Economy

Review of Contingent Valuation of Environmental Goods: A Comprehensive Critique. Edited by Daniel McFadden and Kenneth Train (2017): An Update

John C. Whitehead

No 24-17, Working Papers from Department of Economics, Appalachian State University

Abstract: This paper updates the review of the 2017 BP-funded book critical of the contingent valuation method (McFadden and Train, 2017) that was published in the Australian Journal of Agricultural and Resource Economics (Whitehead, volume 64, number 2, pp. 710-713, 2018). In that review I noted that an expanded review, with summaries of each chapter, was available upon request. A few requests trickled in but I always responded that the expanded review was not quite ready to share. This was primarily due to a comment that I was writing on a chapter in the book and other on-going work that I wanted to include. That comment has been published and my retort to the reply was posted as a working paper in 2024. Therefore, it is high time to finish the extended review of the book. In this paper I include the original review and add two appendices. One appendix contains the short reviews of each chapter promised in 2018 and another is the 2021 proposal narrative for a forthcoming book that more fully responds to McFadden and Train (2017). 

Date: 2024

Downloads: http://econ.appstate.edu/RePEc/pdf/wp2417.pdf

When there is an increase in demand a business firm will increase output. In the case of a park, you need more employees to make sure the quality of the product stays high. But, no:

Handling throngs of visitors has long been a tough task for a dwindling number of Park Service employees. The task has gotten tougher as visitation has jumped and staffing has shrunk.

The amount of full-time equivalent park employees in the National Park Service fell 20% between the 2010 and 2023 fiscal years, according to federal data. Park visitation rose 16% to 325.5 million over that stretch, and the park service got more land to oversee.

Officials now face difficult choices about how to manage some of America’s most prized parcels of land. In smaller parks, they close visitor centers and bathrooms and stop tours when they don’t have staff to manage them. Travelers say they’ve come to expect reduced services or to spend a good chunk of their day waiting in line at popular parks. Rangers report more vandalism and damage. …

In larger parks such as Zion, funding from nonprofit partners and labor from volunteers helps fill gaps. How best to staff the park remains an exercise in triage, former employees say. Visitation has increased over 70% since 2010 at Zion. It welcomed more than 4.6 million people in 2023. The number of full-time equivalent employees has dropped about 8% in that stretch, according to federal figures. …

Visitation to parks accelerated during the Park Service’s centennial celebration that began in 2015, then skyrocketed during peak pandemic years.

Government funding for staffing hasn’t kept up. Republicans and Democrats are at odds over how much more that funding could shrink. The latest funding bill, which passed the House before the summer recess, would eliminate more than 400 positions next year, according to Democrats on Capitol Hill. A spokeswoman for the Republican-led House Appropriations Committee says a recent one-time influx was enough to restore some past staffing cuts and that the number of personnel assigned to parks isn’t directly correlated to budgets.  

The National Park Service manages an appropriated budget of about $3.5 billion when it needs closer to $5 billion for staffing and capital improvements, says Kristen Brengel, senior vice president for government affairs at the National Parks Conservation Association, a nonprofit advocacy group.

Some of the other problems mentioned in the article are due to crowding and we’re not quite ready to ration the popular National Parks to reflect capacity constraints or the realities of reduced government funding. 

Source: America’s National Parks Are Beset by Long Lines, Increased Vandalism (WSJ)

At one point in my life I thought it would be cool to publish a paper in Human Dimensions of Wildlife. So I sent this paper there in 2002 and received an R&R. Here is the response to the referees:

Response to Referees

The empirical models have undergone significant change. When incorporating the trout fishing, deer hunting, and wildlife watching models into the analysis we began exploring an expanded set of independent variables. This is important because controlling for all possible factors that may affect the responses is necessary when searching for differences in the 1991 and 1996 survey. Also we no longer present willingness to pay estimates for three reasons: (1) the regression models are sufficient to conduct the hypothesis test for temporal reliability, (2) brevity and (3) these estimates are presented in detail in the previous analyses of the Fishing, Hunting, and Wildlife-Associated Recreation (FHWAR) data. We have completely rewritten the paper to improve the clarity of our presentation. We address specific comments of each referee below.

Referee #1 (Comments on the HDW Review Comments Sheet)

Paragraph 1: The empirical approach has been simplified to avoid confusion. Our empirical model is the probit to maintain consistency between the previous analyses of these data. An expanded discussion of the censored probit model has been added.

Paragraph 2: We have rewritten the conclusions to increase the clarity of discussion about temporal reliability.

Paragraph 3: We have dropped discussion of the catch per trip as a potential influence on willingness to pay. We have included a discussion of potential omitted variables including demand and supply factors not included in the survey data.

Paragraph 4: The entire paper has been rewritten to improve clarity.

