Fish, Time, and Water: Essays on Environmental Resource Trade-offs

Abstract

Understanding peoples' preferences for resources that are not bought or sold in a market is a challenging and yet often inescapable undertaking for informing decisions regarding many environmental problems. This thesis presents three studies on how people make decisions involving environmental resources. The first paper focuses on the interplay between intertemporal substitution and the value of time. I develop a structural travel cost demand model that explicitly focuses on intertemporal substitution and incorporates time constraints on behavior. The results demonstrate how getting the value of time `right' is important for assessing welfare impacts of policies with large intertemporal substitution effects. I also find people value their leisure time heterogeneously and substantially differently from their implied wage rate and this value differs by time of year. The second paper focuses on eliciting willingness-to-accept (WTA) welfare measures in public and private good settings. Using laboratory experiments, I explore whether elicitation format, survey framing, and follow-up questions can generate more truthful responses. For public goods, I extend the mechanism perspective of incentive compatibility and provide the first empirical test of the theory in a WTA context. The findings provide support for the incentive compatibility of WTA responses for public goods as long as responses have consequences for respondents. The results of the private good experiment suggest that strategic behaviour biases are in the directions expected by theory and explicit survey framing and follow-up questions can provide useful insights. The third paper uses a stated preference survey and focuses on potential endogeneity issues with including perceived consequentiality responses in econometric models of voting behavior. The results of the study suggest that the order of the valuation and consequentiality question matters for consequentiality beliefs and that these beliefs may not be important determinants of voting behaviour, once appropriate methods to address endogeneity are used. Together, these studies contribute to the ongoing research efforts to improve the validity of nonmarket methods applied to environmental resources.