Environmental Valuation & Cost-Benefit News

Abstract: As part of a larger research project which examined the concept of healthy houses in Canada, this study provides a preliminary assessment of potential segments of Canadian householders based on their attitudes about two indoor environmental quality (IEQ) attributes (indoor air quality and lighting). Additionally, concerns about energy efficiency in the home are also addressed. A nationwide survey of households (n = 784) was conducted to search for indications of segments of Canadian householders that value their homes’ indoor environments and energy efficiency, thus addressing issues of consumer interest for healthier homes. Similar groups of householders were derived based on their levels of agreement with a variety of statements regarding some indoor environmental quality attributes and energy efficiency. The specific goals were: (1) to identify segments within Canada which indicate the presence of potential consumers of healthier houses on a broader scale; and (2) to characterize these groups using attitudinal and demographic variables. Segmentation in this study was conducted using a k-means cluster analysis, with the clusters being characterized using demographic and attitudinal information. Results indicated that there is indeed an identifiable segment within the Canadian housing sector for products and services associated with the healthy housing concept. Although housing and policy recommendations are not explicitly made, both private and public stakeholders in the Canadian housing sector could benefit by taking note of these findings.

Keywords Healthy houses - Cluster analysis - Segmentation - Canadian households

by Wellington Spetic, Robert Kozak and David Cohen all of The University of British Columbia, 4th Floor – Forest Sciences Centre, 2424 Main Mall, Vancouver, BC, Canada, V6T 1Z4
Emails: spetic@interchange.ubc.ca , rob.kozak@ubc.ca and David.Cohen@ubc.ca

Journal of Housing and the Built Environment via Springer Publishing www.SpringerLink.com
Volume 23, Number 1; March, 2008; Pages 37-52
DOI: 10.1007/s10901-007-9101-x
http://www.springerlink.com/content/9362x63974j51x86/

Abstract: We investigated the role of anonymity, reciprocity, and conformity for voluntary contributions,based on a natural field experiment conducted at a national park in Costa Rica. Contributions made in public in front of the solicitor were 25 percent higher than contributions made in private. Giving subjects a small gift before requesting a contribution increased the likelihood of a positive contribution. At the same time, however, the conditional contribution decreased. The total effect of giving a gift was positive but small, and taking the cost of the gift into account, it was far from profitable. When the subjects were told that the typical contribution of others was $2 (a small contribution), the probability of a contribution increased and the conditional contribution decreased, compared to providing no reference information. Providing a high reference level ($10) increased the conditional contributions. Overall, the total effects have the expected signs, although the magnitudes are smaller than what one might have expected based on existing evidence from laboratory experiments.

Keywords: Voluntary contributions, anonymity, reciprocity, conformity, natural field experiment

by Francisco Alpízar, Fredrik Carlsson, and Olof Johansson-Stenman
Resources For the Future www.RFF.org
Discussion Paper 08-03; March, 2008
http://www.rff.org/rff/Documents/EfD-DP-08-03.pdf

Abstract: Although ecosystems provide myriad services to economies, only one service is considered in most renewable-resource models. The general equilibrium bioeconomic model introduced here admits a second service, and more importantly it accounts for how the two services are impacted by interactions within an eight-species ecosystem and interactions within a regional economy. Endangered Steller sea lion recovery measures via alternative pollock quotas change all ecosystem populations and all economic variables. While non-use values associated with the ecosystem (e.g., existence values) are not considered, all species matter for the economy because they are all used indirectly as support for ecosystem services. Regional welfare changes from reduced quotas show the tradeoff between consumptive and non-consumptive uses of the ecosystem.

Keywords: Ecosystems; Economics; Ecology

by David Finnoff and John Tschirhart; both of Department of Economics and Finance, Department 3985, 162 Ross Hall, 1000 East University Avenue, University of Wyoming, Laramie, WY 82071, United States

Resource and Energy Economics via Elsevier Science Direct www.ScienceDirect.com
Volume 30, Issue 2; May, 2008; Pages 91-114
http://dx.doi.org/10.1016/j.reseneeco.2007.08.005

Abstract: Using a choice experiment survey, the marginal willingness to pay (WTP) among Swedish households for reductions in power outages is estimated. The results from the random parameter logit estimation indicate that the marginal WTP increases with the duration of the outages, and is higher if the outages occur during weekends and during winter months. Moreover, the random parameter logit model allows us to estimate a sample distribution of WTP and we find a significant unobserved heterogeneity in some of the outage attributes. Given that households have negative welfare effects from outages, it is important that policy makers consider these negative impacts on household utility when regulating the Swedish electricity market.

