities can be expressed by the element of the neighbourhood (as proposed by Lynch, 1997). A number of models are presented, tested and commented. The one with the best fit is the spatial error-lag (Anselin, 1988) specified with a ranking of neighbourhood income. A quantil analysis adds considerably to the understanding of the model.

Keywords: real estate market, neighbourhoods, spatial econometrics, quantil analysis, Belo Horizonte

by Bernardo Furtado; Ph.D. Candidate in Economics CEDEPLAR/FACE/UFMG; Professor Centro Universitário UNA; email: furtado@cedeplar.ufmg.br
Munich Personal REPEC Archive http://mpra.ub.uni-muenchen.de
via REPEC www.REPEC.org
MPRA Paper Number 7340; July, 2007
http://mpra.ub.uni-muenchen.de/7340/
Deposited and Last Modified On February 26, 2008

Abstract:
Objectives: We undertake a systematic review to examine the methods used by researchers in developing cost-of-illness (COI) studies. This review aims to categorize the approaches that the published literature uses in terms of perspective, scope, components of care analyzed in the literature, data sets, and valuation approaches used for direct cost. It draws conclusions regarding the adequacy of current COI research methods and makes recommendations on improving them.

Methods: The online bibliographic information service HealthSTAR (which incorporates MEDLINE) was used to search for COI studies in the research literature published during the period from 2000 to 2004. The search strategy used the term "cost of illness" as a MeSH (medical subject heading) term.

Results: The HealthSTAR literature search identified references to 650 articles. Review of abstracts resulted in the identification of 170 of these for a more detailed review. This process identified 52 articles that met all criteria of COI studies. We identified 218 components of care analyzed across the 52 articles. Private-insurance or employer-claims data sets comprised the largest source of utilization and cost information among the studies.

Conclusion: Analyzing cost of illness presents useful opportunities for communicating with the public and policymakers on the relative importance of specific diseases and injuries. Our research, however, indicates that COI studies employ varied approaches and many articles have methodological limitations. Without well-accepted standards to guide researchers in their execution of these studies, policymakers and the general public must be wary of the methods used in their calculation and subsequent results.

by Gerd Clabaugh MPA, Marcia M. Ward PhD; Department of Health Management and Policy, University of Iowa, 6027 Redbud Court, Johnston, IA 50131-1630 USA. E-mail: gerdclabaugh@uiowa.edu

Value in Health via Blackwell Publishing www.Blackwell-Synergy.com
Volume 11, Issue 1; January/February, 2008; Pages 13-21
doi:10.1111/j.1524-4733.2007.00210.x
http://www.blackwell-synergy.com/doi/abs/10.1111/j.1524-4733.2007.00210.x