3. Environmental Economics

Valuation — Quiz

Test your understanding of valuation with 5 practice questions.

Practice Questions

Question 1

In a discrete choice experiment evaluated with a multinomial logit model, the estimated coefficients are $\beta_{price}=-0.02$ and $\beta_{conservation}=0.15$. What is the marginal willingness to pay (WTP) for a one-unit increase in the conservation attribute?

Question 2

A future environmental benefit of $100$ monetary units occurs in 20 years. Using an annual discount rate of 4\\%, what is the present value (PV) of this benefit?

Question 3

In applying a function transfer, the valuation function is specified as $V=\alpha+\beta_{1}X_{1}+\beta_{2}X_{2}$, where $\alpha=10$, $\beta_{1}=0.001$ per visitor-day, and $\beta_{2}=4$ per percentage point of forest cover. For a site with $X_{1}=40000$ annual visitor-days and $X_{2}=20\%$ forest cover, what is the estimated valuation $V$?

Question 4

Which advantage of discrete choice experiments over contingent valuation methods allows estimation of separate values for multiple environmental attributes?

Question 5

What is a primary limitation of simple unit value benefit transfer when estimating environmental values for a new policy site?