Applications of Quantitative Methods in Environmental Economics: Econometrics, Simulation Modelling and Experiments

In Part I of this thesis we employ novel econometric techniques to explore elicitation anomalies in contingent valuation (CV). According to standard assumptions regarding preferences, changes in the way values are elicited in CV questions should be decision irrelevant. That responses are observed to systematically differ according to elicitation format has, therefore, called the CV method into question. One possible explanation lies in the proposition that respondents are uncertain about their preferences and that their uncertainty precipitates systematically different responses to different question formats. We test this hypothesis using data from a split-sample CV survey. We analyse our data using an innovative application of a semi-parametric estimator more commonly used for duration modelling in the medical sciences but find that uncertainty alone cannot explain away common elicitation anomalies. In Part II we employ simulation modelling and experimental techniques to investigate payment for ecosystem services (PES) schemes that involve multiple buyers. In Chapter 2, we explore opportunities for buyers in PES scheme to realise Paretoimproving outcomes through spatial coordination in their independent purchases of changes to land-management practices. We develop a simulation environment imitating a heterogeneous agricultural landscape and using techniques of integer-linear programming solve for outcomes under different institutional arrangements. Our simulations allow us to explore how gains from negotiated or fully-cooperative purchasing differ across different configurations of landscape and buyer objectives. In Chapter 3, we investigate negotiation as a multiple-purchaser ecosystem service procurement mechanism. We design and conduct novel three-person bargaining experiments in which two potential buyers can negotiate not only between each other but also with a seller of ecosystem services. We find that negotiated deals can be reached that are mutually advantageous to all parties. In all treatment scenarios presented, the vast majority of groups are able to reach agreements; in addition, these agreements are reached relatively quickly