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Last modified
7/14/2009 5:01:46 PM
Creation date
5/22/2009 12:33:25 PM
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UCREFRP
UCREFRP Catalog Number
7793
Author
Douglas, A. J. and R. L. Johnson
Title
Instream Flow Assessment and Economic Valuation
USFW Year
1993
USFW - Doc Type
A Survey of Nonmarket Benefits Research
Copyright Material
YES
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<br />INSTREAM FLOW <br /> <br />95 <br /> <br />There is an ongoing debate about the validity of existence value estimates. 24 <br />Bishop and Welsh 18 discuss the debate in detail, and assert that part of this contro- <br />versy revolves around the fact that off-site benefits can only be measured by the con- <br />tingent value method. Cummings et al.t3discuss the early tests of the contingent <br />value method's accuracy in predicting real market outcomes. But, Mitchell and <br />Carson25 point out that tests of the ability of contingent value method studies to pre- <br />dict public referenda outcomes or similar nonmarket allocation processes are more <br />relevant. Duffield and Patterson24 recently field tested CVM instream flow existence <br />benefits estimates by soliciting actual contributions to a trust fund. The results were <br />inconclusive. Carson et al.,26 however, provided strong empirical evidence of the <br />operational significance of existence benefits estimates. <br />Carson et al.26 used data from a contingent value method study to estimate the <br />outcome of a referendum that dealt with a market versus nonmarket surface water <br />resource conflict. Their study shows the remarkable accuracy of contingent value <br />method predictions of the ballot results. Moreover, the prediction by Carson et al.26 <br />of the outcome of an actual 1984 California state-wide referendum vote was <br />improved by including existence benefits in their estimates of nonmarket aggregate <br />benefits conferred. However, policy relevant testing of the accuracy of CVM esti- <br />mates along the lines explored by Carson et al.26 is rare. Kahneman and Knetsch27 <br />recently explored a type of CVM bias they call the "embedding phenomenon" in a <br />telephone survey. Kahneman and Knetsch27 show that the estimated aggregate will- <br />ingness-to-pay for the provision of more highly trained emergency and disaster res- <br />cue personnel and equipment varies with the questionnaire format. Kahneman and <br />Knetsch27 asked respondents their willingness-to-pay for improved emergency res- <br />cue services after being queried with regard to their willingness-to-pay for improved <br />environmental amenities, and broad based enhanced disaster preparedness. They <br />also query respondents with regard to their willingness-to-pay for improved emer- <br />gency rescue services in a survey in which there is just one amenity. The mean will- <br />ingness-to-pay for improved emergency rescue services increases ten-fold if the <br />other amenities are omitted from the telephone survey instrument,21 <br />Bishop and Welsh 18 point out that the actual survey questions used by Kahneman <br />and Knetsch27 have basic errors in survey design. The Kahneman-Knetsch questions <br />neither tacitly nor explicitly designate a baseline condition, and the hypothetical <br />improvements are not quantified. These survey design errors are related to various <br />types of estimation bias listed in Cummings et al.13 and Mitchell and Carson.25 Thus <br />Kahneman and Knetsch27 have also demonstrated the fact that CVM survey design <br />flaws can induce "embedding bias." Bishop and Welsht8 correctly note that <br />Kahneman and Knetsch27 do not, however, demonstrate lack of accuracy in non- <br />market amenity value estimates obtained with properly designed CVM survey <br />instruments. <br /> <br />THE DOLLAR VALUES AND THEIR POLICY USES <br /> <br />The preceding discussion provides useful background information for a review of <br />the range spanned by nonmarket instream flow benefits estimates. Much of the <br />Temarkable variation in estimates of benefits conferred by instream flows stems from <br />an equally remarkable variation in the range of attributes addressed by these <br />studies. 2 The more inclusive the set of amenities provided by the instream flows, the <br />greater the aggregate acre-foot benefits conferred per linear mile of instream flow <br />
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