Invasive species are a growing threat in the United States, causing losses in biodiversity, changes in ecosystems, and impacts on economic enterprises such as agriculture, fisheries, and international trade. The costs of preventing and controlling invasive species are not well understood or documented, but estimates indicate that the costs are quite high. The costs of aquatic invasive species are even less well understood than those for terrestrial species. A systematic approach is needed to develop a consistent method to estimate the national costs of aquatic invasives. This review of the economic literature on aquatic invasive species is the first stage in the development of that estimate. We reviewed over sixty sources and include both empirical papers that present cost estimates as well as theoretical papers on preventing and mitigating the impacts of aquatic invasive species. Species-specific estimates are included for both animals and plants.

This article reviews and critiques the frontier literature dealing with farm level efficiency in developing countries. A total of 30 studies from 14 different countries are examined. The country that has received most attention is India, while rice has been the most studied agricultural product. The average technical efficiency (TE) index from all the studies reviewed is 72%. The few studies reporting allocative and economic efficiency show an average of 68% and 43%, respectively. These results suggest that there is considerable room to increase agricultural output without additional inputs and given existing technology. Several of the studies reviewed have sought to explain farm level variation in TE. The variables most frequently used for this purpose have been farmer education and experience, contacts with extension, access to credit, and farm size. With the exception of farm size, the results reveal that these variables tend to have a positive and statistically significant impact on TE. This paper shows that considerable effort has been devoted to measuring efficiency in developing country agriculture using a wide range of frontier models. Despite all this work, the extent to which efficiency measures are sensitive to the choice of methodology remains uncertain.

This paper reviews the literature on the economics of invasive species management as it applies to invasive species in general and terrestrial invasive species in particular. The paper summarizes a number of recent studies that assign values to the economic impact of terrestrial invasive species on a national scale. This is followed by a review of the economic literature on control and prevention of a biological invasion and the literature on international trade and trade policy with invasive species. The paper then reviews selected studies on terrestrial invasive plants, animals, and microbes, respectively.

Protest bids are often excluded during analysis of contingent valuation method data. It is suggested that this procedure might introduce significant bias. Protest bids are often registered by respondents who may actually place a higher- or lower-than-average value on the commodity in question but refuse to pay on the basis of ethical or other reasons. Exclusion of protest bids may therefore bias willingness to pay (WTP) results, but the direction of bias is indeterminate a priori.

Demand for healthy, safe, and environmentally friendly food products has been increasing. In response, producers are marketing organic and other quality-differentiated foods, sometimes claiming to have followed sound environmental and animal welfare practices. These products frequently have unobservable quality attributes. If the profit-maximizing producer is able to deceive the consumer with a false claim, then he or she will enjoy a higher price with lower production costs (compared to the full disclosure outcome). The analysis described in this paper shows that repeat-purchase relationships and third-party monitoring are required for high-quality credence goods to be available. Policy implications of this analysis for national organic food standards are discussed.

The extent to which individual factors influence the adoption of sustainable agricultural practices is estimated using a logit model and data from a 1990 survey of West Virginia producers. The results are, as expected, different than those for conventional agricultural technologies. For example, the effects of human capital characteristics are significant, while those for structural and institutional characteristics are not. However, the likelihood of adoption of sustainable agricultural practices is affected most by the environmental characteristic of whether or not the producer is aware that ground water contamination exists on his farm. This creates an important “awareness effect” upon which policies to promote sustainable agriculture adoption can be formulated. It also implies the existence of a derived demand for sustainable agriculture.

Using a survey of over 320 consumers from across the state of Indiana, we estimate an ordered probit model to determine the demographic and attitudinal factors which are most important in predicting the likelihood of consumers to purchase products that are produced within the state. Our results indicate that the willingness to purchase locally produced agricultural products increases with time of residency in the state, and we find a greater tendency for female consumers to purchase such products. We also find that quality perceptions play a critical role in these food purchase decisions. We underscore the importance of maintaining minimum quality standards to maximize the effectiveness of state level agricultural promotion programs.

An understanding of the empirical relationship between income and environmental quality is evolving through recent studies investigating the Environmental Kuznets Curve (EKC). The EKC represents an inverted-U relationship between income and environmental degradation. However, studies may employ different methods, evaluate different environmental indicators, and use different data, resulting in a broad spectrum of findings and leading to sometimes conflicting interpretations. The purpose of this paper is to synthesize the results of existing EKC findings by conducting a statistical meta-analysis, and to predict new income turning points (ITP). Results indicate how both methodological choices and pollutant types affect ITPs. (JEL Q20).

Using a unique spatial database, a hedonic model is developed to estimate the value to nearby residents of open space purchased through agricultural preservation programs in three Maryland counties. After correcting for endogeneity and spatial autocorrelation, the estimated coefficients are used to calculate the potential changes in housing values for a given change in neighborhood open space following an agricultural easement purchase. Then, using the current residential property tax for each parcel, the expected increase in county tax revenue is computed and this revenue is compared to the cost of preserving the lands.

Consumers are increasingly considering information on the safety and process (how foods are produced) attributes of food in making their buying decisions. Producers, processors, and retailers may choose voluntary labeling of these attributes, may be required to label by government regulations, or may use a combination of these approaches. The market effects depend on consumer perceptions of the attributes, the benefits and costs of labeling for companies, and the goals of government policy. These effects are illustrated through a discussion of labeling of foods that are produced with the use of biotechnology (genetically modified organisms) or that are organically grown.

I want to begin with a caveat. I have no training in psychology, and my interest in the field is that of an amateur. Thus, the confidence with which I shall make statements about psychological facts is in inverse proportion to my expertise. My point of departure is the assumption that the most serious problem with contingent valuation (CV) methodology is hypothetical bias. Apart from introspection, the evidence for this assumption comes from two classic studies conducted by Richard Bishop and his colleagues at the University of Wisconsin. The first study by Bishop and Heberlein (1979) involved a survey of two random samples of individuals who had obtained permits to hunt ducks in the Horizon Zone of East Central Wisconsin. One sample group was asked the hypothetical question whether they would be willing to sell their permit for a specified sum of money (this sum differed among individuals). The other sample group was given a real opportunity to sell their permit for a specified sum of money; of 237 hunters surveyed, 105 actually sold their permits.

Policy makers often face the problem of evaluating how water quality affects a region's economic well-being. Using water clarity as a measure of the degree of eutrophication levels (as a lake becomes inundated with nutrients, water clarity decreases markedly), analysis is performed on sales data collected over a six-year period. Our results indicate that water clarity has a significant effect on prices paid for residential properties. Effects of a one-meter change in clarity on property value are also estimated for an average lake in four real estate market areas in New Hampshire, with effects differing substantially by area. Our findings provide state and local policy makers a measure of the cost of water quality degradation as measured by changes in water clarity, and demonstrate that protecting water quality may have a positive effect on property tax revenues.

In Japan, a large U.S. export market, there has been growing public opposition against genetically modified (GM) foods. Using a dichotomous choice contingent valuation method, findings show the discount needed for Japanese Seikyou consumers to purchase GM food products is positively affected (i.e., a greater discount is required) by higher levels of self-reported risk perceptions toward GM food, higher levels of concern about food safety and the environment, higher self-reported knowledge about biotechnology, education levels, and income. Interestingly, gender does not significantly affect the discount needed for GM food. Further, it can be inferred from the results that a transformation of Japanese consumers’ perceptions and attitudes is needed for GM food products to successfully enter the Japanese market.

During the last two decades, product labeling has become an increasingly used policy tool, particularly with respect to the provision of health and environmental information. Theory holds that the flow of information among market participants plays a critical role in the efficient operation of markets. This paper explores the role of product labeling policy in ameliorating two potential market deficiencies: asymmetric information and costly search behavior. Practical considerations for the design and implementation of labeling policy and of labeling research are explored.

