Field experiments were conducted with farmers in the Limari Valley of Chile to test extant theory on right-to-choose auctions. Water volumes that differed by reservoir source and time of availability were offered for sale by the research team. The auctions were supplemented by protocols to elicit risk and time preferences of bidders. We find that the right-to-choose auctions raise significantly more revenue than the benchmark sequential auction. Risk attitudes explain a substantial amount of the difference in bidding between auction institutions, consonant with received theory. The auction bidding revealed distinct preferences for water types, which has implications for market re-design.

This paper explores the use of functional benefits transfer to forecast the effects of waste sites on property values. The results of a meta-analysis of hedonic studies of waste sites are coupled with spatial analysis techniques to produce estimates of the effects of toxic contamination in Areas of Concern (AOCs) in the U.S. Great Lakes. Based on U.S. Census data for median home values, the methods used here suggest that approximately S5.2 billion (2005 dollars) have been lost in residential property values surrounding twenty-three of the AOCs. This compares to estimates that place the cost of remediation of all U.S. AOCs at up to $4.5 billion (2005 dollars). The case study also identifies issues surrounding the use of a meta-analysis with hedonic property value studies to support functional transfer.

An industry group has proposed a novel system for managing the Northeast Multispecies Fishery. Each harvester would be endowed with a budget of points, and each species would have a “point price,” or number of points that must be paid out of his budget when landing that species. By varying the point prices throughout the season, management could redirect effort across species. This paper presents a benchmarked experimental testbed of this management system, and shows that harvesters do respond to point prices, which can be chosen to support harvest of most of the allowable catch of each species without severely over-harvesting any of them.

Using agricultural preservation priorities derived from an analytical hierarchy process by 23 conservation experts from 18 agencies in the state of Delaware, this research uses weighted benefit measures to evaluate the historical success of Delaware's agricultural protection fund, which spent nearly $100 million in its first decade. This research demonstrates how these operation research techniques can be used in concert to address relevant conservation questions. Results suggest that the state's sealed-bid-offer auction, which determines the yearly conservation selections, is superior to benefit-targeting approaches frequently employed by conservation organizations, but is inferior to the optimization technique of binary linear programming that could have provided additional benefits to the state, such as 12,000 additional acres worth an estimated $25 million.

This paper describes a novel experiment designed to examine how rent dissipation may occur in fisheries in which the right to participate is limited and fishermen compete amongst themselves for shares of an exogenous total allowable catch. We demonstrate that rent dissipation may occur through multiple mechanisms, and that the heterogeneity of fishermen has important implications for how rent dissipation occurs and the extent to which different individuals may benefit from the implementation of rights-based management. We apply this approach to investigate the concept of voluntary rights-based management under which managers divide the total allowable catch between two separate fisheries, and fishermen may choose between fishing for a guaranteed individual harvest quota and competing for a share of the total catch in a competitive fishery.

The Livestock Mandatory Reporting Act (MPR) of 1999 was implemented in April 2001. Empirical evidence indicates a significant change in intra-week price dispersion associated with publicly reported fed cattle grid premiums and discounts occurring after MPR implementation.

The research objective is to evaluate the effect of increased market transparency resulting from implementation of MPR, on grid intra-week premium and discount dispersion levels. Empirical results suggest that increased transparency is compatible with intra-week dispersion levels increasing. Increased dispersion suggests that during the pre-MPR period weekly premium and discount data may have been drawn from a non-representative sample. From the empirical evidence, it is concluded that reform of the livestock price-reporting system appears to have been necessary in the case of publically reported grid premiums and discounts.

This paper presents a multinational meta-analysis estimated to identify systematic components of willingness to pay for surface water quality improvements, developed to support benefit transfer for Canadian policy development. Metadata are drawn from stated preference studies that estimate WTP for water quality changes affecting aquatic life habitats—a type of study with few Canadian examples. The goals of this paper are to assess the properties of a multinational (United States/Canada) meta-analysis compared to a single-country (U.S.) analog; illustrate the potential information that may be derived as well as the analytical challenges; and assess the performance of resulting meta-functions for benefit transfer.

A growing number of hotels provide “green” lodging for travelers with strong environmental preferences. Twelve states have developed certification programs to regulate these claims. After describing the new market for green lodging, we use data on prices and amenities of “green” and “brown” hotels in Virginia to estimate a hedonic model of hotel room pricing. We find that travelers can expect to pay a significant premium for a standard room in a green hotel. An internal meta-analysis is used to evaluate the robustness of this result to subjective econometric modeling decisions. Our results indicate a premium between $9 and $26.

We explore the effects of recommended play and the presentation of payoff information on behavior in an ambient-based policy instrument experiment. Specifically, we test the effects of recommended play (via a description of marginal decision making) and a payoff table on the behavior of individuals facing an ambient-based policy instrument. We find that recommended play and the presentation of a payoff table increases the use of the socially optimal strategy, thereby increasing efficiency. These results suggest that providing decision makers with a richer description of the decision making environment significantly reduces decision error, significantly improving the efficiency of ambient-based policy instruments.