Keywords: Choice experiment; Power outages; Random parameters; Willingness to pay

JEL classification codes: C25; C93; D12; Q41

by Fredrik Carlsson and Peter Martinsson; both of Department of Economics, Göteborg University, Box 640, 405, 30 Göteborg, Sweden; Tel.: +46 31 773 41 74; fax: +46 31 773 10 43 and Tel.: +46 31 773 52 55

Energy Economics via Elsevier Science Direct www.ScienceDirect.com
Volume 30, Issue 3; May, 2008; Pages 1232-1245
http://dx.doi.org/10.1016/j.eneco.2007.04.001

Abstract: Several recent papers propose competing theoretical explanations for the empirical observation of an inverted U-shape relationship between environmental degradation and per-capita income. We propose the following test of the theory: calibrate a theoretical model to an already developed economy using information unrelated to the pollution–income curve. Then simulate the model starting from a less developed initial condition and compare the predicted pollution–income relationship with that in the data. Our results are mixed. Some support exists for the theory that the inverted U-shape results from a corner solution in which less developed countries do not abate pollution. However, because we find abatement is relatively inexpensive, the model predicts pollution peaks at a level of per capita income much lower than that observed in our U.S. data. For some pollutants, we find evidence of a structural break in preferences in the early 1970s. When the structural break is added, the model performs better for two of three pollutants.

Keywords: Environmental Kuznets curve; Growth environment; Calibration

by Sherry Bartz and David L. Kelly both of Department of Economics, University of Miami, Box 248126, Coral Gables, FL 33134, United States

Resource and Energy Economics via Elsevier Science Direct www.ScienceDirect.com
Volume 30, Issue 2; May, 2008; Pages 115-149
http://dx.doi.org/10.1016/j.reseneeco.2007.06.001

When a drug can cost more than $300,000 a year, the right dose becomes a matter of public debate.

The drug in question, Cerezyme, is used to treat a rare inherited enzyme deficiency called Gaucher disease. Some experts say that for most patients, as little as one-fourth the standard top dose would work, saving the health care system more than $200,000 a year per Gaucher patient.
...
With Cerezyme, which is made by Genzyme, the profits are sizable. Gaucher disease, which can have complications like ruined joints, is rare; only about 1,500 people in the United States are on the drug and about 5,000 worldwide. Sales of Cerezyme totaled $1.1 billion last year, making it a blockbuster by industry standards.

Genzyme is not the only company feeling some pressure. Some lung cancer doctors are using only half the approved dose of Genentech’s drug Avastin, after a recent study suggested the half-dose might be as effective as the full one, which can cost $100,000 a year.

In a letter to The Journal of Clinical Oncology last September, Dr. Ian E. Haines of Monash University in Australia argued that the doses of all three Genentech cancer drugs — Herceptin, Rituxan and Avastin — appeared to be higher than necessary, perhaps to bolster sales.

Dr. David P. Schenkein, a Genentech executive, said the doses were chosen solely for maximum effectiveness in fighting cancer.

Scientists reported last year that a two-hour infusion of Schering-Plough’s anticlotting drug Integrilin worked just as well for some patients as the standard 18-hour infusion, saving hundreds of dollars per treatment.

And doctors are sharply reducing their use of anemia drugs sold by Amgen and Johnson & Johnson.
...
According to Genzyme, the average dose in the United States is 51 units per kilogram every two weeks. At that dose, it costs about $350,000 a year to treat an adult weighing 70 kilograms, or 154 pounds.

But the worldwide average, even factoring in United States patients, is 34 units. And in Israel, the standard dose is 15 units per kilogram every two weeks.

“Patients are doing just as well on a treatment that is 75 percent less expensive,” said Dr. Ari Zimran, an Israeli Gaucher expert.

A study in the journal Blood in 2006 compared patients in the Netherlands, where a low dose is used, to those in Germany, where a high dose is typical. In the usual measures of disease severity — liver and spleen size and blood counts — there was no difference between the groups. But the German patients did better in two indirect indices of bone health.

Dr. Pramod Mistry, a Gaucher expert at Yale who receives some research funding from Genzyme, said he was caring for some of Dr. Beutler’s former patients who had become “very, very sick” because of under-treatment.
...
By Andrew Pollack
The New York Times www.NYTimes.com
FOR FULL STORY GO TO:
http://www.nytimes.com/2008/03/16/business/16gaucher.html?th&emc=th
March 16, 2008

Abstract: Can eliminating the stock of government bonds reduce welfare? When the government must raise revenue to pay interest on its bonds, the social value of government debt hinges on whether the benefits from greater portfolio diversification outweigh the costs of the revenue-raising efforts. A positive stock of debt is optimal only if interest payments are financed by an inflation tax, agents are not too risk averse, there is a government budget deficit, and the economy is on the bad side of the Laffer curve. Welfare is higher on the good side of the Laffer curve without bonds.

Keywords: Government debt, Fiscal policy, Monetary policy, Portfolio allocation

by Stacey L. Schreft 1 and Bruce D. Smith 2
1. Economic Research Department, Federal Reserve Bank of Kansas City, Kansas City, MO 64198, USA; Email: Stacey.L.Schreft@kc.frb.org
2. Department of Economics, University of Texas-Austin, Austin, TX 78712, USA

Annals of Finance via Springer Publishing www.SpringerLink.com
Volume 4, Number 2; March, 2008; Pages 131-155
DOI: 10.1007/s10436-007-0073-3
http://www.springerlink.com/content/0r7689j92g525640/