Is Existence Value Appropriate for Regulatory Benefit–Cost Analysis?

2020 ◽  
Vol 11 (3) ◽  
pp. 441-456
Author(s):  
Seth Binder
Keyword(s):  
Cost Analysis ◽  
Cognitive Biases ◽  
Stated Preference ◽  
Natural Resource Economics ◽  
Cost Analyses ◽  
Existence Value ◽  
Benefit Cost Analysis ◽  
Ethical Frameworks ◽  
Existence Values ◽  
Benefit Cost

AbstractSince its introduction to the field of environmental and natural resource economics in the late 1960s, existence value has faced several critiques from economists, psychologists, and philosophers. Critics have taken aim at the notion’s conceptual ambiguity and lack of connection to observable behavior, its incompatibility with cognitive processes and its sensitivity to cognitive biases, and ethical shortcomings in applying existence values to environmental decisionmaking. Unlike some critiques of existence value that draw on cognitive and ethical frameworks for decisionmaking fundamentally at odds with stated preference methods and benefit–cost analysis (BCA), this paper takes as given the use and adequacy of both. It focuses on challenges to existence value per se, with respect to the ability of existence value estimates to contribute to benefit–cost analyses in a way that is consistent with qualities of BCA that its proponents value: the objectivity, commensurability, and moral salience of the values analyzed. In light of the challenges, inclusion of existence value in benefit–cost analyses is found to inevitably compromise the quality of the BCA with respect to each criterion.

scholarly journals Accounting for Nonmarket Impacts in a Benefit-Cost Analysis of Underground Coal Mining in New South Wales, Australia

2012 ◽  
Vol 3 (2) ◽  
pp. 1-29 ◽  
Author(s):  
Rob Gillespie ◽  
Marit E. Kragt
Keyword(s):  
Cost Analysis ◽  
Coal Mining ◽  
Choice Experiment ◽  
New South ◽  
New South Wales ◽  
Underground Coal Mining ◽  
Cost Analyses ◽  
Benefit Cost Analysis ◽  
South Wales ◽  
Benefit Cost

Strategic inquiries into coal mining by Australian Governments advocate increased use of comprehensive benefit cost analyses and nonmarket valuation studies when assessing individual project proposals. The study reported in this paper addresses these Government concerns, by integrating results of a choice experiment into a benefit cost analysis undertaken for a Colliery in the Southern Coalfield of New South Wales, Australia. Results of the study were used to aid the State government in evaluating proposals for continued underground coal mining. We show that impacts of mine subsidence on streams, swamps, and Aboriginal sites negatively affect community wellbeing. Social welfare increases with the length of time that the mine provides direct employment. We demonstrate how implicit price estimates from the choice experiment can be incorporated into a benefit cost analysis of continued mining. Benefit cost analyses were carried out for a range of policy scenarios—including policies that would restrict mining activities at the Colliery and protect environmental and cultural features in the Southern Coalfield. Notwithstanding the environmental impacts generated by mining operations, continued mining is shown to be a more economically efficient course of action.

Benefit-Cost Analysis, Policy Impacts, and Congressional Hearings

2019 ◽  
Vol 10 (1) ◽  
pp. 65-94
Author(s):  
Deven Carlson ◽  
Joseph Ripberger ◽  
Wesley Wehde ◽  
Hank Jenkins-Smith ◽  
Carol Silva ◽  
...  
Keyword(s):  
Cost Analysis ◽  
Academic Research ◽  
Cost Analyses ◽  
Congressional Hearings ◽  
Benefit Cost Analysis ◽  
Glen Canyon Dam ◽  
Guidance Documents ◽  
Policy Impacts ◽  
Glen Canyon ◽  
Benefit Cost

Methods for identifying relevant policy impacts for valuation in benefit-cost analyses (BCAs) have received relatively little attention in academic research, applied policy analyses, and guidance documents. In this paper, we develop a systematic, transparent, and replicable process that draws upon information contained in records of Congressional hearings to identify relevant policy impacts for valuation in a BCA. Our approach involves classifying – and subsequently analyzing – statements from witnesses testifying in Congressional hearings on the topic of the BCA. By using Congressional hearings as the basis for our approach, we are identifying potential policy impacts from information provided during the very process the BCA is intended to inform. However, because this approach is quite resource-intensive and would be somewhat burdensome for agencies to implement, it may be best applied in the academic realm, with identified impacts resulting from such applications then made available to agency personnel for potential inclusion in BCAs. Using the case of the Glen Canyon Dam, we demonstrate the approach and its resulting improvements in the quality and transparency of the BCA it was intended to inform.

