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Environmental Economics Research at EPA

In addition to well-studied categories of travel costs, wage differentials and property values, consumers reveal their preferences concerning environmental amenties in other markets and actions. Occasionally, it is possible to infer values consumers place on those amenities by observing their behavior in these “other” markets. You can see the full list of reports that do that or do preliminary work in that direction in the benefits analysis - valuation - revealed preference - other subview of the subject view of the Environmental Economics Report Manager (EERM) database. The studies discussed below constitute a subset of these reports:

Heart Disease Patients’ Averting Behavior, Costs of Illness, and Willingness to Pay to Avoid Angina Episodes (EE-0010A) by Chestnut, Colome, Keller, Lambert, Ostro, Rowe and Wojciechowski is a 1988 study that notes the link between episodes of angina and carbon monoxide. The study consists largely of a willingness to pay or contingent value exercise intended to determine patients’ negative valuation of angina episodes. The study found a value of $40-42 depending on assumptions.

At least some of the subjects in this study engaged in adaptive behavior. Additional expenditure on medical care was one result. Another adaptation was the employment of third parties to perform services such as yard work and the purchase of equipment such as lawn mowers and household appliances. Such expenditures averaged $2,151 annually for 21 subjects. No attempt was made to link this result to ambient carbon monoxide. No valuation was given for a decrement of that pollutant. EE-0010B contains appendices to the study.

Valuing Chronic Morbidity Damages: Medical Costs, Labor Market Effects, and Individual Valuations (EE-0224) by Krupnick and Cropper studies the link between several diseases including bronchitis, emphysema and heart disease on the one hand and air pollutants including ozone, particulates, lead and carbon monoxide. The study attempts to value a reduction in the incidence of the diseases but the link back to pollutants, either via dose-response or a value of abatement, is left to other studies. The study consists largely of a willingness to pay or contingent value exercise intended to determine patients’ negative valuation of angina episodes. Labor market effects and medical costs are also explored.

Estimating and Valuing Morbidity in a Policy Context: Proceedings of June 1989 AERE Workshop (EE-0120) is a collection of papers presented at a workshop. One of those papers, by Mark Dickie and Shelby Gerking, entitled "Valuing Reduced Morbidity: A Household Production Approach," May, 1989, uses household production theory to capture consumer adaptive behavior. Technical relationships are estimated between health attributes, private goods that affect health and air quality. The econometric effort finds that individuals equate marginal rates of technical substitution in household production of health with relevant price ratios.

Marine and Sport Fisheries Economic Valuation (EE-0122) is a collection of papers presented at a 1988 workshop. Two papers from the workshop are discussed here:

"The Economic Valuation of Saltwater Marsh Supporting Marine Recreational Fishing in the Southeastern United States" by Frederick W. Bell reviews six methods of valuing wetlands for recreational fishing and develops a seventh, purportedly superior, one. The paper develops a logistical model of fish populations and a model of sport fishing production that includes effort and, at least indirectly, wetlands as arguments. When these models are combined with demand or willingness to pay data from the author’s earlier works, the result is a per acre valuation of recreational fishing wetlands. For the east coast of Florida, this turns out to be $6,471 and for the West Coast, $981.

"Modelling Response of Recreational Fishermen Within the CERCLA Type A Damage Assessment Model" by James J. Opaluch notes that under the Superfund Amendments and Reauthorization Act and the Clean Water Act, firms are liable for natural resource damages. Type A damage analysis is available for small, marine spills. A model known as NRDAM/CME is used for this purpose. The report examines both conceptual and empirical issues related to extending the NDRAM/CME to include behavioral response by recreational fisherment using a discrete choice framework.

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