Assessing Environmental Goods: Methods and Impacts

This lecture covers the assessment of environmental goods and external costs, focusing on the damage function method and the production function method augmented with environmental factors. It discusses the estimation of the impact of global warming on agricultural land values, the bias in production-function studies, and the preference-based assessment methods. The lecture also delves into revealed preferences and stated preferences approaches, further decomposing the methods into various techniques such as the travel cost method and the hedonic price method. It explains the principles of translating preferences into money, including willingness to pay and willingness to accept. Additionally, it explores the revealed preference methods for assessing environmental goods, such as avoidance or averting costs and the travel cost method. The lecture concludes with the hedonic price method and the challenges in separating premiums from other determinants in real estate markets.