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Developing Conjoint Stated Preference Methods for Valuation of Environmental Resources Within Their Ecological Context

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This research will develop methods for valuing environmental resources within a complex context. The proposed research will evaluate methods to address these challenges through two avenues of research: (1) the usefulness of valuation methods that do not rely exclusively on money-measures of value, (2) the potential to extend available methods of resource valuation when individuals face cognitive limits. The methods of "conjoint analysis" provide a means to address these avenues of research in cases where economic analysis relies upon stated preferences of individuals

The principle objectives of the proposed project are: (1) to test and to compare alternative means of estimating relative values of natural resources using conjoint analysis and to implement and to test measurement of monetary values using conjoint analysis, (2) to use conjoint analysis to develop and test models of human preferences that recognize resource values are dependent upon the ecological context, (3) to expand the neoclassical economic basis of conjoint analysis to consider concepts such as strength of preference indicators, fuzzy logic, effects of complexity and ambivalence theory, and (4) to develop and to test alternative survey methods for measuring values within the context of the issues raised in objectives 1 through 3.

The proposed project will address theoretical, methodological and empirical challenges to reliable and valid estimation of environmental values by focusing on the potential of conjoint analysis as a method of valuation that does not rely exclusively on translating values into monetary terms. This research will address challenges both within the context of the neoclassical economic paradigm, as well as within the context of extensions of the neoclassical paradigm, such as ambivalence theory, decision heuristics and "fuzzy preferences". This study will produce new guidance for the use of conjoint in environmental valuation.

The project will evaluate the theoretical and empirical value of information from strength of preference ratings scales using concepts of fuzzy math. Various methodological issues regarding value elicitation will be explored, including the development of survey instruments based on tools such as interactive multimedia computer presentations, that may facilitate an individuals cognitive assessment of a valuation task. Empirical assessments of these theoretical and methodological considerations will be conducted using methods like focus groups and other cognitive interview methods, such as verbal protocols. This research is expected to offer improvements for appropriate frameworks to assess and quantify public preferences and values for ecological resources.

Metadata

EPA/NSF ID:
R824709-010
Principal Investigators:
Opaluch, James J.
Swallow, Stephen K.
Technical Liaison:
Research Organization:
Rhode Island, University of
Funding Agency/Program:
EPA/ORD/Valuation
Grant Year:
1995
Project Period:
October 1995 - September 1997
Cost to Funding Agency:
$125,972
Project Status Reports:
      The objective of this research is to further develop methods for valuing environmental resources within a complex context. The research will evaluate methods to address these challenges in two ways: 1) the usefulness of valuation methods that do not rely exclusively on money-measures of value; and 2) the potential to extend available methods of resource valuation when individuals face cognitive limits. Conjoint analysis provides a means to address these avenues of research in cases where economic analysis relies upon stated preferences of individuals. The principal objectives of the proposed project are: 1) to test and to compare alternative means of estimating relative values of natural resources using conjoint analysis; 2) to implement and to test measurement of monetary values using conjoint analysis; 3) to use conjoint analysis to develop and test models of human preferences that recognize resource values are dependent upon the ecological context; 4) to expand the neoclassical economic basis of conjoint analysis to consider concepts such as strength-of-preference indicators, fuzzy logic, effects of complexity, and ambivalence theory; and 5) to develop and test alternative survey methods for measuring values.

      The complexity of natural systems presents a great challenge to federal agencies charged with managing public resources. Because ecological services are highly complex and vary widely across ecosystems, services from a particular system can be difficult to identify, measure, and communicate to the public. For example, it is not possible to value the diversity of wetland environments by measuring the value of wetlands. Different wetlands provide varying levels of numerous services that depend both upon the characteristics of the particular wetland and its surroundings. On the one hand, appropriate methods for valuation require that the range of services of ecological systems be appropriately represented so that values for various ecosystems reflect the services provided. On the other hand, research on valuation methods suggests that complex scenarios challenge respondents’ ability to provide accurate, reliable, and valid responses. This means we need to develop methods that facilitate a two-way communication between management agencies and the public for whom resources are managed.

      Conjoint analysis offers an approach that simultaneously incorporates the multiple dimensions of a complex decision and provides a context that may facilitate choices. Rather than asking survey respondents to focus on the “dollar value” of specific resources, conjoint analysis asks the respondent to make a simple (often discrete) choice among resource packages and, in some cases, to use a simple rating scale to indicate the strength of their preferences for the alternative packages. However, monetary measures of value may still be derived from a conjoint survey if the environmental goods are described along with a cost of resource protection.

      If the respondent’s task is simpler or more natural, the conjoint method may encounter fewer limitations due to the cognitive abilities of potential respondents. Also, because the respondent is forced to choose between two different environmental commodities, there is less danger that responses reflect symbolic statements that “the environment is important to me.”

      Our project also explores the theoretical and empirical usefulness of imprecise, yet meaningful information from strength-of-preference ratings scales using concepts of fuzzy math. We explore various methodological issues regarding value elicitation, including the development of survey instruments that may facilitate respondents’ cognitive assessments of valuation tasks using conjoint analysis and strength-of-preference indicators.

      Preference orderings and strength-of-preference indicators are a natural application of fuzzy logic. Because fuzzy knowledge underlies human thought processes and languages, fuzzy logic provides a basis for modeling precisely the type of qualitative reasoning that humans employ in uncertain or unfamiliar situations. The set of commodities that are preferred or indifferent to some particular commodity can be viewed as a fuzzy set, where some commodities are more clearly members of the set than are others. For strength-of-preference indicators in conjoint analysis, individuals might indicate that commodity A is “strongly preferred” to B, and B is “weakly preferred” to C. These strength-of-preference indicators can also be viewed as a measure of the degree of membership in the fuzzy set of weakly preferred commodity bundles.
Project Reports:

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