Water-quality trading is an area of active development in environmental markets. Unlike iconic national-scale air-emission trading programs, water-quality trading programs address local or regional water quality and are largely the result of innovations in water-pollution regulation by state or substate authorities rather than by national agencies. This article examines lessons from these innovations about the “real world” meaning of trading and its mechanisms, the economic merits of alternative institutional designs, utilization of economic research in program development, and research needed to improve the success of environmental markets for water quality.

In many fisheries around the world, the failures of centralized, top-down management have produced a shift toward co-management—collaboration and sharing of decision making between government and stakeholders. This trend has led to a major debate between two very different co-management approaches—community-based fishery management and market-based individual transferable quota management. This paper examines the debate over the relative merits of these models and undertakes a socioeconomic analysis of the two approaches. The paper includes (1) an analysis of differences in the structure, philosophical nature, and underlying value systems of each, including a discussion of their treatment of property rights; (2) a socioeconomic evaluation of the impacts of each system on boat owners, fishers, crew members, other fishery participants, and coastal communities, as well as the distribution of benefits and costs among fishery participants; and (3) examination of indirect economic effects that can occur through impacts on conservation and fishery sustainability. The latter relate to (a) the conservation ethic, (b) the flexibility of management, (c) the avoidance of waste, and (d) the efficiency of enforcement. The paper emphasizes the need for a broader approach to analyzing fishery management options, one that recognizes and properly assesses the diversity of choices, and that takes into account the interaction of the fishery with broader community and regional realities.

We compare two approaches to mitigating hypothetical bias. The study design includes three treatments: an actual payment treatment, a contingent valuation (CV) treatment with a follow-up certainty question, and a CV treatment with a cheap talk script. Our results suggest that both the follow-up certainty treatment and the cheap talk treatment produce willingness-to-pay (WTP) estimates consistent with the actual payment treatment. However, the follow-up certainty treatment provides response distributions at all offer amounts that are statistically similar to the actual payment treatment, while the cheap talk treatment provides similar responses only at some offer amounts. Furthermore, the cheap talk treatment is effective only for inexperienced individuals. We conclude that the follow-up certainty approach is more consistent than the cheap talk approach for eliminating hypothetical bias.

Recently, there has been much interest among horticultural producers concerning the marketing of organic and locally produced food. A consumer survey was administered that asked respondents to choose an applesauce product from a list of products differentiated by price, and by labels that described fat content, nutrition content, and whether the product was grown organically and/or locally. Our analysis indicates that consumers were willing to pay more for locally grown applesauce compared to applesauce that was labeled USDA Organic, Low Fat, or No Sugar Added. Furthermore, we find evidence that increased knowledge of agriculture decreases the willingness to pay for organic and locally grown applesauce.

A growing number of hotels provide “green” lodging for travelers with strong environmental preferences. Twelve states have developed certification programs to regulate these claims. After describing the new market for green lodging, we use data on prices and amenities of “green” and “brown” hotels in Virginia to estimate a hedonic model of hotel room pricing. We find that travelers can expect to pay a significant premium for a standard room in a green hotel. An internal meta-analysis is used to evaluate the robustness of this result to subjective econometric modeling decisions. Our results indicate a premium between $9 and $26.

A choice experiment of Mid-Atlantic consumers was conducted to determine marginal willingness to pay for the attributes organic, natural, locally grown, and state marketing program promoted for strawberry preserves. The influence of purchasing venue on willingness to pay was also examined. Results indicated a price premium when purchased at a farmers market across all five states and versions. Organic was preferred to natural in only one state. Preference ordering between local and state program promoted varied. Consumers in Maryland and Pennsylvania clearly preferred local, while those in New Jersey seemed most likely to prefer the state program version.