The Economic Value of a Biomass Harvesting Program: A Non-Market Valuation Study Design

Abstract

The purpose of this paper is to address the following policy question posed by the United Nations Development Programme in Lebanon:

How can the United Nations Development Programme in Lebanon assess the total economic value of a biomass harvesting program?

To address the policy question, the paper considers the value of the program’s benefits, such as positive environmental impacts, that are not currently reflected in any existent market (non-marketed benefits). Since the program’s non-marketed benefits are not valued, the benefits tend to be underprovided relative to the optimal level. Hence, the need for a non-market valuation becomes crucial in correcting for the market failure in underproviding goods with benefits. Over the past two decades, economists have contributed greatly to developing and applying methods for valuing environmental and developmental non-market benefits to help the public and private sector make more informed decisions about activities with environmental and developmental impacts. Such methods fall under the umbrella of non-market valuation.

Stated preference methods were determined to be the most suitable non-market valuation approach in assessing the program’s total economic value in monetary terms. It was determined that a contingent valuation study would be the most suitable stated preference method in addressing the client’s policy question.

The paper includes a detailed approach in conducting a contingent valuation study, within the context of the policy question, and a draft contingent valuation instrument to be used for implementing the study. The items considered in designing the study include, but not limited to, the following: selecting a non-market valuation approach, identifying the affected population, selecting a sampling procedure (probability vs. non-probability sampling), selecting a data collection mode, choosing a sample size, designing the information component of the survey instrument, drafting the survey instrument, pretesting the survey instrument, survey administration options, calculating the program’s value from aggregated willingness to pay estimates through survey responses.