A Choice Modelling Approach for Assessment of Use and Quasi-Option Values in Urban Planning for Areas of Environmental Interest

32 Pages Posted: 2 Sep 2008

See all articles by Elisabetta Strazzera

Elisabetta Strazzera

Universita di Cagliari

Elisabetta Cerchi

University of Cagliari

Silvia Ferrini

University of Siena

Date Written: August 27, 2008

Abstract

This study adopts a discrete choice modelling methodology to evaluate individuals' preferences over planning alternatives for an urban site of environmental interest. Since such projects involve some uncertainty and irreversibility, a special attention is devoted to the estimation of the quasi-option values which are associated to project development. Two distinct measures for the quasi-option value are estimated, and both coefficients indicate that the public places a significant value on reduction of the possibility of adverse irreversible effects: a more prudent development strategy is valued about four times more than a procedure that provides a lesser hedge against undesired outcomes. Furthermore, the study involved elicitation of intertemporal preferences over projects with different time spans, and estimation of the implicit discount rates: the values obtained seem high if compared to standard discount rates applied to public projects, but not far from current interest rates on consumption.

Keywords: Urban Planning, Environmental Values, Choice Modelling, Use Values, Quasi-option Values, Discounting

JEL Classification: C35, Q51, R41

Suggested Citation

Strazzera, Elisabetta and Cerchi, Elisabetta and Ferrini, Silvia, A Choice Modelling Approach for Assessment of Use and Quasi-Option Values in Urban Planning for Areas of Environmental Interest (August 27, 2008). FEEM Working Paper No. 63.2008. Available at SSRN: https://ssrn.com/abstract=1259757 or http://dx.doi.org/10.2139/ssrn.1259757

Elisabetta Strazzera (Contact Author)

Universita di Cagliari ( email )

CRENOS and DRES Via Fra Ignazio, 78
I-09123 Cagliari
Italy
+39 070 675 3763 (Phone)
+39 070 675 3760 (Fax)

Elisabetta Cerchi

University of Cagliari ( email )

Cagliari, 09124
ITALY

Silvia Ferrini

University of Siena ( email )

Via Banchi di Sotto, 55
Siena
Italy

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