WEAI/AERE 2012 - Individual Paper Abstract
Title: Valuing ecosystem restoration: tradeoffs, experience and design
Author(s): Sahan DISSANAYAKE, Department of Economics, Portland State University, PO Box 751, Portland, OR 97207-0751, USA, 217-419-0452, sdissan2 at gmail dot com; Amy W. Ando, University of Illinois, Urbana-Champaign. [Picture credit: Daniel Case at the English language Wikipedia; File:Shawangunk_Grasslands_NWR.jpg]
Abstract:
Sophisticated non-market valuation techniques have been developed by economists to estimate the value to society of goods not sold in the marketplace such as environmental quality and mortality risk reduction. In environmental economics, these value estimates have been used primarily as critical inputs to cost-benefit analyses and to estimate damages for which firms can be held liable after events such as oil spills. In this paper, we demonstrate how a relatively new tool in the valuation toolkit - choice experiment survey methods - can also be used for another important use: guiding complex decisions about how best to carry out and manage ecosystem restoration projects. We use a choice experiment survey of Illinois residents and analyze public preferences and willingness to pay (WTP) for restoring a grassland.
This paper makes three contributions to the conservation and non-market valuation literatures. First, we estimate the values of multiple facets of grassland ecosystems. Second, we analyze the public's willingness to tradeoff between several common measures of conservation success (species richness and population density). Third, we analyze how existing grasslands (public goods) affect the WTP for restoring new grasslands (providing new public goods). We focus on grasslands because of the massive loss of grasslands in North America that stresses wildlife and reduce ecosystem services and unlike with wetlands or forests, there is no economic valuation research that helps policy makers quantify the value of restoring grassland habitats.
The results reveal several interesting patterns of consumer preferences and choice. First, we find that the presence of nearby existing grasslands actually increases a respondent's WTP for restoring a new grassland; this result is counter to what would be expected from neoclassical economics and can possibly be explained by endogenous preferences. Second, by introducing pairwise interactions terms of the conservation success terms (species richness, population density and endangered species) into the econometric specification, we find that respondents treat the conservation success measures as substitutes for each other; the marginal value of one measure is lower when the levels of the other two measures are high, and contours of total value are concave in pairs of attributes rather than convex. This latter finding implies that value-maximizing grassland design might well display corner solutions in which restoration ecologists maximize the value of a single conservation goal - producing endangered-species havens or duck factories - rather than aiming for balanced bundles of these attributes.