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The free riding incentive has been a major obstacle to establishing markets and payment incentives for environmental goods. The use of monetary incentives to induce private provision of public goods has gained increasing support to help market ecosystem services. Using a series of lab experiments, we explore new ways to raise money from individuals to support private provision of multi-unit threshold public goods. In our proposed mechanisms, individuals receive an assurance contract that offers qualified contributors an assurance payment as compensation in the event that total contributions fail to achieve the threshold provision cost. Contributors qualify by contracting to support provision with a minimum contribution. Evidence from lab experiments shows that the provision probability, group demand revelation, and social welfare significantly increase when the assurance contract is present. Coordination is improved by the assurance payment especially for agents with values above the assurance level, leading to significantly higher aggregate contributions. A medium level of assurance payment used on units with medium and high value-cost ratios is observed to induce the largest improvement on social surplus. Our approach contributes to the private provision of environmental and other types of public goods.

We introduce a double hurdle latent class approach to model choice experiments, where serial non-participants and clustered preference patterns are present. The proposed approach is applied to a recent stated preference study in which the residents of the Eastern Shore of Virginia answer choice questions about alternative coastal climate change adaptation plans. While the double hurdle latent class model avoids self-contradictory assumptions, estimates and tests show that, compared with an unrestricted latent class model, it achieves a significantly better statistical fit and maintains the capability to link the heterogeneity of participants’ preferences to their attributes. Moreover, the double hurdle latent class model also provides important implications in how to conduct welfare analysis based on different behavioral patterns of different groups, which leads to nontrivial changes in welfare measures. The empirical results highlight that certain ecosystem services may increase the willingness to pay for coastal climate change adaptation plans.

The relative performance of public and private enterprises has been long debated. We construct a comprehensive violation dataset based on the EPA's Safe Drinking Water Information System to empirically investigate the compliance behavior of publicly and privately owned Public Water Systems (PWSs). Our results show that publicly owned PWSs commit significantly more Maximum Contamination Level, Treatment Technique, and Health-Related violations but fewer Monitor and Reporting violations than privately owned PWSs. We also find that municipal-level heterogeneities explain a substantial amount of variation in violation behaviors among PWSs, suggesting water supply quality depends crucially on location-specific regulations and local economic conditions.

We experimentally compare the performance of two multi-type environmental credit trading markets. The first trading market is called the multiple market (MM) institution, which allows the providers to sell jointly produced credits of all types. The second trading market is called the single market (SM) institution, where the providers of jointly produced credits can only choose one type of credit to sell. We investigate several key indicators, including the trading price, quantity, and net social benefit, to compare the performance of the SM and MM institutions. We find that the trading prices are significantly lower in MM compared to SM, indicating that MM potentially benefits the credit buyers. We also find that SM leads to more credit productions. Since not all credits can be traded in SM, the increase in the production cost outweighs the increase in the total social benefit. As a result, the net social benefit is lower in SM compared to MM. We expand the literature by firstly designing a market platform for multi-type credit trading and then assessing their performance with lab experiment evidence.

We introduce two novel mechanisms for provision point public goods, motivated by the design of uniform price auctions: The uniform price auction mechanism (UPA) collects an endogenously determined uniform price from everyone offering at least that price, while the uniform price cap mechanism (UPC) collects the uniform price from everyone offering at least that price, plus the full offer of everyone offering less. UPC has the same undominated perfect equilibria as standard provision point (PPM) and proportional rebate (PR) mechanisms, and UPA a somewhat broader set. However, our mechanisms' different marginal penalty structures may facilitate equilibrium selection and lead to higher contributions and more frequent provision. Through laboratory experiments, using both homogeneous (symmetric) and heterogeneous induced values, we show our mechanisms improve upon PR and PPM: UPC generates higher aggregate contributions than PR and PPM, leading to higher provision rates than PPM; UPA attracts much higher contributions, although it provides less frequently. This ranking emerges because high offers are more common (especially among high value people in the heterogeneous environment) in the uniform price mechanisms, where higher offers only increase the payment when needed for provision.

