Environmental Science

Null Hypothesis

Hypothesis stating that the effect being studied does not exist

H0 is defined as beta =

0

α = “alpha” =

significance level

Statistical significance

The probability of the study rejecting the null hypothesis, given that the null hypothesis is true

SE=

standard error (measures precision of estimate)

T-statistic is used to determine

whether or not to reject the null hypothesis

instrumental value

value of the environment derived from its usefulness in satisfying human wants

Damage Assessment

• effect on human health

• loss of environment enjoyment

• damage to vegetation, animals, + materials

Total Economic Value

1. use value: direct use of env resource

2. option value: value of future ability to use the environment

3. nonuse/passive-use values: when the resource isn’t used/consumed in the process of experiencing it

Total Willingness to Pay (TWP)

use value + option value + nonuse value

Revealed Preference Methods

based on observable choice

Stated Preference

survey

Contingent Valuation:

most direct approach, provides means of deriving values that can’t be obtained in more traditional ways

• what’s max ur willing to pay

Choice Experiments

present respondents with set of options

• each set consists of various lvls of attributs/characteristic of the good

Contingent Valuation Method

creates hypothetically market + asks respondents about their willingness to pay question

• major concern = responder bias

Strategic Bias

intentionally provides biased answer to influence outcome - wanting to present self in positive light

Info Bias

value attributes which they have little/no experience with

• visual aids decrease uncertainty

Starting Point Bias

respondent asked to check off WTP from predefined range of possibilities

Hypothetic Bias

The difference between what people say they will do or pay in a survey and what they actually do when facing real financial consequences

• certainty scale helps

Compensating Variation

amount of money it would take to compensate for a price to make consumer just as well off as they were before price increased

Equivalent Variation

amount of money it would take to make consumer indifferent (same income) between money + price increase

Ecosystem Services

flows generated from stocks of natural assets + that benefit humans

• ex: tropical forest: provide habitat, recreation, and timber

Economic Analysis

helpfyl with finding sources of economic degradation + evaluating possible approaches to maintain and restore

• ex: cost-benefit analysis

main strats for eliciting values:

revealed preference + stated preference methods

revealed preferences

observed infers from person’s actions

• ex: ppl leave neighborhood when powerplant moves int

Demand Curve Determinants

price of the good, price of related goods, consumer’s income, preferences

Willingness to Accept

you have a good, how much would someone pay you to get it?

willingness to pay:

good assigned to someone else + u have to pay for it

travel cost method (TCM)

used mostly to measure recreational value

• uses data on frequency of travel to estimate demand curve for rec use of an area

• simple example: it costs $75 in monetary costs + 6 hours to travel to coral reef state park

Use Value

reflects direct use of the environment resource

• fish harvested from the Sea, timber from forest

Option Value

reflects the value people place on a future ability to use the environment, reflects willingness to pay to preserve the option to use the environment in the future

Passive/Nonconsumptive Use Value

arise when the resource isn’t actually consumed in the process of experiencing it

Positive Economics

describe what is, what was, or what will be

• used to describe the kinds of impacts trade would have on the economy + the environment

Normative Economics

deals with what ought to be- difficult for open ended questions

Static Efficiency

criteria for choosing among various outcomes occurring at the same point in time is called this

• static efficiency is satisfied if econ surplus derived from those resources is maximized by that allocation

Economic Surplus

Consumer’s Surplus + Producer’s Surplus

Property Rights

bundle of entitlements defining owner’s rights, privileges, and limitations for the use of the resource

Opportunity Cost of Time

• Time has an economic cost bc spending time traveling means giving up using that time elsewhere

total travel cost = monetary travel costs + opportunity cost of time

Hedonic Pricing

breaks total price of something into values of its individual characteristics

• total market price reflects the bundle of attributes

• price = f(characteristics)

Ceteris Paribus

all else equal

Ordinary Least Squares (OLS)

uses observed data to estimate coefficients that describe the relationship in the data