Existence Values in Benefit-Cost Analysis and Damage Assessment

1992 ◽  
Vol 68 (4) ◽  
pp. 405 ◽  
Author(s):  
Richard C. Bishop ◽  
Michael P. Welsh
Keyword(s):  
Cost Analysis ◽  
Damage Assessment ◽  
Benefit Cost Analysis ◽  
Existence Values ◽  
Benefit Cost

Uses of Cultural Anthropology in Economic Analysis: A Papago Indian Case

1970 ◽  
Vol 29 (3) ◽  
pp. 162-168 ◽  
Author(s):  
James Simpson
Keyword(s):  
Cost Analysis ◽  
Cultural Anthropology ◽  
Resource Economics ◽  
Cultural Factors ◽  
The Other ◽  
Natural Resource Economics ◽  
Social Resource ◽  
Indian Reservation ◽  
Benefit Cost Analysis ◽  
Benefit Cost

To date, wherever Economic Anthropology has been applied in developmental situations, it seems to be the anthropologist who seeks new analytic tools from the economist rather than the other way around. My contention here is that the direction of flow between the two disciplines might usefully be reversed. This, then, is a report by an economist of the use of explicit cultural factors in a pasture reclamation feasibility study on the Papago Indian Reservation of Arizona in 1966. Further, the analytic technique employed - benefit cost analysis - was extended beyond its primary use in natural resource economics in a way that has great potential as a method of social-resource allocation evaluation. The paper specifically attempts to: (1) demonstrate the utility to the economist of an anthropological orientation in analyzing change and development as they occur in actual situations; (2) illustrate the use and applicability of benefit-cost analysis in social development situations; and (3) venture into the nebulous world of placing values on human behavior and decisions on the basis of (1) and (2).

scholarly journals Behavioral economics and policy evaluation

2014 ◽  
Vol 5 (1) ◽  
pp. 89-109 ◽  
Author(s):  
Timothy J. Brennan
Keyword(s):  
Cost Analysis ◽  
Willingness To Pay ◽  
Behavioral Economics ◽  
Policy Evaluation ◽  
Direct Democracy ◽  
Cognitive Biases ◽  
Policy Issues ◽  
Benefit Cost Analysis ◽  
Benefit Cost ◽  
Benefits And Costs

Abstract:Behavioral economics posits a number of cognitive biases and limitations, which raises questions as to whether revealed willingness to pay equals true willingness to pay. If so, benefit-cost analysis, with a number of methodological advantages, would need to be replaced. Prior analyses of the issue by Sunstein, Sugden, and Bernheim and Rangel fail to offer guidance that would avoid substituting centralized judgments for decentralized information on benefits and costs. Alternatives including using post-implementation valuations, libertarian paternalism, and direct democracy on policy issues also have conceptual or practical limitations. A tentative suggestion is democratic delegation, somewhat appealing because it is already applied to cope with bounded rationality and non-efficiency values. Viewing benefit-cost analysis as a market analogue, and restricting the domain of behavioral economics to uninformed consumers, may be useful guides. The most important guidance may be to require very strong evidence of substantial choice failure before abandoning benefit-cost analysis.

Applying Benefit/Cost Analysis To Identify and Measure the Benefits of Intelligent Transportation Systems

1998 ◽  
Vol 1651 (1) ◽  
pp. 23-29 ◽  
Author(s):  
Daniel Brand
Keyword(s):  
Data Collection ◽  
Customer Satisfaction ◽  
Cost Analysis ◽  
Intelligent Transportation Systems ◽  
Stated Preference ◽  
Intelligent Transportation ◽  
Transportation Systems ◽  
Benefit Cost Analysis ◽  
Benefit Cost ◽  
Model Chain

The guidance provided by benefit/cost analysis (BCA) is used to identify the measures appropriate for assessing the benefits of intelligent transportation systems (ITS) investments using BCA. Proper recognition of how ITS differs from conventional transportation improvements can avoid expensive data collection, serious underestimates of the benefits of ITS, and mistakes in our planning and investment policies. The steps in BCA are described, including its strict rules governing the inclusion of benefit measures. An ITS causal model chain is presented that links the five traditional ITS goals (efficiency, mobility, safety, productivity, and energy/environment). The model chain varies from the conventional planning model because the ITS mobility and productivity benefit measures do not vary directly with its safety, energy, and environmental impacts. Recommendations are given for avoiding double counting ITS mobility and productivity benefits, and for identifying them correctly. Errors in valuing the mobility benefit using observed data on travel and ITS product and service buying behavior are described, as is the potential for serious underestimates of ITS mobility benefits from using observed or predicted travel time savings as the primary mobility benefit measure. Instead, direct measurement and valuation of the ITS mobility benefit using customer satisfaction (stated preference) survey methods avoid the problems of ( a) how exactly to measure the utility-generating features of ITS user benefits, and ( b) observing the behavioral responses to ITS information, which involve expensive data collection. Measuring customer satisfaction directly can also simplify other areas of ITS evaluation, including avoiding traditional transportation modeling in some instances.

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