HABIT FORMATION AND VARIETY SEEKING IN A DISCRETE CHOICE MODEL OF RECREATION DEMAND

The recreational site choice decision modeled in most economic analyses seldom contains previous experience with the site as a characteristic or attribute. A rational dynamic model is used to incorporate previous experience with the site in a model of the choice of recreation sites. Based on the comparison of dynamic and static models, it is apparent that dynamic elements influence choice. The use of previous consumption as an attribute (either in a naïve or rational form) is an improvement over static models of choice. In welfare analysis, this effect may be a significant factor. For example, a change in prices or quality attributes may have a much larger impact on those individuals who have developed habits.Resource /Energy Economics and Policy,

What's it worth? An examination of historical trends and future directions in environmental valuation

The present paper reviews activity in environmental valuation by examining trends in publication rates over the past three decades. It also provides an overview of the demand for environmental valuation by academic markets and by policy markets. The results of this historical analysis suggest that there is not as much use of environmental valuation in policy analysis as could be expected given the academic efforts on this topic. The paper also provides an overview of the future directions that environmental valuation research is likely to take given current research efforts.Environmental Economics and Policy,

Integrating Routine, Variety Seeking and Compensatory Choice in a Utility Maximizing Framework

Given the large number of choices that consumers make each day it seems likely that they will generally adopt decision strategies that minimize cognitive effort, particularly with low price products such as most items found in a supermarket. One such strategy may be to simply choose what has been chosen in the past, i.e. to fall into a pattern of routine choices or decisions. In contrast, there may be preferences for variety in markets for low price, highly differentiated goods. We develop a conceptual and empirical model of routine choice, and the factors that result in transitions to two strategies other than routine selection, to wit, utility maximizing choice among available alternatives and a variety seeking strategy. The empirical approach we employ provides a mechanism for the examination of panel data that avoids the state dependence issues present in most applications to these types of data. We apply this framework to the choice of two food products that illustrate the heterogeneity across types of products in decision strategies and routine choice patterns.Choice modeling, routine behavior, variety‐seeking, panel data, Consumer/Household Economics, Demand and Price Analysis, Institutional and Behavioral Economics, D12, D03, C25,

TIME IN RECREATION MODELING AND DECISION MAKING

Consumer/Household Economics,

The Role of Economic Instruments to Resolve Water Quantity Problems

Resource /Energy Economics and Policy,

TESTING NONMARKET VALUES IN A NONPARAMETRIC FRAMEWORK

Resource /Energy Economics and Policy,

CONSUMER'S PERCEPTIONS OF ENVIRONMENTAL RISKS AND THE DEMAND FOR FOOD SAFETY

Public concern regarding food safety has emerged as a major policy issue. Chemicals and biotechnological processes are perceived as risks of food safety despite their contribution to an efficient, low cost agriculture and food industry. Increases in uses of biotechnological processes for foods are expected to be a major potential source of productivity improvements for Alberta and Canadian agriculture in future years. However, the demand for food safety involves increasing awareness and concern by consumers of chemical inputs and biotechnological processes in the agriculture and food industries. Nonetheless, there is a lack of basic economic and agricultural economic theory and methodology to analyze these issues and a need for policy, socioeconomics and marketing research on biotechnology and other environmental risk situations in the agricultural and food industry. This project was directed at developing and applying economic theory and methodology to help fill this gap. A major contribution of the project is the identification and verification of methodologies of stated choice to analyse tradeoffs arising from food safety perceptions of concerns by consumers. One component of the research project involved assessment of Alberta consumers' stated preferences and purchase behaviour for foods exhibiting a range of environmental risks, including perceptions of pesticide residues and hormonal treatments derived from biotechnological processes. The results of this survey indicated that Albertans were more concerned about pesticide use in food production than about the use of hormones. In contingent valuation questions developed for the study, more Albertans wish to restrict pesticide use (relative to a base case of not restricting either hormones or pesticides). They tended to persist in these choices in the face of potential increases in food costs, reflecting a higher level of concern with pesticides than hormones. Increasing education increased this concern. Increasing food cost decreased the probability of choosing to restrict pesticide or hormone use. Women appeared to perceive pesticide use in food production as a greater food safety risk than was perceived by men. The inferred average willingness to pay to restrict pesticide and growth hormone use in food production amounted to about 25% and 13% respectively of the average Albertan's food expenditures respectively. In the second survey of consumers' food/environmental risk perceptions undertaken relative to this project, the responses of a random sample of consumers to the use of recombinant bovine somatotrophin (rBST) in milk production were elicited using a stated preference methodology. A conditional logit model of consumer choice was developed and tested to analyse consumers' choices of milk with varying characteristics of fat content, price, freshness and rBST treatment. Awareness of rBST presence or otherwise is implied by labelling. The approach attempts to simulate market conditions with and without rBST labelled milk and to predict consumers' responses to variations in these conditions. Welfare calculations for a representative consumer indicate welfare losses with the introduction of rBST. These were slightly less for a male than a female household food purchaser and were less for food purchasers with higher levels of income and education. There was a small welfare gain when the representative food purchaser was offered a full range of "rBST" and "non-rBST" milks. The results suggest that making appropriately labelled "rBST-free" milk available to consumers could decrease consumer welfare losses associated with any introduction of rBST. The outcomes from application of these methodologies were related to the evidence of consumers' purchasing behaviour after licensing of the technology of rBST for use in the United States; this introduction did not require labelling. The assessment suggests a critical impact of product labelling policies and strategies on potential market impacts. An assessment is also made of Canada's food safety regulatory framework. The need for increased transparency and greater public participation in regulatory processes as means to increase public confidence in such food safety regulatory processes, specifically relating to biotechnology, is also identified.Food Consumption/Nutrition/Food Safety,

