The Economic Valuation of the Environment and Public Policy
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The Economic Valuation of the Environment and Public Policy

A Hedonic Approach

  • New Horizons in Environmental Economics series

Noboru Hidano

The importance of the hedonic valuation approach in public policy evaluation and environmental value estimation is now widely accepted. This book is especially designed to illustrate the basic assumptions of the hedonic approach and highlight the strengths and weaknesses associated with it. Combining rigorous theoretical analysis, detailed empirical studies and an extensive history of hedonic valuation, the book is both a good introductory text to the field and a precise yet comprehensive aid for professionals and practitioners alike.
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Chapter 10: Concluding Remarks

Noboru Hidano

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10. Concluding remarks This book attempts to explain the hedonic approach in the context of environmental and public policy evaluation from both theoretical and practical viewpoints, and to extend the role of the hedonic approach from marginal cases to large-scale public projects and environmental changes mainly based upon theoretical and empirical perspectives. The strength of this study, on the theoretical side, is being able to consider explicitly the price changes within the general equilibrium framework and the cost of public and environmental policies. Although it is claimed in the studies discussed from the viewpoint of time-series or comparative statics that the benefits of the projects should be incorporated into wages, it is shown, in our book, that the hedonic measure based upon cross-sectional capitalization theory can also correctly approximate the benefits in large-scale cases. We hope this book is instrumental in changing the prevailing conception of the limitations of the hedonic approach for benefit estimation, especially with respect to large-scale policies or environmental changes, although the results may have some limitations because of the parameters examined. Thus, we advocate that future evaluation of large-scale environmental projects and public policies should have a local public goods nature (that is, people are able to choose a good) using the hedonic price functions based upon land, housing, commercial, and business market price data. We also emphasize the importance of using comparative studies of hedonic and other benefit estimation methods in different circumstances, which will enable us to support the...

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