Recap on environmental valuation methods

Which of the following component of total economic value of a resource is correctly identified?

• Use value reflects the value people place on a future ability to use the environment

• Use value reflects the common observation that people are more than willing to pay for improving or preserving resources that they will never use

• Option value is the direct use of the environmental resource

• Non-use value is the the benefit or pleasure derived from the knowledge that an environmental good exists without using it

Which of the following correctly states the difference between the observed discrepancy between

willingness to pay and willingness to accept?

• Respondents tend to report higher values for willingness to accept than willingness to pay

• Respondents tend to report higher values for willingness to pay than willingness to accept

• Respondents tend to report the same values for willingness to accept and willingness to pay

• Policy-makers ignore this type of survey because of its unreliability

Which of the following is an example of nonuse value?

• The value of a river to a recreational fisherman who practices catch-and-release fishing

• The value of a forest to a lumberjack

• The value of dolphins to commercial fishermen, who don’t harvest the dolphins but use the dolphins to locate fish that they do catch

• None of the above are examples of nonuse value

Identify the best ending of this definition:

Economic valuation of an environmental service is ______

• the set of accounting principles for economic activities that are derived from the environmental service

• the process of estimating the amount that members of society would be willing to pay for the environmental service

• the process of determining the value of the jobs that rely on the environmental service

• the assessment of the moral and ethical values that people place on the environmental service

Revealed preference methods are ______ because they involve actual behavior and ______ because they infer a value rather than estimate it directly

• unobservable; direct

• unobservable; indirect

• observable; direct

• observable; indirect

Complete this sentence:

The hedonic price method can be used to place a value on pollution damages in an urban setting because ______

• holding all else equal, property values tend to be lower in polluted neighborhoods

• people tend to be hedonistic

• pollution makes the workplace riskier so workers in urban areas must be paid a higher wage

• pollution makes people wash their homes more often, which is an expensive activity

Which of the following can be referred to as the hedonic price method for valuing environmental assets?

• Using 'existence value' to estimate the value of an environmental asset

• Using 'willingness to pay' to value an environmental asset

• Using travel costs to estimate the value of an environmental asset

• Using linkages between variations in house prices and geographical proximity to an environmental asset

Which of the following is the most correct?

• The production function approach is limited to valuing those ecosystem services that can be used as productive inputs

• The production function approach may overestimate the true value of ecosystem services when not all

  services are related to the production of marketed goods

• The production function approach is appropriate to elicit sociocultural values and intrinsic values of ecosystem services

• A special category of valuing the environment as inputs is the replacement cost method

Which of the following is NOT a correct statement about the contingent valuation method (CVM)?

• CVM studies are relatively straightforward since they directly ask respondents about their willingness to pay

• Because CVM studies use surveys to estimate the values that people place on environmental services, it is called a revealed preference method

• CVM studies have been criticized because of the potential for bias

• The name contingent valuation comes from the idea that the method involves a hypothetical market and then considers a respondents willingness to pay contingent on the existence of that market

Which of the following is NOT a potential bias when using the contingent valuation method?

• Hypothetical bias

• Strategic distortion

• Dummy variable trap

• Loss aversion