Experimental and environmental economics at ESA 2007

Have you ever conducted a contigent valuation study in which you need to portray some kind of risk (risk of oil spill, risk of wildfire, etc..) in an understandable form? If you have, you’re certainly aware of the difficulties in portraying risk in contingent valuation surveys.

In her ESA 2007 presentation Virtual Experiments And Environmental Policy at http://www.luiss.it/esa2007/programme/programme3.php?paper=212
Rutström Elisabet (co-authors Stephen Fiore, Glenn Harrison, and Charles Hughes) demonstrated the use of virtual experiments to assess the willingness to pay of people for an increase the forested area subject to prescribed burn in Florida. Prescribed burns are a tool to reduce the risk of wildfire, so that crucial to measuring such willingness to pay is the subjects’ proper understading of such risk and of the variables that affect it.

You can follow audio and video an earlier presentation of the same paper ( Feb 2007) by Glenn Harrison from the the web page of RFF’s Frontiers in Environmental Economics conference at http://www.rff.org/rff/Events/Frontiers-of-Environmental-Economics.cfm#Paper3

Here is the abstract:

“We develop the concept of virtual experiments and consider their application to environmental policy. A virtual experiment combines insights from virtual reality in computer science, naturalistic decision-making from psychology, and field experiments from economics. The environmental policy applications of interest to us include traditional valuation tasks and less traditional normative decision-making. The methodological objective of virtual experiments is to bridge the gap between the artefactual controls of laboratory experiments and the naturalistic domain of field experiments or direct field studies. This should provide tools for policy analysis that combine the inferential power of replicable experimental treatments with the natural “look and feel” of a field domain.”

On the last day of ESA 2007 there was another presentation related to environmental economics by Stefan Traub titled “Energy Taxation And Renewable Energy: Testing For Incentives, Framing Effects And Perceptions Of Justice In Experimental Settings”. Here’s the abstract (no link available for the paper):

“This paper addresses the following two questions: First, how does the individual willingness-to-pay for green electricity – some kind of public good – react on different institutional settings? Second, are individual votes on taxes for the support of green electricity subject to framing effects resulting from different institutional settings and do these votes correspond to different perceptions and attitudes concerning public finance and environmental policy? We try to answer these questions by means of an artefacutal field experiment that was conducted with 368 subjects. Six different treatments were run, which were based on two different institutional settings, namely the poluter-pays principle and the public-pays principle. Preliminary econometric analysis suggest that much of the individual variance in the willingness-to-pay can be explained by the treatment variables as well as by the subjects’ attitudes towards public finance and environmental policy.”

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