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Naeem - Dissertation.pdf (3.98 MB)

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Two Essays on Non-market Valuation

Naeem, Afif
http://rave.ohiolink.edu/etdc/view?acc_num=osu1405447102

Abstract Details

2014, Doctor of Philosophy, Ohio State University, Agricultural, Environmental and Developmental Economics.
This dissertation analyzes the issues pertaining to non-market valuation of environmental amenities. In particular, it addresses the underlying latent systematic heterogeneity across individuals and its effect on their valuation for environmental amenities. The first chapter analyzes the effect of level of risk-aversion of an individual on willingness to pay for an improvement in environmental amenity. Many environmental quality improving policies, such as Clean Air Act and Clear Skies Act, also affect the health of the individuals and alter the morbidity and mortality risk due to environmental degradation. Risk-preferences of an individual will play a role in determining his willingness to pay (WTP) for this class of environmental quality improving projects. This chapter examines the relationship between the level of risk-aversion of individuals and their WTP for such environmental quality improving projects. Empirical results show that risk preferences of an individual in personal health matters play a significant role in determining his WTP. Results show that a more risk-averse individual in personal health matters is expected to have higher WTP as compared to a less risk-averse individual. The second chapter analyzes the effect of protest-zero response in contingent valuation surveys. Underlying assumption in contingent valuation surveys is if an individual values the proposed change in environmental amenity, he should be willing to pay for the proposed program. Starting from this assumption, certain reasons why individuals are not willing to pay for the proposed program become problematic. Such reasons include aversion to the proposed payment vehicle and ethical beliefs opposed to put value on environmental goods and services, among others. Such responses are labeled as protest-zero responses. Common approach in literature to account for protest-zero respondents is to identify them on the basis of reasons for stating a zero willingness to pay for the proposed program, and drop them from the final analysis. Major issues with this approach include final sample not representative of the population, and the criterion for the identification of protest-zero response is dependent on the response to the valuation question. An alternate methodology is proposed in this chapter. The issue is analyzed as an omitted variable problem, and the omitted variable is the level of protest-beliefs held by an individual. Factor scales obtained from common factor analysis are utilized as proxy variables for the level of protest-beliefs. This methodology avoids the arbitrary truncation of sample, and the criterion to infer the level of protest-beliefs is independent of the response to the valuation question. Empirical results show that sample dropping protest-zero respondents from the final sample leads to an over-estimate of willingness to pay. Parameter estimates obtained from the proposed methodology are internally consistent and compliant with prior expectations. Results from Monte Carlo simulation experiments show that dropping protest-zero respondents from the final sample leads to biased parameter estimates. Simulation results also show that proposed methodology yields parameter estimates close to the true values.
Timothy Haab (Advisor)
Brian Roe (Committee Member)
Brent Sohngen (Committee Member)
186 p.
Economics; Environmental Economics
non-market valuation; contingent valuation; conjoint analysis

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Citations

  • Naeem, A. (2014). Two Essays on Non-market Valuation [Doctoral dissertation, Ohio State University]. OhioLINK Electronic Theses and Dissertations Center. http://rave.ohiolink.edu/etdc/view?acc_num=osu1405447102

    APA Style (7th edition)

  • Naeem, Afif. Two Essays on Non-market Valuation. 2014. Ohio State University, Doctoral dissertation. OhioLINK Electronic Theses and Dissertations Center, http://rave.ohiolink.edu/etdc/view?acc_num=osu1405447102.

    MLA Style (8th edition)

  • Naeem, Afif. "Two Essays on Non-market Valuation." Doctoral dissertation, Ohio State University, 2014. http://rave.ohiolink.edu/etdc/view?acc_num=osu1405447102

    Chicago Manual of Style (17th edition)

osu1405447102
383
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This open access ETD is published by The Ohio State University and OhioLINK.