Edited by Anna Alberini and James R. Kahn
Chapter 7: An Introduction to Choice Modeling for Non-market Valuation
Steven Stewart and James R. Kahn 7.1 Introduction Critical to the ongoing social assessment of environmental policy is a need for estimates of individuals’ values for environmental (public) goods and services relative to private goods and services. We can easily observe individuals’ valuation for private goods (homes, candy bars, dry cleaning, etc.) because these goods are exchanged in markets where goods have prices and the quantities traded can be observed. In general, a private good confers beneﬁts only to the individual consuming it (or the individual’s family, friends). In contrast, public goods confer beneﬁts (or costs) to many members of society. Public goods and services such as national parks, ecosystem services, scenic views, and weather or climate forecasts are not generally traded in markets, thus it is diﬃcult to determine how people value them. We believe that multi-attribute elicitation mechanisms such as choice modeling oﬀer powerful tools to analyse the values that individuals place on public goods. While society relies on markets to make many choices about resource allocation such as whether to use a forest for timber production or housing, purchase a new car or a used one, or pursue a career as an economist or schoolteacher, many important resource allocation decisions, such as those related to environmental assets, are not captured by market transactions. However, even environmental choices involve tradeoﬀs. Sometimes these tradeoﬀs can be easily measured in dollars such as the choice between leaving water instream for species protection at the...
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