This paper develops a method that incorporates the public value for environmental cobenefits when a conservation buyer can purchase water quality credits based on nonmarket valuation results. We demonstrate this approach through an experiment with adult students in a classroom laboratory environment. Our application contributes to the study of individual preference and willingness to pay for cobenefits associated with the production of water quality credits in relation to the Ohio River Basin Trading Project. We use three different methods to elicit individuals' willingness to pay (WTP), including (1) a hypothetical referendum, (2) a real referendum lacking incentive compatibility, and (3) a real choice with incentive compatibility. Methodologically, our WTP estimates suggest individuals are more sensitive to the cost changes and reveal the lowest value in the real choice with incentive compatibility. Practically, we find individuals value certain cobenefits and credits as public goods. Incorporating public value toward cobenefits may improve the overall efficiency of a water quality trading market. Based on our specification of a planner's welfare function, results suggest a substantial welfare improvement after identifying an optimal allocation of a buyer's budget across credits derived from agricultural management practices producing different portfolios of cobenefits.

China recently introduced a national policy initiative called sponge city development as a holistic, ecosystem-based approach integrated with urban planning and development to address storm-induced pluvial flooding as well as other urban water and environmental issues. The initiative, while following the U.S. low impact development with a concept also similar to the U.K. sustainable drainage systems and Australian water sensitive cities, is subject to a major design issue in practice with infrastructure projects of similar types adopted unanimously across regions despite spatially diverse and heterogeneous hydrological and biophysical conditions. The ecosystem services framework as applied to the urban setting, particularly its holistic consideration of ecosystem structure and management intervention in relation to services or benefits delivery, can and should guide the planning, design, development, and evaluation of relevant projects or nature-based practices for carrying out the policy initiative, a perspective of practical value with foreseeable transformative impact that has received little recognition in China's current green urban movement toward water resilience and sustainability.

Innovative market mechanisms are being increasingly recognized as effective decision-making institutions to incorporate the value of ecosystem services into the economy. We present a field experiment that integrates an economic auction and a biophysical water flux model to develop a local market process consisting of both the supply and demand sides. On the supply side, we operate an auction with small-scale livestock owners who bid for contracts to implement site-specific manure management practices that reduce phosphorus loadings to a major reservoir. On the demand side, we implement a real money, multi-unit public good auction for these contracts with residents who potentially benefit from reduced water quality risks. The experiments allow us to construct supply and demand curves to find an equilibrium price for water quality improvement. The field experiments provide a proof-of-concept for practical implementation of a local market for environmental improvements, even for the challenging context of nonpoint pollution.

This case examines the use of appreciative inquiry by a multinational company to gain market differentiation by developing a world-class global service and technical support organization. Magnetrol International, Incorporated is a family-owned manufacturing company headquartered outside Chicago, Illinois USA, with manufacturing facilities in the US, Belgium, Brazil, China and the UAE. The purpose of the article is to demonstrate how the appreciative inquiry framework was used to drive innovation in the creation of a world-class global service organization through the use of positive discourse and employee engagement. Data was collected over a 5-month period including during two appreciative inquiry (AI) summits, one in the US and one in Belgium. The article seeks to demonstrate that positive discourse conducted in an inclusive environment can lead to positive, innovative action with an ensuing benefit of a more engaged, committed workforce.

In discrete choice experiments, survey participants are often asked to consider stated cost, to themselves, as a source of funding of an environmental project. An open question remains whether participants would consider an additional source of funding, such as public or federal support. We examine the impact of federal funding availability on the marginal utility of management attributes and on respondents’ private willingness to pay (WTP) for watershed management plans. Our results suggest that availability of public funding does not significantly alter the preferred tradeoffs among management attributes for active management plans, but alters the utility difference, and therefore the WTP, between an active plan and the status quo alternative. A latent class model further suggests that classes with relatively similar preferences may nonetheless show heterogeneity in how availability of public funds affects WTP for management plans against the status quo, depending on individuals’ sociodemographic profiles and environmental attitudes. Public funding affects WTP through both crowding-in and crowding-out effects. Our results suggest that private responses to public funds may be more complex than previous studies on public goods have suggested, as public funds may neither attract contributions nor crowd out private support uniformly.

