As part of the Resources for the Future Frontiers of Environmental Economics collection of papers, we consider the problem of general equilibrium feedback effects in non-price space as they relate to non-market valuation. Our overall objective is to examine the extent to which non-price equilibria arising from both simple and complex sorting behavior can be empirically modeled and the resulting differences in partial and general equilibrium welfare measures quantified. After motivating the problem in general we consider the specific context of congestion in recreation demand applications, which we classify as the outcome of a simple sorting equilibrium. Using both econometric and computable general equilibrium (CGE) models we examine the conceptual and computational challenges associated with this class of problems and present findings on promising solution avenues. We demonstrate the relevance of accounting for congestion effects in recreation demand with an application to lake visits in Iowa. Our econometric and CGE results confirm that, for some plausible counterfactual scenarios, substantial differences exist between partial and general equilibrium welfare estimates. We conclude the paper by describing tasks that are needed to move forward research in this area.
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Publisher Info
Paper provided by Iowa State University, Department of Economics in its series Staff General Research Papers with number
12996.
Length: 55 pages Date of creation: 15 Oct 2008 Date of revision: Publication status: Published in Journal of Environmental Economics and Management, January 2009, Vol. 57, No. 1, pp. 4564. Handle: RePEc:isu:genres:12996
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Find related papers by JEL classification: Q2 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation