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Sonia Akter Environmental Management and Development Department, Crawford School, ANU

Non-Market Valuation in the Context of Global Warming. Sonia Akter Environmental Management and Development Department, Crawford School, ANU. Environmental Cost-Benefit Analysis. Expressed in money, but also not in money. Costs of taking action. Benefits of taking action.

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Sonia Akter Environmental Management and Development Department, Crawford School, ANU

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  1. Non-Market Valuation in the Context of Global Warming Sonia Akter Environmental Management and Development Department, Crawford School, ANU

  2. Environmental Cost-Benefit Analysis Expressed in money, but also not in money Costs of taking action Benefits of taking action Remember: Economics  Finance!

  3. What are the Benefits of avoiding Anthropocentric Climate Change? Damages that we can avoid

  4. 1. Avoided property damage cost Measured using market based data A minimum estimate of money saved

  5. 2. Benefit from avoiding costs that are not bought and sold in the market Saving Bio-diversity Reducing human sufferings Measured using non-market valuation techniques

  6. Non-market Valuation Techniques Revealed Preference Stated Preference Hedonic Pricing Contingent Valuation Method Choice Experiment Method Travel Cost Method

  7. To act or not to act “Households’ preferences for combating global warming” by Sonia Akter and Jeff Bennett

  8. Carbon Emission in Australia • Australians have recently been declared the world's worst polluters per capita. (Source: Center for Global Development 2007) • Australian households generate almost one-fifth of Australia's greenhouse gases. Sources of Household Greenhouse Gas Emissions in Australia

  9. Energy saving technology Reforestation Renewable energy Carbon Offset Market in Australia The number of carbon offset providers in the Australian market has doubled over the past six months. Carbon Offset Schemes

  10. + 1.95 tonnes A return flight from Sydney to Perth results in the equivalent of 1.95 tonnes of CO2 entering the atmosphere - 1.95 tonnes The fee you pay to an offsets program goes towards projects, effectively canceling out or "offsetting" your emissions. = 0 tonnes This means that you can continue to fly, confident in the knowledge that you have effectively reduced your total emissions to zero. What does carbon offset mean?

  11. What is a Choice Experiment? • Determine individual preference across a multi-attribute choice. • Consumers state choices between over two or more future outcomes. • Statistical analysis to establish relationship between characteristics and preference

  12. Choice Experiments: Study Design Are you Neutral about being Carbon Neutral?” • Scenario development • Questionnaire design • Sampling strategy • Pre-tests • Data collection • Analysis: reliability and validity

  13. An Example of a Choice Card Scenario Policy Uncertainty Cost

  14. What do we Estimate? • Willingness to pay for risk reduction. • Implicit measure of welfare gain from policy action. • Help us to understand the benefit better.

  15. How does the Result Help? Cost-Benefit Analysis Better benefit estimate Costs of combating climate change Benefits of combating climate change

  16. General Pros and Cons • Pros • Widely applicable • Direct method • Cons • Biases • Based on statements rather than behavior • Choices/trade-offs can be complicated • Analysis can become more difficult than expected

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