Auction experiments are commonly used to determine consumers’ willingness to pay for various food items. While their non-hypothetical nature is a positive, market substitutes create a probable confounding of bids by field prices. This study examines the influence of field prices on bids for four foods in two versions by conducting auctions before and after large price increases in 2007. Results show that bids were capped at given field prices and were significantly higher in sessions conducted after store prices increased. Percentage premiums, however, were not significantly different across sessions, suggesting that effects of field prices could be reduced. Overall, researchers must be conscious of how field prices affect bids.

Hedonic prices are estimated for summer and winter rentals for vacation houses located near a lake and ski-golf resort in rural western Maryland. Regressions for weekly rents are conditioned on house size, quality, and recreation features including lakefront proximity and ski-slope access. Percentage effects and marginal implicit prices indicate that access to recreation is reflected importantly in rental offers. Evaluated at the means, lakefront locations command a premium of $1,100–1,200 per week, and the premium for ski-slope access is $500–600 per week. Unit recreation values are about $18 per person per day for a lakefront location with a private dock and $7 per person per day for a ski-slope location. There are small differences in the unit values for three real estate management agencies. Although there is evidence of spatial correlation in ordinary least squares residuals, estimation of spatial-lag and spatial-error models does not yield substantial changes in the empirical results.

This paper explores the role of managerial ability in determining efficiency in New York dairy farms. Using an unbalanced panel of farm data from 1993 through 2004, we estimate outputoriented technical efficiencies using stochastic distance frontier functions. We find that both lagged net farm income and farmers’ own estimates of the value of their labor and management as proxies for managerial ability impact measured efficiency. Efficiency increases with operator education, farm size, and extended participation in a farm management program, but decreases with operator age.

Conservation programs faced with limited budgets often use a competitive enrollment mechanism. Goals of enrollment might include minimizing program expenditures, encouraging broad participation, and inducing adoption of enhanced environmental practices. We use experimental methods to evaluate an auction mechanism that incorporates bid maximums and quality adjustments. We examine this mechanism's performance characteristics when opportunity costs are heterogeneous across potential participants, and when costs are only approximately known by the purchaser. We find that overly stringent maximums can increase overall expenditures, and that when quality of offers is important, substantial increases in offer maximums can yield a better quality-adjusted result.

Had only a farm program like the new ACRE state revenue program existed instead of the authorized 1996–2008 programs for com, soybeans, and wheat, farm support expenditures would have occurred earlier but totaled less. In contrast, at the higher prices forecast for the three crops over the 2009–2012 crop years, spending per acre is expected to be higher for acres enrolled in the ACRE program than for acres enrolled in the traditional programs. These results reflect the different design features of the two programs: revenue versus price assistance and assistance levels that adjust with lagged market revenue versus fixed nominal support triggers. The design issues and policy questions raised for both domestic policy considerations and WTO compliance are discussed.

Overexploitation of coastal aquifers may lead to seawater intrusion, which irreversibly degrades groundwater. The seawater intrusion process may imply that its consequences would not be perceptible until after decades of accumulated overexploitation. In such a dynamic setting, static externalities may enhance the users’ awareness about the resource's common nature, inducing more conservative individual behaviors. Aiming to evaluate this hypothesis, we experimentally test predictions from a dynamic game of substitutable common-pool resource (CPR) exploitation. The players have to decide whether to use a free private good or to extract from one of two costly CPRs. Our findings do not give substantial support to the initial conjecture. Nevertheless, the presence of static externalities does induce some kind of payoff reassurance strategies in the resource choice decisions, but these strategies do not correspond to the optimum benchmark.

Matching grants are a prevalent mechanism for funding environmental, conservation, and natural resource projects. However, economists have largely been silent regarding the potential benefits of these mechanisms at increasing voluntary contributions. To examine the behavioral responses to different match levels, this research uses controlled laboratory experiments with generically framed instructions and introduces a general-form matching-grant mechanism, referred to as the proportional contribution mechanism (PCM). Results show that contributions are positively correlated with both the match and the induced value of the public good even when a dominant strategy is free-riding. An implication of this partial demand revelation result is that manifestations of this type of “helping hand” social preference should be counted in benefit-cost analysis.

Using unique panel data on individual transactions between buyers and sellers in the spot market for live hogs, we found a large degree of intra-day price dispersion. Motivated by this empirical puzzle, we offer an explanation which is rooted in the bargaining with search theory. We formulate three hypotheses involving the role of farmers’ search cost, bargaining parties’ patience, and asymmetric information that we believe can explain the observed phenomenon. Empirical analysis shows strong support for all three of the stated theoretical predictions, indicating that the bargaining with search theory explains at least 31 percent of the observed intra-day price variation in this market.

This paper reports results from a contingent valuation based public good experiment conducted in the African nation of Botswana. In a sample of university students, we find evidence that stated willingness to contribute to a public good in a hypothetical setting is higher than actual contribution levels. However, results from regression analysis suggest that this is true only in the second round of the experiment, when participants making actual contributions have learned to significantly lower their contribution levels. As globalization expands markets, and economies such as Botswana's continue to modernize, there is a growing need to understand how hypothetical bias will influence the valuation of public goods.