Environmental and Resource Economics

, Volume 54, Issue 1, pp 41–61 | Cite as

Intertemporal Valuation of River Restoration

  • Andrew Meyer


Willingness to pay for an environmental improvement is a function of how long it takes to deliver the improvement. To measure the effect of time on benefits, I utilize a discrete choice experiment that includes an attribute for delay until the improvement occurs and simultaneously estimate discount rates and valuation parameters. I estimate the present value of immediate and delayed Minnesota River Basin improvements using discount rates directly estimated from the econometric model. Compared to an immediate river basin cleanup, Minnesota residents lose almost half of the benefits when cleanup is delayed by 5 years.


Non-market valuation Intertemporal choice Discounting Water pollution 

JEL Classification

D90 Q25 Q51 H43 


Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.


  1. Alberini A, Chiabai A (2007) Discount rates in risk versus money and money versus money tradeoffs. Risk Anal 27: 483–498CrossRefGoogle Scholar
  2. Alberini A, Cropper M, Krupnick A, Simon NB (2006) Willingness to pay for mortality risk reductions: does latency matter?. J Risk Uncertain 32: 231–245CrossRefGoogle Scholar
  3. Alberini A, Scasny M (2011) Context and the vsl: evidence from a stated preference study in Italy and the Czech Republic. Environ Resour Econ 49: 511–538CrossRefGoogle Scholar
  4. Alberini A, Tonin S, Turvani M, Chiabai A (2007) Paying for permanence: public preferences for contaminated site cleanup. J Risk Uncertain 34: 155–178CrossRefGoogle Scholar
  5. Balogh SJ, Meyer ML, Johnson DK (1997) Mercury and suspended sediment loadings in the lower Minnesota River. Environ Sci Technol 31:198–202.
  6. Bond CA, Cullen KG, Larson DM (2009) Joint estimation of discount rates and willingness to pay for public goods. Ecol Econ 68: 2751–2759CrossRefGoogle Scholar
  7. Cairns J, van der Pol M (2000) Valuing future private and social benefits: the discounted utility model versus hyperbolic discounting models. J Econ Psychol 21: 191–205CrossRefGoogle Scholar
  8. Center MRBD (2007) Minnesota River Basin data center. Available at
  9. Collins A, Rosenberger R, Fletcher J (2005) The economic value of stream restoration. Water resources research 41 NU: citation no. W02017; TR: CS0507258Google Scholar
  10. Daly A, Hess S, Train K (2012) Assuring finite moments for willingness to pay in random coefficient models. Transportation 39: 19–31CrossRefGoogle Scholar
  11. Farber S, Griner B (2000) Valuing watershed quality improvements using conjoint analysis. Ecol Econ 34: 63–76CrossRefGoogle Scholar
  12. Fennessy MS, Cronk JK (1997) The effectiveness and restoration potential of riparian ecotones for the management of nonpoint source pollution, particularly nitrate. Crit Rev Environ Sci Technol 27:285–317.
  13. Flores NE, Shafran A (2007) What we know about valuing ecosystem improvements and restoration. Working paper. Department of Economics, University of Colorado, BoulderGoogle Scholar
  14. Hanley N, Adamowicz W, Wright RE (2005) Price vector effects in choice experiments: an empirical test. Resour Energy Econ 27: 227–234CrossRefGoogle Scholar
  15. Harvey CM (1986) Value functions for infinite-period planning. Manag Sci 32: 1123–1139CrossRefGoogle Scholar
  16. Hensher DA, Rose JM, Greene WH (2005) Applied choice analysis: a primer. Cambridge University Press, New YorkGoogle Scholar
  17. Herrnstein R (1981) Self-control as response strength. Quantification of steady-state operant behavior. Elsevier/North-Holland, New York, pp 3–20Google Scholar
  18. Holmes TP, Adamowicz WL (2003) A primer on nonmarket valuation: attribute-based methods. Economics of non-market goods and resources, vol 3, Southern Research Station, US Forest Service, pp 171–219Google Scholar
  19. Keller LR, Strazzera E (2002) Examining predictive accuracy among discounting models. J Risk Uncertain 24: 143–160CrossRefGoogle Scholar
  20. Kovacs KF, Larson DM (2008) Identifying individual discount rates and valuing public open space with stated-preference models. Land Econ 84: 209–224Google Scholar
  21. Laibson D (1997) Golden eggs and hyperbolic discounting. Q J Econ 112: 443–477CrossRefGoogle Scholar
  22. Magat WA (2000) An iterative choice approach to valuing clean lakes, rivers, and streams. J Risk Uncertain 21: 7–43CrossRefGoogle Scholar
  23. Mazur JE (1987) An adjustment procedure for studying delayed reinforcement. Quantitative analysis of behaviour: the effect of delay and intervening events on reinforcement value. Erlbaum, Hillsdale, NJ, pp 55–73Google Scholar
  24. Meyer AG (2012) Estimating discount factors for public and private goods and testing competing discounting hypotheses. SSRN eLibraryGoogle Scholar
  25. Page MRBI (2008) Minnesota River Basin information page. Department of Soil, Water, and Climate, University of Minnesota. Available at
  26. Phelps ES, Pollak RA (1968) On second-best national saving and game-equilibrium growth. Rev Econ Stud 35: 185–199CrossRefGoogle Scholar
  27. Rheinberger CM (2011) A mixed logit approach to study preferences for safety on alpine roads. Environ Resour Econ 49: 121–146CrossRefGoogle Scholar
  28. Smith VK, Desvousges WH (1986) Measuring water quality benefits. Kluwer, BostonCrossRefGoogle Scholar
  29. Train KE (2003) Discrete choice methods with simulation. Cambridge University Press, New York, NYCrossRefGoogle Scholar
  30. US EPA (2008) Monitoring and assessing water quality. Available at
  31. Viscusi WK, Huber J, Bell J (2008) Estimating discount rates for environmental quality from utility-based choice experiments. J Risk Uncertain 37:199–220. RX:850816 (on 24 May 2010)Google Scholar
  32. Weitzman ML (2001) Gamma discounting. Am Econ Rev 91: 260–271CrossRefGoogle Scholar
  33. Weitzman ML (2010) Risk-adjusted gamma discounting. J Environ Econ Manag 60: 1–13CrossRefGoogle Scholar
  34. Whitmore GA, Cavadias GS (1974) Experimental determination of community preferences for water quality-cost alternatives. Decis Sci 5: 614–631CrossRefGoogle Scholar
  35. Wilson MA, Carpenter SR (1999) Economic valuation of freshwater ecosystem services in the united states: 1971–1997. Ecol Appl 9: 772–783Google Scholar

Copyright information

© Springer Science+Business Media B.V. 2012

Authors and Affiliations

  1. 1.Department of EconomicsOhio Wesleyan UniversityDelawareUSA

Personalised recommendations