ICES Brown Bag for February 4

Events, Seminars | January 22, 2016

Join us for an ICES Brown Bag Lecture, featuring Jon Strand.

Prof. Strand, of the University of Oslo and the World Bank, will discuss his paper (co-authored with Sauleh Siddiqui) Value of Improved Information about Forest Protection Values, with Application to Rainforest Valuation (Abstract). The talk will take place on Thursday, February 4th, from 12:00 to 1:00pm, in room 5075 of the Metropolitan Building, Arlington campus.

Coffee and dessert will be provided.

Please visit the Brown Bag Schedule to learn more about the Brown Bag series.

Abstract

What is the utility from obtaining more precise values of natural resource objects (rainforests), through surveys or other similar information gathering? In the value of information (VOI) problems studied here, a principal (P) who wishes to preserve a resource sets a price to offer to a seller (S) without knowing precisely its protection value, B, nor its opportunity value to S, V. The VOI related to more precise information about B for P is a key issue in environmental and natural resource valuation, but it is in most cases implicit and not analyzed. More precise resource values reduce the frequency of two types of mistakes (saving the resource when it should not be saved; and not saving it when it should), and increases P’s ex ante expected utility value. Applying our model to Amazon rainforest protection and considering the hypothetical value of perfect information (VOPI), we find that VOPI can easily exceed realistic information costs, thus perhaps justifying significant expenditures for valuation studies, given that all available information is used efficiently for conservation decision purposes. VOPI is found to depend on the nature of buyer-seller interactions, and is higher in the altruistic case, where P has full concern for the outcome for S.

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