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A Choice Modelling Approach for Assessment of Use and Quasi-Option Values in Urban Planning for Areas of Environmental Interest

Elisabetta Strazzera, Elisabetta Cherchi and Silvia Ferrini ()
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Elisabetta Cherchi: DIT and CIREM, University of Cagliari

No 2008.63, Working Papers from Fondazione Eni Enrico Mattei

Abstract: This study adopts a discrete choice modelling methodology to evaluate individuals’ preferences over planning alternatives for an urban site of environmental interest. Since such projects involve some uncertainty and irreversibility, a special attention is devoted to the estimation of the quasi-option values which are associated to project development. Two distinct measures for the quasi-option value are estimated, and both coefficients indicate that the public places a significant value on reduction of the possibility of adverse irreversible effects: a more prudent development strategy is valued about four times more than a procedure that provides a lesser hedge against undesired outcomes. Furthermore, the study involved elicitation of intertemporal preferences over projects with different time spans, and estimation of the implicit discount rates: the values obtained seem high if compared to standard discount rates applied to public projects, but not far from current interest rates on consumption.

Keywords: Urban Planning; Environmental Values; Choice Modelling; Use Values; Quasi-option Values; Discounting (search for similar items in EconPapers)
JEL-codes: C35 Q51 R41 (search for similar items in EconPapers)
Date: 2008-07
New Economics Papers: this item is included in nep-dcm, nep-env, nep-geo, nep-ppm, nep-tur and nep-ure
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