Choice Modelling in Australia: past, present and future Jeff Bennett Crawford School ANU

Some quiet contemplation  Non-market environmental valuation … and choice modelling in particular … appears to have reached a turning point in Australia  Significant interest in applications and useful levels of funding for research  Some strong ‘nodes’ of application and training  Appropriate to contemplate what has happened, to assess where we are, to speculate on future developments and to plan

In the beginning …  The Phoenix of Kakadu  Resource Assessment Commission Forestry Inquiry … the appetite for CVM applications had been lost  Contingent Ranking and Rating?  Louviere and Hensher  Vanuatu Forests … CV and CM studies for ACIAR Flatley, Rolfe  LWRRDC “General Call” application Blamey, Morrison, Huybers, Whitten

Slow and steady  Sequence of applications and developments  National Land and Water Audit  NSW EPA  Fitzroy River Basin  SA - CSIRO  WA - UWA  Vic – Neil Sturgess … Rivers and VEAC  NZ – Kerr and Sharp  Health and transport developments

Not always forward  NSW Rivers … two steps forward and one step back  Living Murray … one step forward and one step back  Great Barrier Reef …two steps forward and into oblivion  MBIs … no interest in assessing the level of investment  MCA … advanced as the means for avoiding the need for the hassles of NMV  The politics of economic analysis

A new impetus  Inception of the Environmental Economics Research Hub  Specific interest in advancing non-market valuation as a key element of developing government policy  Hub theme devoted to Valuation  Specific projects looking at: Integrating valuation into bio-economic models Scope and scale effects Time Uncertainty Expert vs lay values  Preparation of an application guide

Why now?  People demand: DEWHA, State agencies supply: capacity  Policy Environmental issues to the fore BUT the ‘ascendancy’ of economics and finance  Pressure Regulatory Impact Statements

Remaining barriers  Deeply held scepticism in some quarters The ‘anti-economics’ environmental lobby The ‘anti-economics’ bureaucrats The antagonistic economists  The political process … rent seeking rules  Technical issues

The research frontier  Demonstrating the accuracy of results remains the ‘holy grail’ … policy makers require the assurance that they are not entering a quagmire of dispute  Incentive compatibility … belief in the results is ‘counterintuitive’ to decision makers  Hypothetical bias … also ‘counterintuitive’  Context sensitivity … what is the ‘right’ context? Scope and scale … framing concerns Questionnaire presentation issues … cognition, comprehension, confusion Information provision

 Room for wide-scale experimentation (lab and field) … especially revealed vs stated preference comparisons that are not confounded by the public/private good divergence  Consistency and convergence  Useful to find points of agreement within the profession without ‘standardisation’  Avoid ‘freezing’ the evolutionary process

 Contingent behaviour and choice modelling  ‘Green’ accounting … at the national scale and for individual environmental assets … values for stocks and flows of non-marketed assets  Coping with uncertainty  Dealing with the ‘over-surveyed’ respondent  ….

 Timing is vital for policy making. Without a bank of studies and a well-recognised process of benefit transfer, the time needed to do environmental valuation (esp stated preference work) is a killer.  Benefit transfer – to be widely accepted – needs to be founded on a thorough understanding of the impacts of all the variables affecting value estimates … scope, frame, presentation etc etc