ISSUES IN NONMARKET VALUATION AND POLICY APPLICATION: A RETROSPECTIVE GLANCE



Walsh, Johnson, and McKean


Issues in Nonmarket Valuation 187

Summary and Conclusion

This paper addressed the problem of infor-
mation transfer, that is, the possibility of ad-
justing past studies to estimate benefits for
long-run policy analysis. The process involves
developing an understanding of the variables
that explain the observed differences in benefit
estimates. As a first step, the contribution of
this paper was to update and evaluate a pre-
vious literature review that adjusted reported
values before presenting summary statistics.
The travel time adjustιin⅛t was supported by
the regression results while the adjustments for
sample truncation and use of the individual
observation approach were somewhat lower
than suggested by those results. Overall, these
three adjustments were reasonably effective.
There was no significant difference between the
mean value of adjusted and unadjusted stud-
ies. The regression results indicated other can-
didates for adjustment including substitution,
CVM method, site quality, administration,
recreation activity, and regional location. Ide-
ally, benefit estimates for a recreation site lack-
ing data could be predicted by inserting ap-
propriate values of explanatory variables into
the regression. Unfortunately, an insufficient
number of studies have been completed to ob-
tain more than a few estimates of benefit by
this method. Thus, it seems likely that public
agencies will need to rely on a combination of
several approaches until more studies have
been completed.

The results presented here should be con-
sidered tentative and subject to revision with
further study. Much more research is needed
to fully understand the problems of informa-
tion transfer. The approach illustrated here ap-
pears to be sufficiently promising to indicate
that it could be used to analyze other impor-
tant problems. These include adjusting for
variation in the treatment of monetary and
time cost of travel, substitution, site quality,
and the functional form used in TCM appli-
cations. CVM problems include adjusting for
variations in the method of payment, func-
tional form used to analyze dichotomous choice
questions, and information on resource qual-
ity, uncertainty, and substitution possibilities.
Newer methods of controlling for the effects
of these and other sources of variation in the
estimates give reason to believe that it may be
possible to resolve many of the problems of
information transfer. It is particularly note-
worthy that in both the TCM and CVM ap-
proaches, the link between consumer theory
and statistical estimation may be improved via
use of discrete choice and qualitative response
models with maximum likelihood statistical
techniques.

[Received July 1988; final revision
received March 1989.}

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