Name ofthe Paper ; (DSE) (v) Environmental Economics Name of Course : BA, Hons.) Economics III Year Semester : VI Duration : 8 Hours Maximum Marks : 75 Attempt any five questions, All questions carry equal marks. Q.1.(@) Supposea local governmentis trying to clean river pollution ina city. There are 100 families in the city and each has an identical demand function given by P = 10 ~q, where q is the area of river cleaned and P is the associated price he or she is willing to pay, @ If the marginal cost of cleaning is € 500 per unit of area, how much area should be cleaned in an efficient allocation ? (i) Determine the net benefits associated with cleaning the river pollution, +4) () “The Stern Review’s, alarming findings about damages, as well as its economic rationale, rest on its model parameterization... If we correct these parameterizations, we get a carbon tax and emission reductions that looks like standard economic models.” William Nordhaus. Comment. mM Ans. (a) (i) Suppose x units of area should be cleaned. So, one family is willing to pay = 10-x " ! 1 10 q al 1, So, benefit derived by one family = > * 9x9 = 34 So, Marginal benefit = q So, _ total benefit of 100 families = 100q For efficient. allocation, SO, => * (@) Total benefit of ail 100 famili = 50g = 50(5)? = 50 x 25 = 1250 5 * 500 = 2500 ~ 1250 375 Total cost Net benefit Scanned sith CamSeamner376 AMAR : B.A. (Hons.) Economics III Year (Semester-VI) * (&) The Stern Review's alarming findings about damages, as well as its economic rationale, rest on its model parameterization—a low time discount rate and low inequality aversion—that leads to savings rates and real returns that differ greatly from actual market data. If we correct these parameterizations, we get acarbon tax and emissions reductions that look like standard economic models, Comparing the optimal Carbon tax under alternative discountin assumptions—The Dynamic Integrated model of Climate and the Economy (DICE * model) integrates the economic costs and benefits of greenhouse-gas (CHG) reductions with a simple dynamic representation of the scientific and economic ‘links of output, emissions, concentrations, and climate change. The DICE model is designed to choose levels of investment in tangible capital and in GHG reductions that maximize economic welfare. It calculates the optimal carbon tax as the price of carbon emissions that will. balance the incremental costs of abating carbon emissions with the incremental benefits of lower future damages from climate change. Using the DICE model to optimize climate policy leads to an optimal carbon tax in 2005 of around $30 per ton carbon (shown here as “DICE baseline”), If we substitute the Stern Review's assumptions about time discounting and the consumption elasticity into the DICE model, the calculated optimal carbon tax is much higher and rises much more rapidly (shown as “Stern assumptions”), Q.2. (a) Describe the Ricardian approach used by Mendelsohn to examine the impact of climate change on agriculture. Why is this called “positive analysis"? (b)_ Provide a brief account of air pollution in India by focusing on the reason as well as government responses to the problem. a Ans. (a) The Ricardian method is a cross-sectional approach to studying agricultural production, It was named after David Ricardo because of his original observation that the value of land would. reflect its net productivity. Farmland ne ieventes (V) reflect net productivity. This principle is captured in the following 7 v eric F,H,Z,G)-EP.X ay where P, is the market price of crop i, Q, is i, Xi purchased inputs other than land), Risa vector of ehanste vere ies slic tet flow, Z is a vector of soil variables, G is a vector of economic variables as et access and P, is a vector of input prices. The farmer ie aavumed to choose maximize net revenues giver cl istics prices. The Ricardian model isa rede Rene ea ne am a al erogenous variables, F, H, Z and G, affect net revenues. aaa : $B fe _ erate pr oa quadratic formulation of ln where w i: nee sete pintonat laces Teens aan ee variable on farm net revenue eval fuatewarti marginal impact of a single climate BlaViafl sb, edeb at the mean is : The quadratic term réflacte ic term reflect i , Tesponse fun reflects the nonlinear shape of the net revenue climate indie tae {equation 2). When the quadratic term is positive, the net revent® shaped. We anes ing when the quadratic term is negative, the function ishil analyses, that ee ased on agronomic research and previous cross-section’ value will have a hill-shaped relationship with temperature Scanned ith CamScamnerWo? Wi) s Environmental Economics (Sem.