Referee #2 (Comments on white paper)

Paragraphs 4-6: We have focused on the analysis that adjusts the sample for the bid distribution and state of residence. We have discarded from both surveys respondents who took trips outside the state of residence. In the bass fishing, trout fishing, and deer hunting models the average (inflation adjusted) bid amount in the 1991 survey is lower than in the 1996 survey. We have randomly discarded respondents so that the average bid amounts are not statistically different across year of the survey. The adjustments to the sample are described in the “data” section of the paper. Note that the empirical results are robust to samples in which these two adjustments are not made.

Paragraph 7: The word “trends” has been purged from the paper.

Paragraph 8: We have expanded our analysis to include each of the contingent valuation questions that appear in both the 1991 and 1996 FHWAR surveys: bass and trout fishing, deer hunting, and wildlife watching.

Paragraph 9: Appendix 1 and 2 are deleted. We provide more discussion about the survey questions, including the exact text of both the 1991 and 1996 questions, in the “survey background and methods” section of the paper. We focus on the log normal functional form stating that similar results are found for other functional forms of the bid amount.

As you can see, they asked us to do a lot of work, including re-estimation with more dependent variables than just bass and trout fishing. The editor rejected the revision:

The reviewers suggested refocusing the manuscript to highlight how methodological changes in the survey over the years have potentially influenced the findings and conclusions. Both reviewers note specific recommendations in this regard. Because the topic of temporal reliability is important for surveys like FHWAR, I encourage you to revise and resubmit the paper along the lines they suggest. In particular, you will need to include the 2001 FHWAR data.

I used the 1991 and 1996 data in the paper and the editor thought it would be a good idea to update with another year’s worth of data. I didn’t think so, especially since the 2001 data asked a completely different type of willingness to pay question (open-ended). And, after reading two versions of the paper, the referees thought that the contingent valuation data wasn’t worth the trouble. Referee 1:

The strength of the paper lies not in the probit model, but in highlighting how methodology can influence the findings and the conclusions that can be drawn. A probit model might be still be used, but the variables in the model should be methodological variables (type of question asked [dichotomous choice versus iterative bid], recall period, etc.), rather than variables like PUBLIC, PRIVATE, PHOTO, etc.

Referee 2:

My view is that the authors should forget their probit analysis and concentrate on whether there appear to be “conventional” reliability and bias problems that make comparison of 1991 and 1996 likely to be a comparison dominated by bias or error rather than showing validity. …

My personal view is that there is probably enough in the current paper about changes and incompatibilities that the paper can be easily revamped along the lines suggested. In fact, at one point it seemed to me that the authors were going to study the distributions of responses for 1991 and 1996 and discover that response patterns were such that testing for temporal reliability made no sense.

In short, both referees thought a paper with a different focus would be a good idea and the editor agreed. As it was, the different paper wasn’t something that I wanted to write since it was really beyond my research interests. So, I sent the paper to JARE in 2002 (reject), the Journal of Leisure Research (JLR) in 2003 (reject) and Ecological Economics in 2005 (reject). I think it was a JLR referee who was so incensed at our analysis that he threatened to write a comment on the paper if it was published. After a cooling off period, I sent it to Applied Economics in 2005. Here is the editor’s response:

We have had difficulty in obtaining timely reports on your paper. Accordingly, I have read it myself and I have also sought the advice of an associate editor. We were both impressed with your paper and I have therefore decided to accept it without further revision for publication in Applied Economics. It is a good piece of applied work.

It was around this time that I may have decided it wasn’t such a great idea to engage with a more multi-disciplinary audience. 

I didn’t revise the paper for this journal but here is what I wanted to say:

Reviewer #1: 1. This is an important contribution. However, I feel it would be much more support to the cause of maintenance of the waterways if there was an equally valid assessment of the commercial fishing and towing industry that depend on the AIWW for their livelihood.

Response: Agreed. Someone should write this paper. 

2. The authors need to better explain the difference between their derived value of $97 that each boater is willing to pay from the 47% of boaters that are willing to pay up to $100.

Response: 47% of respondents said that they would pay $100. The willingness to pay estimate is $97 which arises because the highest bid amount is so close to 50% … [OK: nothing snarky here] 

3. I believe that there must be a difference in value for each foot of depth based upon the draft and length of the waterway. This is not explored in the text or noted in the table of survey results.

Report: The model first estimates how trips will change with different depths in a Tobit and then uses the predicted trips as a covariate in the willingness to pay model. Each additional trip leads to an increase in WTP of $1.31. We’ve added a table to break the $1.31 down into different depths. [Again, nothing snarky … good comment]

4. I did not see any indication of consideration of users outside of North Carolina such as the boaters that annually migrate south each Winter and north each summer through North Carolina.

Response: That is because our sample frame and survey only covered boaters licensed in North Carolina.

5. Two pages of references for a ten page paper seems out of balance.

Response: Good point but should we have more references or less?