We consider the choice experiment approach to valuation, due to its focus on tradeoffs between alternatives. Our study is not hypothetical, but implements a real-payment choice experiment (CE) for a multi-attribute good. We use two real wetland parcels to create over 18 descriptions of parcels for conservation under a 10-year development-rights contract. Our payment protocol mitigates incentives to understate willingness to pay through a provision point with a rebate of excess funds. Real choice questions captured significant values for spatial attributes of wetland conservation. Average respondents positively valued 73-acre parcels surrounded by woodland, but required 100 acres for parcels surrounded by residential or farm land, and accepted a 19-acre smaller parcel in exchange for full public access.

This paper examines whether and how survey respondents react to spatial factors in stated preference surveys, and the ways in which preferences for spatial factors may influence welfare estimation. Alternative proposals to develop rural lands for residential purposes in southern New England were studied. Results illustrate that spatial attributes can influence estimated willingness to pay for development plans, even in cases where spatial attributes are only presented as cartographic details of maps used to clarify survey scenarios. Moreover, we find that subtle, and potentially unintended, spatial features presented in choice questions may influence marginal valuation of non-spatial attributes.

This study reports on a contingent choice survey in which respondents expressed their preferences for packages of watershed management outcomes, where these packages were assessed against alternative institutional characteristics of the funding mechanism. Specifically, this study addresses the issue of respondents' faith in the payment mechanism as an efficient and guaranteed funding source. Analyses of marginal willingness to pay for single variable changes, marginal rates of substitution among variable pairs, and willingness to pay for watershed management packages indicate the potential for significant impacts of payment mechanism attributes. Implications address ranking of policy packages and validity in estimating money-scaled welfare impacts.

This paper studies the preferences and willingness-to-pay of individuals for volunteer water quality monitoring programs. The study involves supporting water quality monitoring at two ponds in the state of Rhode Island. The paper uses both a hypothetical and a real-payment contingent valuation survey to directly measure individual preferences and willingness-to-pay (WTP) for volunteer water quality monitoring at the two ponds. The overall results of the study suggest that hypothetical WTP is not statistically greater than real WTP, and that the average survey respondent is willing to support water quality monitoring on one of the two ponds. The study also finds that the specified purpose of water quality monitoring and certain socioeconomic characteristics of a respondent significantly affect the respondent's decision to support volunteer water quality monitoring.

Resource managers often ignore economic information in decisions about recreational use of fish and wildlife resources. By evaluating within‐season harvest regulations, economists can identify strategies to improve recreational benefits without compromising management objectives represented in an annual harvest quota. Theoretical analysis raises a potential for bias in applied welfare analysis if regulations inefficiently trade off fishing quality and exogenous seasonality in anglers' demand. Simulations demonstrate that efficient regulations may limit daily harvests during the best fishing season or during the peak season of demand. Inadequate knowledge of recreationists' behavioral responses to quality and regulations currently limits policy assessments.

This paper develops a model that provides an objective framework for evaluating the concerns often cited by members of nearby communities and other state residents when potential sites for solid waste landfills are evaluated. An empirical version of the model is estimated using preference data collected in a paired comparison survey of Rhode Island residents, in which participants identify a preferred site and location for a landfill among two alternatives. The estimated model is used to assign scores to each characteristic describing the natural resources present at a site and the characteristics of the nearby community. The model estimates the proportion of voters who would choose each candidate site in a referendum that includes the complete set of alternatives. This simulated voting mechanism can be used to reduce a long list of technically desirable sites to a shorter list of sites that rank highly according to public preferences regarding natural resources and local community impacts.

This paper synthesizes familiar theories of nonrenewable and renewable resource economics in a two-sector, partial-equilibrium analysis of efficient trade-offs between renewable resource production and environmental development. The irreversible impacts of coastal zone development provide a motivating example. While development proceeds, the efficient harvest of renewable resources may exceed the “sustainable” rate. While development may involve several periods of growth and decline, once development begins it proceeds without significant interruptions. If a profitable renewable sector survives, development ceases before exhausting all profitable opportunities. Interdependent stocks reduce distinctions between resource types because each sector exhibits features of the other.