-V1, 2015) 377 For each crop, there is a known temperature at which that seasons. The relati r lonship of seasonal climate variables, however, is more complex and may include a mixture e tive coefficients across seasons. The change in annual welfare, AU, resulting from a‘climate change from C, to. C, can be measured as follows ° aU=ViC,)-W(C,) (a) If the change increases net income it will be beneficial and if it decreases net income it will be harmful, Cross-sectional observations across different climates can reveal the climate sensitivity of farms. The advantage of this empirical approach is that the method includes not only the direct effect of climate on productivity but also the adaptation response by farmers to local climate. This farmer behavior ie important because blems associated with less than optimal environmental crop grows across the n n pared to more Pessimistic results found in purely agronomic studies. ) Air pollution in Indi u fa is quitea serious issue with the major sources being fuelwood and biomass buri ning, fuel adulteration, vehicle emission and traffic winter months, large scale crop residue burning in alterriative to mechanical tilling-is a major scurce of pollution. India has a low per capita emissions of green house gases but the country as a whole is the third largest after China and the United States. A 2013 study on non-smoker has found that Indians have 30% lower lung function compared to Europeans. The Air (Prevention and Control of Pollution) Act was passed in 1981 to regulate air pollution and there have been some measi urable improvements. However, the 2013 Environmental Performance Indexranked India 155 out of 178 countries. smoke, smog and particulat For 2010, the key findings of India’s central pollution control board are. * Most Indian cities continue to violate India’s and world air quality PM10 targets. Respirable particulate matter pollution remains a key challenge for India. Despite the general non-attainment, some cities showed far more improvement than others. A decreasing trend has been observed in PM 10 levels in cities like Solapur and Ahmedabad over the last few years. This improvement may be due to local measures taken to reduce sulphur in diesel and stringent enforcement by Gujarat government. : : * A decreasing trend has been observed in sulphur dioxide levels in residential areas of many cities such as Delhi, Mumbai, Lucknow, Bhopal during last few years. The decreasing trend in sulphur dioxide levels may be due to Tecently introduced clean fuel standards, and the increasing use of LPG as domestic fuel instead of coal or fuelwood, and the use of LPG instead of diesel in certain vehicles. . é | * A decreasing trend has been observed in nitrogen dioxide levels in Tesidential areas of some cities such as Bhopal and Solapur during last few years. e decreasing trend in sulphur dioxide levels may be due to recently introduced Vehicle emission standards, and the increasing use of LPG as domestic fuel instead f coal or fuelwood. Scanned with ComScanner. (Hons.) Economics II rear semester” ™ °t AMA! 378 jan citi Js of suspended patticulay © Most Indian cities greatly exceed acceptable levels 4 te matter. This may be because of refuse and biomass burning, vehicles, power plant issi in jal sources. and suspended particulate matter during monscon months possibly due to wet deposition and air scrubbing by rainfall. Higher levels 0! particulates were observed during winter months possibly due to lower mixing heigt ts and more calm conditions. In other words, India’s air quality worsens in winter months, ith the onset of monsoon season. | 'd NOx emissions level and periodic violations ndia were significantly and surprisingly lower than the dential areas of In © The average ai in industrial areas of I emission and violations in Tesi¢ i i . E © Of the four major Indian cities, air pollution was consistently worst in Delhi, every year over 5 year period (2004-2008). Kolkata was close second, followed by Mumbai. Chennai air pollution was least of the four. Steps taken by the government : ; . 2 1 Bharat stage-IV emission norms have been implemented in 13 mega cities including NCR for new-4 wheelers from 2010. 2, Mass emission standards (Bharat Stage 1 three wheelers and diesel driven agricultural throughout the country. : 3 Stringent Emission Standard have been implemented to regulate emissions from in-use vehicles from-October 2004. 4, Supply of improved diesel and gasoline. Co ; 5, Operating Compressed Natureal Gas (CNG) mode public transport in Delhi. 6, Introduction of metro in Delhi to promote use of mass publictransport * system. 7, Central Pollution Control Board and State Pollution Control Boards are implementing the Air (Prevention and Control of ?ollution) Act 1981 to restore air quality. : 8. A ‘mutually time targeted programme is implemented under Corporate Responsibility for Environment Protection (CREP). . 9, Special drives for prevention and control of pollution in 17 categories of highly polluted industries, 10. Standards are developed for Oxides of Nitrogen (NOx), Sulphur Dioxide (S02) and load based standards for particulate matter (PM) including revision of PM emission standard for ‘cement industry. : Q.3. (a) Take the classic example of positive externality : two neighbouring firms—a beekeeper and a farmer with an apple orchard. The farmer derives an external benefit from its neighbour since the bees pollinate the apple trees. Assumé that one beehive pollinates one acre of orchard. If there were no. beehives next door, the farmer’s pollination cost per acre.of orchard is € 200. The beekeeper has total costs of TC = H?