Chapter 27: Choice modelling research in environmental and resource economics
Choice modelling has been a fundamental component of environmental valuation within environmental economics. Stated preference approaches to valuation have traditionally used contingent valuation methods, but are increasingly based on multi-attribute experimental designs (‘choice experiments’) to identify economic values of environmental quality changes. Similarly, revealed preferences on recreation choices or housing choices have been used to identify the value of environmental attributes. In contrast to choice modelling research in transportation and marketing, environmental economists rely on these methods to measure compensating or equivalent variation, or monetary measures of willingness to pay (WTP) or willingness to accept (WTA), for an environmental quality change. In this chapter we review the state of practice and examine research frontiers in the application of choice modelling to environmental valuation, and provide some comment on applications of choice modelling to other areas of natural resource and environmental economics. We begin with an examination of discrete-choice experiments as the most common application of choice modelling in environmental economics. Contingent valuation is one form of ‘discrete-choice experiment’ – using the terminology outlined by Carson and Louviere (2011), as are ‘choice experiments’ in which many attributes, including price, are manipulated using an experimental design. Various challenging issues continue to arise in the use of discrete-choice experiment stated preference methods in environmental valuation.
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