Nachusa Grasslands : a benefit-cost analysis, using the contingent valuation method
Long, James E. (Student of economics)
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The purpose of this research paper is to help policy-makers compare environmental interests to non-environmental interests. It involves calculating use and non-use values for a preserve—Nachusa Grasslands. Use values consist of direct values. Non-use values are indirect, option and existence values. The total value, containing only direct, option and existence values, is divided by the total costs of operating the preserve to determine a ratio (Dzurik and Theriaque 1996: 128). This ratio allows pplicy officials to make simple comparisons with similar projects an easy task. Use values are tangible benefits. They represent those qualities that can be directly measured in monetary terms (Barde and Pearce 1991: 3). For example, revenue generated from a guided tour constitutes use values. Often times, policy-makers look only at these values when comparing alternatives. The non-use values represent intrinsic qualities that are not easily quantified. Indirect values represent the chemical and biological characteristics that keep the Earth functioning. This value was not computed, since only limited indirect value estimation has been performed by anybody worldwide. Additionally, Earth's natural environmental systems are priceless because they allow life to function. Option values indicate the amount someone is willing to pay for future use even though no current use is taking place. Existence values are benefits of the area in its conserved state to people who may or may not use the preserve (Barde and Pearce 1991: 3). A hypothetical market is created from the public's willingness to pay (WTP) for a public good to establish the existence and option values. The WTP is identified using the contingent valuation method (CVM). This method uses a questionnaire format, asking people from a simple random sample what they are willing to pay (Mitchell and Carson 1989: 1-3). A median WTP is extrapolated from the defined Lee County population for an overall existence value (Carson et al. 1994). This number represents Lee County's values or perceptions of the study area. The direct values are easily obtained. Direct values may consist of user fees, sale of harvested products, donations and any other revenue generating action. Direct values are added to the indirect values for a total economic value (Pearce 1993: 17). The total economic value represents the benefits of the preserve to the people of Lee County, Illinois. A benefit-cost analysis is then calculated. The total benefits are divided by the total costs (Dzurik and Theriaque 1996: 128). The total costs contain fuel, management fees, equipment, public affairs and additional seed. The ratio is an easily defined universal number.