+ 20 H where H is the number of bechives. Each hive yields & 500 worth of honey. @ How many hives would the beekeeper maintain if operating independently of the farmer? Gi) Whatis the socially efficient number of hives? (9 In the absence of transaction costs, what outcomes do you expect? arise from bargaining between the two firms ? (2+3+9 11) have been notified for two, 1 tractors from April 1, 2010 Scanned ith CamScaner@SE) (vi) : Environmental Economics (Sem.-VI, 2015) 379 ) Explain using equations and diagram how bid functi ived i . markets for similar but differentiated peeacts hanes ‘Ans. (2) (i) Net benefit = 500H — H?— 20H Meghan hausln 7 ONB * oH 7 500-2H-20=0 > 480-2H= 0 > H= 240 (@ For socially efficient number of hives, total net benefit should be maximized, Former’s benefit + bookeeper’s benefit = 200H + 500H — H? - 20H = 680 H - H? (680H - H’) ae = 680-2H = 0 => Hi = 340 (iti) Total benefit of bookeeper with 240 beehives = 500 x 240~ (2407 + 20 x 240) = 57600 Total benefit of bookeeper with 340 beehives = 47600 50, . he loeses= 10,000 so bookeeper would want the farmer to pay this. Since with 340 beehives, he saves 68,000, he should not mind paying him this amount » “as he still pockets 58000. @® The bid function, 0(z; y, s, u) describes the amount of money that a household would be prepared to pay for a property with attributes z in order to enjoy the level of utility, u. Of course, the amount that. a household would bid for a particular property w'ill not depend solely on the level of utility specified in the bid function. Rather, the household’s income, y, and socioeconomic characteristics, s, will also influence their bid. The bid function can be illustrated as bid curves. Bid curves depict combinations of property attributes, z, and payments for those attributes, 8, between which the household is indifferent (i.e. combinations that confer the same utility on the household). For our present purposes, it frequently proves more convenient to work with the marginal bid function. That is, a function that shows how much a household is willing to pay for each extra unit of housing attribute Zi, so as to maintain the same level of utility, u.Mathematically the marginal bid function is the partial derivative of the bid function. Remember from Equation (15) thai the bid function is defined as : e. (zy, 5, u)= y-x(z's, u) (15) Thus the’marginal bid function is given by : 4 26(2; y,5,u) Oz; b,(zj2 5, 4)= 6) Scanned with ComScanner380 AMAR : BA. (Hons.) Economics IIT Year (Semester-Vi__ inal bid function, 's income y falls out of the margit d Notice that the househols wantthat a household is prepared to pay fora begins Ee anit of an attribute in order to maintain the sam of property wit! : ir income. , a . utility is independent of Heir can ilself be illustrated as a marginal bid curve which ‘The marginal i i irve. describe the slope of an eae ft pagal bid curves for a household are Two bid curves ane the left hand panel, the higher bid curve correspon a is illustrated in Figure nts and housing attribute z, that result ina util ity ie 1 “ combi cortesponds toa higher level of utility, u,, since each level o} The lower bi A ; ‘i ith a lower payment. attribute 2 5 as80C a es and Marginal Bid Curves a 2 Marginal | ; ry : Bibs, |, Marginal Bid e © Curves for z, 0,245, TS D OG 29S, *, Lt BG 2,504) bs zy5.(n) Y Quantity of : ane Characteristic z, aracteristic 2, - Aswe would expect, the marginal bid curves in the right hand panel of Figure (2) slopes down from left to right. The household is prepared to pay less for each successive unit of attribute z;. Though not shown in the figure, at some level ofz, the marginal bid curves will intercept the horizontal axis. This intercept would Teflect the point of satiation at which paying anything for more 2, would reduce the household’s utility below that described by the particular marginal bid curve. *Q.4.(a) Consider the case of a pollutant such as carbon dioxide (CO2) that is ‘long-lived’ in the atmosphere, astoclpollutant. Let e, denote emissions of CO2 in time period t. Marginal savings from emissions in any time period are MSt(¢) and marginal damages are given by the total stock of CO2 in the atmosphere, MDU(s,). Show that for efficiency, we should set the marginal savings ._ from emitting a unit of CO2 today equal to the sum of all marginal damages that the ccutin the future, with those marginal damages discounted by two factors: 7 discount factor, , and the persistence rate of CO2, 8 ©) Using a diagram ex lai achieves polletins plain how am: ” arket for pollution permits works and reduction at least cost. Ans. (a) MS #(e) = Margi j sa ty, Marginal savings from emissions at time’ Total Benefit—Present value of sil hat hap emissions of time period “p” ie(e) ne damages that happen because of Scanned sith CamSeamnera —__ “conomics (Sem.~V1, 2015) 381 =DGS,..+¢)+BD, ¢s Ditlersntiating the dbev we fo + BD, (8, +5%4 Seu, 6,,,) +o = MD, (S, 4S IMD Saas 6.480.464.) + BSD G,., 2,45, (S))* BB MD,,, (8) (85) Aan MS aye eet Be + 86,55 #643) + 102 (S42) MD,= 2108)" MD, (sp) and Manginal benefit at time H= For Efficiency MB, = MD, MS(¢,) i MD(e)= 2.(88)"'MD, (Sp) (1) Marketable pollution permits are ; i ermits which give a firm the right emit a specific number of uni fain yand sell these Ne P poll units of pollution, Polluters are free to buy and sell these A marketable pollution ermit syst imi: ode prdila flexibility me 'ystem can both minimize total abatement rc e choice of mechanisms used to meet i and achieve the desired level o = ene A system of marketable pollution ermits begii i inatic famgcere me P egins with the determinaiion of The next step is to allocaté pollution across polluters. This allocation can be based on historic pollution levels, auctions, a lottery, or some other allocation ene: The buying and selling of pollutins permits will reallocate the emicsion rights. Marketable pollutions permits equate marginal abatement costs across polluters. Each polluter compares his/her marginal abatement costs with the price of a permit. If the marginal abatement costs are higher than the price, they have an incentive to buy. If the marginal abatement costs are lower, they have an incentive to sell. Buying and selling will continue until the equilibrium price is reached which equates marginal abatement costs across all firms. _ | Q. 5. (a) What do you understand by inclusive investment ? According to Dasgupta “(A)n economy would enjoy sustainable development if and only if, relative to its polulation, inclusive investment is not negative. r Explain. (8) (b) Two firms emit an environmentally harmful pollutant in their production processes. The government decides that an aggregate abatement target of 147 units must be met. The marginal costs of the firms for abatement are : MC, = 64, and MC, = 39, where q, and q, are the units of abatement undertaken by firm 1 and firm 2, respectively. Calculate the cost-effective allocation that satisfies the irement. a . ee putea ene role of ‘transfer coefficient’ in the relationship between marginal damage per unit of emission and marginal damage per unit of am! im Peleton Known as ‘land grabs’ in the media, large-scale land bised investments have generated much international debate. Some commentators seth : welcomed the new livelihood opportunities investment may bring to lot f pollution emissions, Scanned sith CamSeamner382 AMAR : B.A. (Hons.) Economics ITI Year (Semester-VI) ii gountries. Other have raised concerns about negative social impacts, including Toss of local rights to land, water and other natural resources; threats to focal food security; and the risk that Targe-scale investments marginalise family farmers. Why is inclusive investment necessary ? ; letgtaee ‘The idea that these land acquisitions are happening on ‘idle’ or ‘empty’ land is largely false. The truth is that in many parts of the world most arable land is already farmed or provides: important ecosystem services to communities, such as clean water OF wood fuel. And rather than improving degraded land, agricultural in restments, which often focus on intensive forming and mono- cropping, often add pressure to soil and resources. Insecure rights and weak land governance are major challenges to ensuring that local landholders benefit from agricultural investments. Many deals violate local land rights and do not consider local development needs or priorities. And the idea of the land being ‘idle’ is also misleading because it often refers to land that is Under customary tere and use. | i It is true that land acquisitions and commercial agriculture can bring rural jobs, but in many cases, employments often limited and insecure. The consequence of land acquisitions is an increase in displacement and landlessness across the developing world. Indige:ious people are. particularly vulnerable to dispossession. For example, poor consultation, disregard for customary tenure and little ‘evidence of free, prior and informed consent is well documented in Southeast Asia where it is not uncommon for the military to be brought in to defend investor access to lands. In Sarawak, Malaysia, alleged appropriation of ancestral lands has led to rnore than 200 legal cases being brought against the regional government. @) MC, =6q, Mc,= 34, 4+47 147 Applying the equimarginal principle *” “MC,= MC, a . star ‘ = i +q= peel Phi (q+ 4.7147) 99, = 441 = 49 and fen 98 (0 Non-uniform dispersion : C= ley Eyre gil B= LN Mya tty(€ys-m1En) YYuuy iy $0,08M, Y,. Note that some smoke may still be generatec:, but the amount is chosen so as to balance the interests of the steel mill with those of the laundry. If there is a transfer from the laundry to the steel mill, this is a Pareto improvement (both the laundry and Stee] mill are made better off). If no transfer takes place, (S,, L,) is a potential Pareto improvement over (Sy L,). This is because the pie is bigger when the externality is corrected. = . Pareto relavance of externality. (S,L,), steel and laundry production without coordination; (S,, L,), steel and laundry production with firms merged; Y,, value of output of merged firm; ¥,, value of output without coordination; (P,, P,), prices of steel and laundry. | "Production Steel Production (S) There is a question of semantics about whether we have eliminated the externality at (S,, L,). There is still smoke being produced so there is still an external effect. The convention is to distinguish between Pareto-relevant and Pareto- irrelevant externalities. It is socially desirable to correct’a Pareto relevant + externality; after. the correction, the externality becomes Pareto irrelevant. Thus smoke at (5, L,) is Pareto relevant, whereas smoke levels at (S,, L,) are Pareto irrelevant. : There is another type of externality that can best be illustrated by an example. Suppose you have been a swordfish eater for many years. Recently you have see the price of swordfish rise dramatically due to the increasing popularity of fish in a healthy diet and depletion of swordfish stocks. The actions of others have driven up the price of fish so that now you have to pay more so you consume less swordfish. This is what is known as a pecuniary externality. Basically, your prices change due to the actions of others. Your utility changes because your income remains fixed. While this is certainly an external effect, it is not something that we will be concerned about. The basic reason is that there is no inefficient involved in introducing a pecuniary externality. Prices change, but we have efficiency before and after the prices change. We have just moved from one point on the Pareto frontier to another. Although this may have distributional consequences, it does not have the efficiency effects of a conventionality which involves the inappropriate physical amount of an externality. * Scanned ith CamScamner(DSE) (vi) : Environmenta! Economics (Sem.-VI, 2015) 385 onl ® OUGX=9x since 9=8, U(x)=8x This ee with respect to x. But budget constraint < 100 so, x* Total utility of the consumer = 100 x 8= 800 Budget line 10 indifference 100 (@ x will still be 100 The new consumption point would be ‘BY and total ulility would be = 100 x 10 = 1000 (i) With q =8, his ulility 800 so, with q = 10, his ulility should remain 800 hence 800= 10xx > x= 80 50, he would be willing to forgo € 20, the amount he would have been spending on other goods. (a) Consider a firm that is the sole producer of smoke(s) in a town. The following figure shows the marginal savings from producing smoke, MS(s). Also shown is the marginal damage to the residents from smoke, MD(s). ® MD (s) MS (s) ‘Smoke (s) Scanned with ComScenner386 AMAR : B.A. (Hons.) Economics II] Year (Semester-V1) Reproduce the figure in your answer book and answer the following questions. @ Inthe figure, identify the efficient level of smoke and the Pigovian fee, (i) Complete the diagram by drawing the curve indicating marginal tay payments by the smoke monopolist, MT(s). How is MT(s) related to MD(s) ? (ii) Now, show in the diagram how much smoke the smoke monopolist wil} emit and the emission fee he will pay. (iv) Will there be a dead weight loss associated with the production of smoke by the monopolist ? If yes, show it in the figure. (2434242) ()) According to Kolstad “(T) here are many problems that have been identified with contingent valuation.” Which problems is he referring to in this statement? © Ans. (a) (i) . $* is the efficient level of smoke. Charging a pigovian fee of p* will help in achievivg it. : MD 4: ‘Smoke (5) @) MT(s)=SMMD(s) +MD(s) : Where MMD(s) is the marginal “marginal damage of smoke”. Scanned with CamScamner(SE) (vi) : Environmental Economics (Sem-V1, 2015) 387 (#) Themonopolistsmokeup § where MS(¢)=MT(). i, he underpollutes and payt,,. (iv) Yes, there is a deawei; i . sectally optimal level ight loss since the level of smoke is lesser than the tre detdweight loss is AABC (the shaded area) : ough the contingent valuation method has been widely used for the past two decades, there is considerable controversy over whether it adequately measures people's willingness to pay for environmental quality. . People have Practice making choices with market goods, so their purchasing decisions in markets are likely to reflect their true willingness to pay. cv assumes that people understand the good in question and will reveal their preferences in the contingent market just as they would in areal market. However, most people are unfamiliar with placing dollar values on environmental goods and services. Therefore, they may not have an adequate basis for stating their true value. * The expressed answers to a willingness to pay question in a contingent valuation format may be biased because the respondent is actually answering a different question than the survey or had intended, Rather than expressing value for the good, the respondent might actually be expressing their feelings about the scenario or the valuation exercise itseli. For example, respondents may express a positive willingness to pay because they feel good about the act of giving for a social good (referred to as the “warm glow” efiect), although they believe that the good itself is unimportant. Respondents may state a positive willingness to pay in order to signal that they place importance on improved environmental quality in general. Alternatively, some respondents may value the good, but state that they are not willing to pay for it, because they are protesting some aspect of the scenario, such as increased taxes or the means of providing the good. * Respondents may make associations among environmenta! goods that the researcher had not intended. For example, if asked for willingness to pay for improved visibility (through reduced pollution), the respondent may actually answer based on the health risks that he or she associates with dirty air. * Some researchers argue that there is a fundamental difference in the way that people make hypothetical decisions relative to the way they make actual decisions. For example, respondents may fail to take questions seriously because they will not actually be required to pay the stated amount. Responses may be untealistically high if respondents believe they will not have to pay for the good or service and that their answer may influence the resulting supply of the good. Conversely, responses may be unrealistically low if respondents believe they will have to pay. . ’ * ‘The payment question can either be phrased as the conventional ‘What are you willing to pay (WTP) to receive this environmental asset ”, or in the less usual form, ‘What are you willing to accept (WTA) in compensation for giving up this-environmental asset ?' In theory, the results should be very close. However, When the two formats have been compared, WTA very significantly exceeds WIP. Critics have claimedc that this result invalidates the CVM approach, showing Scanned sith CamSeamner388 AMAR : B.A. (Hons.) Economics III Year (Semester-V1) responses to be expressions of what individuals would like to have happen rather than true valuations. . * If people are first asked for their willingness to pay for one part of an environmental asset (e.g. one lake in an entire system of lakes) and then asked to value the whole asset (e.g. the whole lake system), the amounts stated may be similar. This is referred to as the “embedding effect.” « In some cases, people’s expressed willingness to pay for something has been found to depend on where it is placed ona list of things being valued. This is referred to as the “ordering problem.” * Respondents may give different willingness to pay amounts, depending on the specific payment vehicle chosen. For example, some payment vehicles, such as taxes, may lead to protest responses from people who do not want increased taxes. Others, such as a contribution or donation, may lead people to answer in terms of how much they think their “fair share” contribution is, rather than expressing their actual value for the good. ° ¢ Many early studies attempted to prompt respondents by suggesting a starting bid and then increasing or decreasing this bid based upon whether the respondent agreed or refused to pay a such sum. However, it has been shown that the.choice of starting bid affects respondents’ final willingness to pay response. © © Strategic bias arises when the respondent provides a biased answer in order to influence a particular outcome. Ifa decision to preserve a stretch of river for fishing, for example, depends on whether or not the survey produces a sufficiently large value for fishing, the respondents who enjoy fishing may be tempted to provide an answer that ensures a high value, rather than a lower value that reflects their true valuation. © Information bias may arise whenever respondents are forced to value attributes with which they have little or no experience. In such cases, the amount and type of information presented to respondents may affect their answers. ‘* Non-response bias is a concern when sampling respondents, since individuals who do not respond are likely to have, on average, different values than individuals who do respond. : « Estimates of non use values are difficult to validate externally. © When conducted to the exacting standards of the profession, contingent valuation methods can be very expensive and time-consuming, because of the extensive pre-testing and survey work. * Many people, including jurists policy-makers, economists, and others, do not believe the results of CV. oa Scanned sith CamSeamner