Constructed Climates

Figure 5.3: Photos display residential areas in College Station, Texas, with varying levels of vegetation (courtesy of Chris Ellis). The correlation table reveals connections between each pair of features (after Ellis et al. 2006). Bold numbers show statistically significant correlations. For example, comparing the bottom and top photos shows the −0.28 correlation indicating increased trees and shrubs with decreased retail land use.

People generally value vegetation. A study in College Station, Texas, surveyed people to identify satisfying environmental features where they lived (Figure 5.3). Eight hundred surveys were mailed out, and 311 were returned. A subset of these surveys included 122 respondents living within 1,500 feet of retail land-use areas. Using this information, researchers teased out various environmental and socioeconomic aspects correlated with the satisfaction that people have with their neighborhood.[9] Satisfaction is simple: Trees and shrubs enhance people’s satisfaction when they live near areas with retail land use.[10]

What’s satisfaction worth? How much do people value cleaner air or cleaner water or the loss of species? Most approaches evaluate values of nonmarket goods through surveys. In some situations, surveys ask people of their willingness-to-pay (WTP), perhaps through higher taxes or entrance fees, for something like a nature reserve or bicycle paths or other environmental benefit. In other cases, people already have something, perhaps a certain level of environmental benefits or other “quality-of-life” feature, and studies evaluate people’s willingness-to-accept (WTA) a shopping center or job in lieu of environmental degradation or poorer living conditions.[11] These surveyed people may or may not actually have to pay for the goods or accept poorer living standards at their stated values.

People are not terribly rational. One interesting study split people into two groups and asked one group how much money they would be willing to pay to subsidize emissions abatement from an animal rendering plant.[12] The other group was asked how much money they would be willing to accept to tolerate the noxious odors. In this study the WTP value was roughly $105, but the WTA value was an astonishingly larger $735.

Why aren’t these two numbers the same?[13] They should be if people were rational. People should place a value on an obnoxious odor independently of whether they’re paying to avoid it or accepting money to tolerate it. One classic example: Give one subject a coffee cup, then ask to buy it back (a WTA value — the subject thinks,“It’s pretty and it’s worth so much!”). Offer to sell another subject the identical coffee cup (a WTP value — “I have a lot like it, thank you very much.”). This example reveals much about myself: I have a garage full of stuff I wouldn’t pay a dime for in a store (it’s WTP value is near zero), but I just can’t seem to throw it away (it has a nonzero WTA value).[14] Overall, WTA-to-WTP ratios are highest for nonmarket goods, intermediate for ordinary private goods (stuff you’d sell at a yard sale), and lowest for money.[15] Certainly, these results have implications for conservation easements.[16] How much does a property owner demand as compensation for development rights versus how much would said property owner pay for development rights?

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[9]Correlations near zero mean very little connection, values near ±1 mean strongly connected, and negative numbers mean an increase in one reflects a decrease in the other. See Figure A.3 for a deeper understanding of correlations.

[10]Ellis et al. (2006) studied people’s satisfaction with where they lived and demonstrated that trees “moderated” people’s negative feelings associated with living near retail areas.

[11]Carson et al. (2001) argue in favor of evaluating nonmarket values through surveys and simultaneously present a good introduction. Harrison (1992) also critically examines these issues.

[12]An animal-rendering plant processes animal carcasses after butchering and can lead to considerable odors. Bowker and MacDonald (1993) studied WTA and WTP values for the animal-rendering plant and note many cautions to such an examination.

[13]The question of why WTP values and WTA values are different has led to some impressively mathematical demonstrations that the two numbers should not be identical (Hanemann 1991).

[14]Svedsater (2003) describes detailed responses to interviews that assess these WTA and WTP values and concludes that people come up with these values using many irrelevant, noneconomic thought processes.

[15]Horowitz and McConnell (2002) performed the WTA-to-WTP ratio meta-analyses determining what kinds of goods have the highest ratios.

[16]Instead of buying land outright, groups can purchase the right to develop land into suburbs or what-not, while the land’s owner retains all other rights. The land’s deed notes the easement and provides legal recourse if future landowners violate the restriction. Farmland conservation easements can also require that the land be used for agriculture in perpetuity.