6. The statements made “Exogenous factors such as high energy prices, water pollution, beach erosion and damage caused by coastal storms has limited waterway access and use. The future impacts of climate change and sea level rise will also have negative impacts on marine recreational boating.” are very sweeping without support in the document and in some cases very misleading if not incorrect. These should be revised by the author.

Response: How would that statement be “very misleading if correct”?

Total Economic Valuation of Great Lakes Recreational Fisheries: Attribute Non-attendance, Hypothetical Bias and Insensitivity to Scope

John C. Whitehead, Louis Cornicelli and Gregory Howard

Abstract: We use stated preference methods to estimate willingness to pay to avoid reductions in recreational catch in Great Lakes fisheries. We compare willingness to pay estimates where uncertain “in favor” votes are recoded to “against” votes to an attribute non-attendance model that focuses on the policy cost attribute. We find that the two hypothetical bias models yield similar results. We estimate another attribute non-attendance model that also considers the scope of the policy and find that the scope elasticity is significantly underestimated in other models. The willingness to pay in this last model is higher than in the other models.

Key Words: Attribute non-attendance, Hypothetical bias, Scope test, Willingess to pay

URL: https://econpapers.repec.org/paper/aplwpaper/24-10.htm

The Aggregate Economic Value of Great Lakes Recreational Fishing Trips

John C. Whitehead, Louis Cornicelli, Lisa Bragg and Rob Southwick

Abstract: We use the contingent valuation method in a survey of Great Lakes anglers to estimate the willingness to pay for a Great Lakes recreational fishing trip. Employing various assumptions and models, we find that the willingness to pay for a trip ranges from $54 to $101 ($2020). We then combine the willingness to pay per trip estimates with an estimate of the number of trips and find that the aggregate economic value of Great Lakes fishing trips in the U.S. is $611 million. We conduct a sensitivity analysis over the estimates of willingness to pay and the number of trips and estimate that the 90% confidence interval around the mean estimate of $632 million is ($182.5, $1,553) million. 

URL: https://econpapers.repec.org/paper/aplwpaper/24-11.htm

They doth protest too much, methinks: Reply to “Reply to Whitehead”

John C. Whitehead

No 24-04, Working Papers from Department of Economics, Appalachian State University

Abstract: Desvousges, Mathews and Train (2020) point out a mistake in my comment on their 2015 paper. When this mistake is corrected the conclusions drawn in my comment are unchanged. In addition, the authors claim that I make another 11 “mistakes”. In this paper I argue that these “mistakes” are mostly fairly standard practice in the contingent valuation method. Desvousges, Mathews and Train misread and distort this literature. In addition, I place the comments and reply in the context of a larger debate over using the Contingent Valuation Method for Natural Resource Damage Assessment.

URL: https://econpapers.repec.org/paper/aplwpaper/24-04.htm

From the inbox:

The International Review of Environmental and Resource Economics has published the following new issue. The articles in this issue are freely avaible until 20 February[*]. For other issues or for subscription information, please visit the journal webpage.

Wow.

*Note: the website says free until January 20, not February.

From the NORC NOW email:

$394 billion. That’s how much hunters, anglers, and wildlife observers spent on being in the wild in 2022, according to the latest National Survey of Fishing, Hunting, and Wildlife-Associated Recreation. When the survey first launched in 1955, the best way to ask Americans about those pursuits was through in-person interviews. Fast forward to 2020, when the Association of Fish & Wildlife Agencies—in partnership with the U.S. Fish & Wildlife Service—tasked NORC with mitigating declining survey response rates and reducing costs. NORC revitalized the survey by streamlining its content and replacing in-person interviewing with a “push to web” approach that invites randomly selected and targeted households through mailed invitations to take the survey online, on paper, or by phone. NORC’s AmeriSpeak® Panel helped identify rural residents and our TrueNorth® methodology reduced bias in the targeted sample.

NORC completed 100,000+ interviews, which revealed that 57 percent of Americans (148 million) watched wildlife, 15 percent (40 million) fished, and six percent (14.4 million) hunted. All of these suggest significant contributions to local economies. Survey findings will help local and state organizations fine-tune their efforts to preserve the habitats for both wildlife and its enthusiasts.  

Read: 2022 National Survey of Fishing, Hunting, and Wildlife-Associated Recreation report

Good luck using that link to find the actual report. When I click on PDF it takes me to a list of other reports and then I survey for National Survey and I’m in a loop.

The USFWS used the Census to do these surveys for decades. As far as I can tell, this survey had the biggest contingent valuation method sample in history until budget cuts with, I think, the 2011 survey and they went from dichotomous choice back to open-ended willingness to pay questions. This survey and, I think, the previous one dropped the CVM questions.

Here’s the link to a paper I wrote with the data a long time ago: https://www.tandfonline.com/doi/abs/10.1080/00036840500438996.