Non-market valuation in integrated assessment modeling: The benefits of water right retirement

Dale T. Manning, Mani Rouhi Rad, Jordan Suter, Christopher Goemans, Zaichen Xiang and Ryan Bailey

Journal of Environmental Economics and Management, 2020, vol. 103, issue C

Abstract: The impact of resource management on natural capital value depends on processes that affect resource stocks over space and time. We develop an integrated assessment modeling framework that links econometric estimates of non-market benefits from a resource stock to a spatially explicit model of resource dynamics. Results from a dichotomous choice contingent valuation survey are used to estimate a marginal willingness to pay function for groundwater, which has no market. We use the model to measure the economic benefits to agricultural producers of a program that pays for water right retirement. Under the baseline scenario, without water right retirement, the benefits from groundwater stocks in the study region decline in value by $3.6 million over 15 years because of groundwater depletion. Water right retirement leads to groundwater benefits that are $0.55 million higher than in the baseline after 15 years, but benefits vary greatly over space. Comparing this to an explicit program cost of $45 million suggests that other social benefits from groundwater stocks must exist to justify the program from a benefit-cost perspective. Valuing the economic benefits from increasing natural capital stocks can inform policy and provide insight into the value of management in resource and environmental systems.

Keywords: Non-market valuation; Natural capital; Integrated assessment modeling; Groundwater; Conservation policy; Contingent valuation method (search for similar items in EconPapers)
JEL-codes: Q18 Q25 Q51 Q58 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0095069620300644
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:jeeman:v:103:y:2020:i:c:s0095069620300644

DOI: 10.1016/j.jeem.2020.102341

Access Statistics for this article

Journal of Environmental Economics and Management is currently edited by M.A. Cole, A. Lange, D.J. Phaneuf, D. Popp, M.J. Roberts, M.D. Smith, C. Timmins, Q. Weninger and A.J. Yates

More articles in Journal of Environmental Economics and Management from Elsevier
Bibliographic data for series maintained by Catherine Liu ().