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on Resource Economics |
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Issue of 2009‒11‒07
four papers chosen by |
| By: | Kurt E. Schnier (Department of Economics, Andrew Young School of Policy Studies, Georgia State University, P.O. Box 3992, Atlanta GA 30302-3992); William C. Horrace (Department of Economics and Center for Policy Research, Maxwell School, Syracuse University, 426 Eggers Hall, Syracuse, NY 13244-1020); Ronald G. Felthoven (U.S. National Marine Fisheries Service, Alaska Fisheries Science Center) |
| Abstract: | Observed tradeoffs between monetary returns and fatality risk identify estimates of the value of a statistical life (VSL), inform public policy and quantity preferences for environmental quality, health and safety. To date, few investigations have estimated the VSL associated with tradeoffs between returns from natural resource extraction activities and the fatality risks they involve. Furthermore researchers have been unable to determine whether or not one's VSL is stable across multiple decision environments using revealed preference methods. Understanding these tradeoffs (and the VSL that they imply) may be used to inform resource management policy and safety regulations, as well as our general understanding of the value of life. By modeling a commercial fishing captain's choice to fish or not, conditional on the observed risk, this research investigates these toics using data from the Alaskan red king crab and snow crab fisheries. Using weather conditions and policy variables as instruments, our estimates of the mean VSL range from $4.00 to $4.67M (depending on the modeling assumption and fishery analyzed) and are robust to the incorporation of heterogeneous preferences. Furthermore, given the unique nature of the data we are able to conduct an intra-vessel comparison of the VSL and conclude that for roughly 92% of the fishermen observed in the data seet their VSL estimates are stable across both fisheries. |
| Keywords: | value of statistical life (VSL); intra-agent VSL comparison; Alaskan crab fisheries |
| JEL: | J28 Q22 |
| Date: | 2009–10 |
| URL: | http://d.repec.org/n?u=RePEc:max:cprwps:117&r=res |
| By: | Thomas J. Kniesner (Krisher Professor of Economics and Senior Research Associate, Center for Policy Research, Maxwell School, Syracuse University, 426 Eggers Hall, Syracuse, NY 13244-1020); W. Kip Viscusi (University Distinguished Professor of Law, Economics, and Management, Vanderbilt University, Nashville, TN); James P. Ziliak (Carol Martin Gatton Chair in Microeconomics; Director, Center for Poverty Research, University of Kentucky, Lexington, KY) |
| Abstract: | We examine differences in the value of statistical life (VSL) across potential wage levels in panel data using quantile regressions with intercept heterogeneity. Latent heterogeneity is econometrically important and affects the estimated VSL. Our findings indicate that a reasonable average cost per expected life saved cut-off for health and safety regulations is $7 million to $8 million per life saved, but the VSL varies considerably cross the labor force. Our results reconcile the previous discrepancies betweenhedonic VSL estimates and the values implied by theories linked to the coefficient of relative risk aversion. Because the VSL varies elastically with income, regulatory agencies should regularly update the VSL used in benefit assessments, increasing the VSL proportionally with changes in income over time. |
| Keywords: | value of statistical life, VSL, quantile regression, panel data, fixed effects, PSID, fatality risk, CFOI |
| JEL: | C23 I10 J17 J28 K00 |
| Date: | 2009–10 |
| URL: | http://d.repec.org/n?u=RePEc:max:cprwps:118&r=res |
| By: | Frey, Bruno S. (University of Zurich); Luechinger, Simon (University of Zurich); Stutzer, Alois (University of Basel) |
| Abstract: | In many countries environmental policies and regulations are implemented to improve environmental quality and thus individuals' well-being. However, how do individuals value the environment? In this paper, we review the Life Satisfaction Approach (LSA) representing a new non-market valuation technique. The LSA builds on the recent development of subjective well-being research in economics and takes measures of reported life satisfaction as an empirical approximation to individual welfare. Micro-econometric life satisfaction functions are estimated taking into account environmental conditions along with income and other covariates. The estimated coefficients for the environmental good and income can then be used to calculate the implicit willingness-to-pay for the environmental good. |
| Keywords: | life satisfaction approach, subjective well-being, non-market valuation, cost-benefit analysis, air pollution |
| JEL: | Q51 I31 D61 Q53 |
| Date: | 2009–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4478&r=res |
| By: | Ostrom, Elinor |
| Abstract: | This paper proposes an alternative approach to addressing the complex problems of climate change caused by greenhouse gas emissions. The author, who won the 2009 Nobel Prize in Economic Sciences, argues that single policies adopted only at a global scale are unlikely to generate sufficient trust among citizens and firms so that collective action can take place in a comprehensive and transparent manner that will effectively reduce global warming. Furthermore, simply recommending a single governmental unit to solve global collective action problems is inherently weak because of free-rider problems. For example, the Carbon Development Mechanism (CDM) can be ‘gamed’ in ways that hike up prices of natural resources and in some cases can lead to further natural resource exploitation. Some flaws are also noticeable in the Reducing Emissions from Deforestation and Forest Degradation in Developing Countries (REDD) program. Both the CDM and REDD are vulnerable to the free-rider problem. As an alternative, the paper proposes a polycentric approach at various levels with active oversight of local, regional, and national stakeholders. Efforts to reduce global greenhouse gas emissions are a classic collective action problem that is best addressed at multiple scales and levels. Given the slowness and conflict involved in achieving a global solution to climate change, recognizing the potential for building a more effective way of reducing green house gas emissions at multiple levels is an important step forward. A polycentric approach has the main advantage of encouraging experimental efforts at multiple levels, leading to the development of methods for assessing the benefits and costs of particular strategies adopted in one type of ecosystem and compared to results obtained in other ecosystems. Building a strong commitment to find ways of reducing individual emissions is an important element for coping with this problem, and having others also take responsibility can be more effectively undertaken in small- to medium-scale governance units that are linked together through information networks and monitoring at all levels. This paper was prepared as a background paper for the 2010 World Development Report on Climate Change. |
| Keywords: | Climate Change Mitigation and Green House Gases,Environmental Economics&Policies,Climate Change Economics,Transport Economics Policy&Planning,Environment and Energy Efficiency |
| Date: | 2009–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:5095&r=res |