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Natural Resource Damage Assessment Methods: Lessons in Simplicity from State Trustees

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  • Amy W. Ando
  • Madhu Khanna

Abstract

When natural resource damages are caused by releases of hazardous materials into the environment, government trustees must conduct Natural Resource Damage Assessments (NRDAs) to support claims to recover the value of lost or damaged resources. This article sets forth theoretical arguments that support efforts to develop unbiased simplified NRDA methods for use by government trustees and proposes a set of criteria that can be used to evaluate the quality of any such simplified method. The authors then describe the simplified methods being used by five states across the country, affording academic economists a rare view of the kinds of methods state agencies use in-house. The article evaluates those methods against the criteria set forth and discusses the potential of other nonstate-specific simplified NRDA methods (benefit transfer and Type A models) to do the job better. The new framework established can guide future research to design simplified methods that are less biased than the simplified methods currently in use by some states without compromising ease of implementation. (JEL "Q5", "K32") Copyright 2004 Western Economic Association International.

Suggested Citation

  • Amy W. Ando & Madhu Khanna, 2004. "Natural Resource Damage Assessment Methods: Lessons in Simplicity from State Trustees," Contemporary Economic Policy, Western Economic Association International, vol. 22(4), pages 504-519, October.
  • Handle: RePEc:bla:coecpo:v:22:y:2004:i:4:p:504-519
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    References listed on IDEAS

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    1. Alan Randall, 1997. "Whose Losses Count? Examining Some Claims About Aggregation Rules For Natural Resources Damages," Contemporary Economic Policy, Western Economic Association International, vol. 15(4), pages 88-97, October.
    2. Gary S. Becker, 1974. "Crime and Punishment: An Economic Approach," NBER Chapters,in: Essays in the Economics of Crime and Punishment, pages 1-54 National Bureau of Economic Research, Inc.
    3. John C. Bergstrom & Paul Civita, 1999. "Status of Benefits Transfer in the United States and Canada: A Review," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 47(1), pages 79-87, March.
    4. Kaplow, Louis & Shavell, Steven, 1996. "Accuracy in the Assessment of Damages," Journal of Law and Economics, University of Chicago Press, vol. 39(1), pages 191-210, April.
    5. W. Michael Hanemann, 1994. "Valuing the Environment through Contingent Valuation," Journal of Economic Perspectives, American Economic Association, vol. 8(4), pages 19-43, Fall.
    6. Richard W. Dunford & F. Reed Johnson & Emily S. West, 1997. "Whose Losses Count In Natural Resource Damages?," Contemporary Economic Policy, Western Economic Association International, vol. 15(4), pages 77-87, October.
    7. Nicholas E. Flores & Jennifer Thacher, 2002. "Money, Who Needs It? Natural Resource Damage Assessment," Contemporary Economic Policy, Western Economic Association International, vol. 20(2), pages 171-178, April.
    8. Loomis, John B. & White, Douglas S., 1996. "Economic benefits of rare and endangered species: summary and meta-analysis," Ecological Economics, Elsevier, vol. 18(3), pages 197-206, September.
    9. Harrison, Glenn W. & Lesley, James C., 1996. "Must Contingent Valuation Surveys Cost So Much?," Journal of Environmental Economics and Management, Elsevier, vol. 31(1), pages 79-95, July.
    10. John C. Bergstrom & Kevin J. Boyle & Gregory L. Poe (ed.), 2001. "The Economic Value of Water Quality," Books, Edward Elgar Publishing, number 1723, April.
    11. Unsworth, Robert E. & Bishop, Richard C., 1994. "Assessing natural resource damages using environmental annuities," Ecological Economics, Elsevier, vol. 11(1), pages 35-41, September.
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    Citations

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    Cited by:

    1. Amy Whritenour Ando & Wallapak Polasub, 2006. "Envelope Backs or the Gold Standard? Choosing the Accuracy of Damage Assessment Methods," Land Economics, University of Wisconsin Press, vol. 82(3), pages 424-444.
    2. Athanasios Kampas & Anna Vasilaki & Athanasios Petsakos & Angeliki Stefopoulou, 2013. "Irrigation Full Cost Assessment: The case of the Pinios Local Organization for Land Reclamation, Greece," Working Papers 2013-1, Agricultural University of Athens, Department Of Agricultural Economics.
    3. Boyd, James & Banzhaf, Spencer, 2007. "What are ecosystem services? The need for standardized environmental accounting units," Ecological Economics, Elsevier, vol. 63(2-3), pages 616-626, August.
    4. Mataria, Awad & Giacaman, Rita & Khatib, Rana & Moatti, Jean-Paul, 2006. "Impoverishment and patients' "willingness" and "ability" to pay for improving the quality of health care in Palestine: An assessment using the contingent valuation method," Health Policy, Elsevier, vol. 75(3), pages 312-328, February.
    5. Amy Ando & Wallapak Polasub, 2009. "The political economy of state-level adoption of natural resource damage programs," Journal of Regulatory Economics, Springer, vol. 35(3), pages 312-330, June.

    More about this item

    JEL classification:

    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics
    • K32 - Law and Economics - - Other Substantive Areas of Law - - - Energy, Environmental, Health, and Safety Law

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