Essays in environmental economic valuation and decision making in the presence of an environmental disaster

The first essay developed a respondent model of Bayesian updating for a double-bound dichotomous choice (DB-DC) contingent valuation methodology. I demonstrated by way of data simulations that current DB-DC identifications of true willingness-to-pay (WTP) may often fail given this respondent Bayesian updating context. Further simulations demonstrated that a simple extension of current DB-DC identifications derived explicitly from the Bayesian updating behavioral model can correct for much of the WTP bias. Additional results provided caution to viewing respondents as acting strategically toward the second bid. Finally, an empirical application confirmed the simulation outcomes. The second essay applied a hedonic property value model to a unique water quality (WQ) dataset for a year-round, urban, and coastal housing market in South Florida, and found evidence that various WQ measures affect waterfront housing prices in this setting. However, the results indicated that this relationship is not consistent across any of the six particular WQ variables used, and is furthermore dependent upon the specific descriptive statistic employed to represent the WQ measure in the empirical analysis. These results continue to underscore the need to better understand both the WQ measure and its statistical form homebuyers use in making their purchase decision. The third essay addressed a limitation to existing hurricane evacuation modeling aspects by developing a dynamic model of hurricane evacuation behavior. A household's evacuation decision was framed as an optimal stopping problem where every potential evacuation time period prior to the actual hurricane landfall, the household's optimal choice is to either evacuate, or to wait one more time period for a revised hurricane forecast. A hypothetical two-period model of evacuation and a realistic multi-period model of evacuation that incorporates actual forecast and evacuation cost data for my designated Gulf of Mexico region were developed for the dynamic analysis. Results from the multi-period model were calibrated with existing evacuation timing data from a number of hurricanes. Given the calibrated dynamic framework, a number of policy questions that plausibly affect the timing of household evacuations were analyzed, and a deeper understanding of existing empirical outcomes in regard to the timing of the evacuation decision was achieved.

Essays in Environmental Economic Valuation and Decision Making in the Presence of an Environmental Disaster

The first essay developed a respondent model of Bayesian updating for a double-bound dichotomous choice (DB-DC) contingent valuation methodology. I demonstrated by way of data simulations that current DB-DC identifications of true willingness-to-pay (WTP) may often fail given this respondent Bayesian updating context. Further simulations demonstrated that a simple extension of current DB-DC identifications derived explicitly from the Bayesian updating behavioral model can correct for much of the WTP bias. Additional results provided caution to viewing respondents as acting strategically toward the second bid. Finally, an empirical application confirmed the simulation outcomes. The second essay applied a hedonic property value model to a unique water quality (WQ) dataset for a year-round, urban, and coastal housing market in South Florida, and found evidence that various WQ measures affect waterfront housing prices in this setting. However, the results indicated that this relationship is not consistent across any of the six particular WQ variables used, and is furthermore dependent upon the specific descriptive statistic employed to represent the WQ measure in the empirical analysis. These results continue to underscore the need to better understand both the WQ measure and its statistical form homebuyers use in making their purchase decision. The third essay addressed a limitation to existing hurricane evacuation modeling aspects by developing a dynamic model of hurricane evacuation behavior. A household’s evacuation decision was framed as an optimal stopping problem where every potential evacuation time period prior to the actual hurricane landfall, the household’s optimal choice is to either evacuate, or to wait one more time period for a revised hurricane forecast. A hypothetical two-period model of evacuation and a realistic multi-period model of evacuation that incorporates actual forecast and evacuation cost data for my designated Gulf of Mexico region were developed for the dynamic analysis. Results from the multi-period model were calibrated with existing evacuation timing data from a number of hurricanes. Given the calibrated dynamic framework, a number of policy questions that plausibly affect the timing of household evacuations were analyzed, and a deeper understanding of existing empirical outcomes in regard to the timing of the evacuation decision was achieved.

Valuation of Ecosystem Services for Environmental Decision Making in South Florida

The Greater Everglades system imparts vital ecosystem services (ES) to South Florida residents including high quality drinking water supplies and a habitat for threatened and endangered species. As a result of the altered Everglades system and regional dynamics, restoration may either improve the provision of these services or impose a tradeoff between enhanced environmental goods and services and competing societal demands. The current study aims at understanding public preferences for restoration and generating willingness to pay (WTP) values for restored ES through the implementation of a discrete choice experiment. A previous study (Milon et al., 1999) generated WTP values amongst Floridians of up to $3.42 -$4.07 billion for full restoration over a 10-year period. We have collected data from 2,905 respondents taken from two samples who participated in an online survey designed to elicit the WTP values for selected ecological and social attributes included in the earlier study (Milon et al. 1999). We estimate that the Florida general public is willing to pay up to $854.1- $954.1 million over 10 years to avoid restrictions on their water usage and up to $90.8- $183.7 million over 10 years to restore the hydrological flow within the Water Conservation Area.

Fair price and its effect on willingness to purchase

The purpose of the present research is to demonstrate the influence of a fair price (independent of the subjective evaluation of the price magnitude) on buyers' willingness to purchase. The perceived fairness of a price is conceived to have three components: perceived equity, perceived need, and inferred compliance of the seller to the process rules of pricing. These components reflect the Theories of Distributive Justice (as adjusted for conditions of need) and Procedural Justice.^ The effect of the three components of a fair price on willingness to purchase is depicted in a theoretically causal chain model. Based on the Theories of Dissonance and Attribution, conditions of inequity and need activate concerns for Procedural Justice. Under conditions of inequity and need, buyers tend to infer that the seller has not complied with the generally accepted pricing practices, thus violating the social norms of Procedural justice. Inferred violations of Procedural Justice influence the buyer's attitude toward the seller. As predicted by the Theory of Reasoned Action, attitude is then positively related to willingness to purchase.^ The model was tested with a survey-based experiment conducted with 408 respondents. Two levels of both equity and need were manipulated with scenarios, a common research method in studies of Distributive and Procedural Justice. The data were analyzed with a structural equation model using LISREL. Although the effect of the "need" manipulation was insignificant, the results indicated a good fit of the model (Chi-square = 281, Degrees of Freedom = 104, Goodness of Fit Index =.924). The conclusion is that the fairness of a price does have a significant effect on willingness to purchase, independent of the subjective evaluation of the objective price. ^

Time spent with children and working parents' willingness to medicate ADHD-like behaviors

ADHD, which refers to one of the most common behavioral problems among children, is subject to controversial arguments surrounding its nature and its primary treatment with psychiatric medications. At the heart of the problem are parents, whose responsibility includes providing pivotal information to clinicians for the diagnosis and deciding whether their children will receive medications. This study investigates the relationship between working parents' willingness to medicate ADHD-like behaviors and the time they are able to spend with their children during a regular workday. The importance of time spent with children derives from the observation that it is likely to influence not only parents' judgments of their children's behaviors but the behaviors themselves. The relationship was investigated using a subsample of 551 working parents (452 parents reporting no child with problems and 99 parents reporting child with problems) drawn from a population-based telephone survey of parents in the Miami-Dade and Broward counties of Florida. A series of path analyses, controlling for selected socio-demographic and family variables, showed that spending more time with their children during a regular workday was significantly related to being less willing to medicate ADHD-like behaviors. The association was stronger for parents reporting having a child with emotional and behavioral problems (β = −.20) and faint for other parents (β = −.06). The interpretation of the study findings emphasizes the vagueness surrounding the nature of ADHD and the events and procedures leading to the diagnosing of a child, as well as the delicate situations in which parents find themselves.

A Comparative Study of Customer Perceptions Regarding Green Restaurant Practices: Fast Food vs. Upscale Casual

The current exploratory study was designed to determine the impact that green restaurant practices may have on intention to visit a restaurant and willingness to pay more because of those green practices. The study analyzed a convenience sample of 260 surveys from customers in fast food restaurants and 501 surveys from customers in upscale casual restaurants in the Midwestern United States (U.S.) in order to determine if there were differences in the perception of guests regarding these types of restaurants and their green practices. The findings showed that upscale casual restaurant customers believed they are knowledgeable at a higher level than the fast food restaurant customers about green restaurant practices, have a higher mean rating on the importance of environmental record and recycling in restaurants, and believed that restaurants should use local products when they can. In both groups of customers, there was a positive relationship between green practices utilized at home and customers’ willingness to pay more for green restaurant practices as well as their intention to visit the restaurant using green practices. Management implications are discussed.

Investigating Stakeholders’ Preferences for Coral Reef Research Funding in Florida

Abstract: Heavily used and highly valuable, the Florida Reef is one of the world's most threatened ecosystems. Stakeholders from a densely urbanized coastal region in proximity to the reef system recognize its degradation, but their comprehension of climate change and commitment to pay for sustainable management and research funding have been opaque. With an emphasis on recreational anglers, residential stakeholders were surveyed online about their marine activities, perceptions of resources and threats, and willingness to pay (WTP) for dedicated coral reef research funding in Florida. The majority of stakeholders are wealthy, well educated, and politically independent. Supermajorities favored the two scenarios of taxation for a Florida Coral Reef Research Fund, and the scenario with matching federal funds earned higher support. In regression analyses, several factors emerged as significant contributors to stakeholders’ preferences, and the four recurring factors in extended models were prioritizing the environment over the economy, donating to environmental causes, concern about coral reefs, and concern about climate change, with the latter indicating a recent shift of opinion. Status in terms of income and education were found insignificant, and surprisingly income was negatively correlated with WTP. Perceptions through lenses of environmental and emotional attachments appear to overwhelm conventional status-based factors. Applied statewide, the first scenario's extrapolated WTP (based on a sales tax rate of 2.9%) would generate $675 million annually, and the extrapolated WTP under the second scenario, with matching federal funds (based on a sales tax rate of 3.0%) would generate $1.4 billion. Keywords: willingness to pay, coral reef research, taxation, climate change, stakeholder, perceptions, Florida Reef, recreational fishing, anglers

A profile of travelers who are willing to stay in environmentally friendly hotel

The purpose of this study is to describe travelers that have indicated they are willing to stay in green hotel in order to better understand the market segment. There is very little knowledge about these types of travelers, thus making it difficult for hoteliers to know how to create marketing campaigns that target them. Data were collected via an online survey company. Behavior characteristics provided a more distinguishing profile of the traveler than did demographics or psychographics. Most travelers were willing to pay the same amount for a green hotel as a traditional hotel. Implications, future research, and limitations are discussed.