Two essays on natural resources valuation: Wetlands benefit transfer and farmlands preservation efficiency

Date of Completion

January 2009


Economics, Agricultural




The first essay proposes to characterize the effects of ecological attributes used in choice modeling on the benefit transfer validity that can occur when different sets of ecological indicators are used to qualify otherwise identical ecological changes. With three distinctive attribute sets designed for aquatic restoration at two sites in Rhode Island, the study empirically estimates three categories of welfare measures (i.e. marginal utility, implicit price and compensating surplus). ^ The mixed logit results confirm that changes in representation of attributes affect the amount of information people absorb and the interpretation of policy outcomes, which in turn affect their decision making. Within convergent validity context, hypothesis test results indicate that the effects of different attribute sets vary across ecological attributes and across welfare measure categories. ^ The study concludes that convergent validity with marginal utility declines, indicating that adjustments among different types of indicators are needed in order to characterize ecological changes at the two sites. In addition to the effect of differences in attributes used, validity results with implicit price and compensating surplus are also affected by differences in the marginal utility of income at the two sites. ^ The objective of the second essay is to assess the impact of farmland preservation programs on the technical efficiency and profitability of dairy farms in Connecticut; a related objective addressed is how the inclusion of amenity benefits provided by farmland would affect technical efficiency and profitability. ^ Two scenarios are evaluated: technical efficiency and profitability without incorporating the amenity benefits provided by farmland; technical efficiency and profitability incorporating the amenity benefits provided by farmland. ^ The results indicate that participation in farmland preservation programs negatively affects technical efficiency and profitability of dairy farms in Connecticut; however, when incorporating amenity benefits in the evaluation, farmland preservation programs positively correlate with technical efficiency and have no significantly negative impact on the profitability of dairy farms. Therefore, tangible compensation is needed in order to balance the loss of private efficiency resulted from participation in farmland preservation programs and the public desire to preserve farmlands in Connecticut. ^