A SEQUENTIAL CHOICE MODEL OF RECREATION BEHAVIOR

The travel cost model is the standard model used in the recreation demand literature. This model assumes that the decision on the number of trips to a particular site in a given period (a season, for example) is determined at the beginning of the period. For certain types of recreation activity, this decision may be more appropriately modeled as a sequential process, in which the decision of whether or not to take each additional trip is made after previous trips have occurred. This decision is dependent on the realization of random variables on previous trips as well as travel costs. A model is developed in which the choice of a discrete number of sequentially chosen trips to a given site is specified as function of site-specific variables and variables realized on previous trips. This models advantage over the traditional travel cost model is that it specifies discrete, nonnegative integer values for the number of trips and allows intraseasonal effects to determine the probability of taking each additional trip.Resource /Energy Economics and Policy,

An Economic Evaluation of Woodland Caribou Conservation Programs in Northwestern Saskatchewan

The purpose of this study was to identify the values Saskatchewan residents place on their Woodland Caribou conservation programs. Using contingent valuation methods, individual values for maintaining caribou numbers within Millar Western-NorSask Forest Management Licence agreement area were estimated. Using these value estimates, societal benefits were estimated for the implementation of a woodland caribou maintenance program within the forest licence agreement area. The data used in this study were collected using a mailout survey to Saskatchewan residents. Two contingent valuation formats were used, the opened ended willingness to pay and the dichotomous choice. A number of question structures were employed in order to judge the sensitivity of the valuation to the design. In all, 9 different versions of the contingent valuation question were used in a randomized design strategy. The resulting welfare measures for the implementation of the caribou maintenance program were somewhat variable. The open ended format produced the lowest estimates, while the dichotomous choice estimates were higher and showed a higher degree of variability. This variability may be due to the presence of the ordering or whole-part effects. The values elicited for the conservation program using the open ended approach average approximately $15.00 per person per year. These values, when aggregated over the provincial population, result in an annual benefit of the woodland caribou conservation program of about$10M. These are the most conservative of the estimates, suggesting that woodland caribou conservation is very important to Saskatchewan residents.Environmental Economics and Policy, Resource /Energy Economics and Policy,

Consumers' Responses to the Potential Use of Bovine Somatotrophin in Canadian Dairy Production

The responses of a random sample of consumers to the use of bovine somatotrophin (BST) in milk production were elicited using a stated preference methodology. A multinomial logit model of consumer choice was developed and tested to analyse consumers' choices of milk with varying characteristics of fat content, price, freshness and BST treatment. Welfare calculations for a representative consumer indicate welfare losses with the introduction of BST which are not fully offset by preferred milk attributes such as reduced price or increased freshness levels. Welfare losses were slightly less for a male than a female consumer and were less for consumers with higher levels of income and education. Losses were greatest when a representative consumer was denied the option of choosing not to purchase milk. There was a small welfare gain when the representative consumer was offered a full range of "BST" and "non-BST" milks. The results suggest that making appropriately labelled "BST-free" milk available to consumers could decrease consumer welfare losses associated with the introduction of BST in Canada.Consumer/Household Economics, Livestock Production/Industries,