Economic evaluation:
Trade-offs and Cost-Benefit
Readings:
McAllister, D.M., 1980.
Evaluation
in Environmental Planning. Cambridge, MA: MIT. Chapter 5, 67-83.
Willis, Ken, 1994. Contingent
valuation in a policy context. Landscape Research, 19(1), 17-20.
Fundamental issues:
The scope of any evaluation -- the systems impacted Vs. the
affected people or groups Vs. the time periods the impact continues.
An evaluation dilemma -- we commonly subdivide problems and analyze
the component parts but synthesize solutions from holistic impressions.
Basic concepts:
Trade-offs -- the active identification and balancing of benefits
and costs incurred in a selection process.
Commensurate Units -- the objective evaluation of trade-offs
requires that values are stated in commensurate units ... but many components
of public decisions are subjective, not able to be stated in commensurate
units, and hence are not tradeable.
Conventions:
-
baseline state -- the original state of a system before any
action.
-
reference point -- the state that would evolve in the absence of
action.
-
target state -- realistic assessment of achievable future condition.
-
ideal state -- the desired future condition.
Criteria for assessing methods - they must be:
-
systematic
-
simple
-
quick
-
inexpensive
-
legally acceptable
-
comprehensive
Characteristics of methods
categorize and describe impacts -- choice of measures must match
ends to which evaluation is aimed.
how are impacts to be measured -- mathematical and statistical
vs. expert judgement-based.
determination of ratings -- simple measures, constant weighting,
scaled value weight, rescaled values.
Cost-Benefit
Utility and Willingness to Pay
utility -- a measure of individual well-being, often derived
from a person's expressed preference.
willingness-to-pay -- an indirect measure of utility, a gain
in something desired OR a reduction in something not desired.
willingness-to-accept-compensation -- receiving payment for the
loss of something desired OR for accepting something not desired
Some measures of benefit
contingent valuation method -- willingness to pay for hypothetically
changed conditions.
travel cost method -- observed market behavior in purchasing
recreation benefits.
unit day value -- expert judgement estimates of willingness to
pay.
Case studies: A simple approach to evaluation - II
Upland landscape character: Willis. Contingent Valuation used to
establish the desirability of alternate land uses as part of a case for
landscape protection
Focus groups
Goal:
Identify range of benefits to consider in land use changes proposed by
the class.
Process:
-
Identify facilitators and invite 'citizens' to join small groups
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Invite discussion to nominate new items and prioritize a list
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As a group identify a key land use benefit for closer study
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Report list back to group
Discuss effectiveness of focus group processes
Practical 4
-
Prepare a simple economic evaluation of the benefits side of the land resource
change you have chosen in East St Louis.
-
Prepare a description of the components of the benefits in the same way
as you did last week for the costs..
-
Prepare an EXCEL spreadsheet to estimate the economic value of your land-use
proposal.
-
Directly compare the costs and the benefits and summarize your reactions,
including any ways you may have identified that may improve th method.
-
Publish on the WWW including descriptions of the elements in your evaluation,
how you came up with the $ values, and the EXCEL spreadsheet as a table.
Readings for next Monday:
Walsh, Richard G., 1986. Recreation
Economic Decisions. State College, PA: Venture. Chapter 8, 195-248.
McAllister, D.M., 1980. Evaluation
in Environmental Planning. Cambridge, MA: MIT. Chapter 7, 105-123.
Modified: 1 August 1999, Brian Orland
