We have up to two PhD scholarships available to work with us on a new ARC project called “Benefits and costs of non-market valuation methods for environmental management”. Please share with anybody who may be interested.

Here is a summary of the project, extracted from our funding application. “Non-market values (NMVs) are economic benefits derived from goods and services that are not exchanged directly in markets, such as environmental quality, human health or reductions in natural-hazard risk. These values often represent the vast majority of economic benefits realized through environmental policy and management, but can be more difficult to quantify than market values. This challenge has been addressed, with decades of research quantifying NMVs for the environment, yet there has been almost no analysis estimating the value of information for the NMVs that has been generated. As a result we have no analytical basis for judging whether and when such information is worth generating. It also leaves us unable to take a rigorous approach to decisions about the balance between information accuracy and cost when choosing which NMV method to use in a particular case. The options for informing environmental decision makers include: conducting an original study (using one of several available methods), using “benefit transfer” to extrapolate existing studies to a new context (again, various methods are available), and proceeding without any rigorous evidence about NMVs. Currently, choices amongst these options are largely ad hoc and weakly informed.”

I think it’s a fascinating topic. For example, we know that benefit transfer is less accurate than doing an original NMV study, but it is also less costly. How can we rigorously weigh up the value of additional accuracy?

The study is also relevant to the big debate about whether some value is better than no value (focused on criticisms of Contingent Valuation) (Kling et al. 2012; Hausman 2012; Haab et al. 2013). The two sides in the debate tend to believe that some value definitely is, or definitely isn’t, better than no value. But to me it is completely obvious that it’s not that simple. Even if an estimated non-market value has very wide confidence intervals (high uncertainty), it might be quite a lot more valuable than no value in some decision contexts, and even if it has narrow confidence intervals (high certainty), it might not be better than no value in some other decision contexts. Any conclusion about this has to be context-specific and has to be thought about in relation to specific decisions.

We have a fantastic national and international team working on the project, led out of UWA. The PhD topics are not tightly prescribed – we will develop them up with the students.

For more information, see here.

Further reading

Kling, C.L., Phaneuf, D.J. and Zhao, J. (2012). From Exxon to BP: Has some number become better than no number? Journal of Economic Perspectives 26(4), 3-26.

Haab, T.C., Interis, M.G., Petrolia, D.R., Whitehead, J.C. (2013). From hopeless to curious? Thoughts on hausman’s “dubious to hopeless” critique of contingent valuation. Applied Economic Perspectives and Policy 35(4), 593-612.

Hausman, J. (2012). Contingent Valuation: from dubious to hopeless. Journal of Economic Perspectives 26(4), 43-56.