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Identification, Measurement, and Incorporation of Environmental Quality Objectives in Natural Resource Development Herbert David Schellenberg Iowa State University

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Identification, Measurement, and Incorporation of Environmental Quality Objectives in Natural Resource Development Herbert David Schellenberg Iowa State University Iowa State University Capstones, Theses and Retrospective Theses and Dissertations Dissertations 1973 Identification, measurement, and incorporation of environmental quality objectives in natural resource development Herbert David Schellenberg Iowa State University Follow this and additional works at: https://lib.dr.iastate.edu/rtd Part of the Agricultural and Resource Economics Commons, and the Agricultural Economics Commons Recommended Citation Schellenberg, Herbert David, "Identification, measurement, and incorporation of environmental quality objectives in natural resource development " (1973). Retrospective Theses and Dissertations. 5961. https://lib.dr.iastate.edu/rtd/5961 This Dissertation is brought to you for free and open access by the Iowa State University Capstones, Theses and Dissertations at Iowa State University Digital Repository. It has been accepted for inclusion in Retrospective Theses and Dissertations by an authorized administrator of Iowa State University Digital Repository. For more information, please contact [email protected]. INFORMATION TO USERS This material was produced from a microfilm copy of the original document. While the most advanced technological means to photograph and reproduce this document have been used, the quality is heavily dependent upon the quality of the original submitted. The following explanation of techniques is provided to help you understand markings or patterns which may appear on this reproduction. 1. The sign or "target" for pages apparently lacking from the document photographed is "Missing Page(s)". If it was possible to obtain the missing page(s) or section, they are spliced into the film along with adjacent pages. This may have necessitated cutting thru an image and duplicating adjacent pages to insure you complete continuity. 2. When an image on the film is obliterated with a large round black mark, it is an indication that the photographer suspected that the copy may have moved during exposure and thus cause a blurred image. You will find a good image of the page in the adjacent frame. 3. When a map, drawing or chart, etc., was part of the material being photographed the photographer followed a definite method in ssctiOifing ths rnstsrssl. w CuStoîTaory to bsgsn photoing st ths uppsr left hand corner of a large sheet and to continue photoing from left to right in equal sections with a small overlap. If necessary, sectioning is continued again — beginning below the first row and continuing on until complete. 4. The majority of users indicate that the textual content is of greatest value, however, a somewhat higher quality reproduction could be made from "photographs" if essential to the understanding of the dissertation. Silver prints of "photographs" may be ordered at additional charge by writing the Order Department, giving the catalog number, title, author and specific pages you wish reproduced. 5. PLEASE NOTE: Some pages may have indistinct print. Filmed as received. Xerox University Microfilms 300 North Zeeb Road Ann Arbor, Michigan 48106 74-9153 SOŒLLENBERG, Herbert David, 1944- ÎDS.TIFÎGATION, LNCORPÛPATION QF ENVIRONMENTAL QUALITY OBJECTIVES IN NATURAL RESOURCE DEVELOÏMENT. lowa State University, Ph.D., 1973 Economics, agricultural University Microfilms, A XERQ\Company. Ann Arbor. Michigan TUTC nTCCCDTATTONT HAQ RTZPM MTroATTTTMPn PYArTT V AQ RPrPT\rPr> Identification, measurement, aoid incorporation of environmental quality objectives in natural resource development by Herbert David Schellenberg A Dissertation Submitted to the Graduate Faculty in Partial Fulfillment of The Requirements for the Degree of DOCTOR OF PHILOSOPHY Major: Economics Approved: Signature was redacted for privacy. Charge of Major Work Signature was redacted for privacy. Signature was redacted for privacy. Iowa State University Ames, Iowa 1973 ii TABLE OF CONTENTS Page CHAPTER I. INTRODUCTION 1 The Meaning of Environmental Quality 1 The Role of Natural Resources in Meeting Demands of Mankind 6 Environmental Quality and Economic Development 10 The Problem of Identifying smd Measuring Amenity Values 14 Objectives of Study 21 Methods aoid Procedure of Study 23 Organization of Report 25 CHAPTER II. THEORETICAL CONSIDERATIONS IN ENVIRONMENTAL QUALITY ANALYSIS 26 Environmental Quality amd the Price System 26 Criteria for Economic Performance 37 Directives for this Study 47 CHAPTER III. IMPUTING MARKET VALUES BY INDIRECT AND NON-MARKET TECHNIQUES 50 Willingness-to-Pay Methods 52 Pricing by Government Decree 65 Estimation of Preservation Benefit Levels Required to Exceed Development Benefits 72 Benefit Estimation by Environmental Improvement 75 The Role of Interest Rates in the GNP Criterion 78 Model Choice for Application of the GNP Criterion 85 CHAPTER IV. MODEL DEVELOPMENT 88 Production Criteria and Economic Welfare 89 iii Page Measurement of the Economic Development Axis 95 Measurement of the Environmental Quality Axis 99 Model Development 114 CHAPTER V. PHYSICAL IMPACT, SURVEY DESIGN, AND QUESTIONNAIRE DEVELOPMENT 123 Magnitude of Physical Impact in the Study Region 124 Elements of Survey Design 135 Questionnaire Development 138 CHAPTER VI. EMPIRICAL RESULTS 154 Population Characteristics in the Sample 154 Survey Results—Importance and Ranking of Resource Categories 157 Ranking of Resource Categories by Point Allocation 178 Empirical Results Related to the Green-belt Park System 185 Ranking of Development Alternatives by the Public 196 Application of Performajjce Criterion 199 CHAPTER VII. SUMMARY AND CONCLUSIONS 205 Summary 205 Limitations of Study 216 Conclusions 218 Recommendations for Further Research 222 BIBLIOGRAPHY 225 ACKNOWLEDGEMENTS 234 iv APPENDIX A: THE SURVEY QUESTIONNAIRE APPENDIX B: ADDITIONAL INFORMATION REGARDING RESOURCE CATEGORIES APPENDIX C: SAMPLE SELECTION AND USE APPENDIX D: HOUSEHOLD CHARACTERISTICS OF SAMPLE POPULATION APPENDIX E: IMPACTS OF ENVIRONMENTAL LEGISLATION UPON THE FEDERAL GOVERNMENT 1 CHAPTER I. INTRODUCTION The development of natural resources to meet various demands of mankind and the impact of such development upon the quality of the environment is of public interest and concern. Environmental quality is emerging as a goal in the societal objective function, which includes economic development and improved income distribu­ tion. Development of natural resources to meet the economic de­ velopment objective may well become competitive with the goal of environmental quality. Furtherance of one goal may lead to a les­ sening or degradation of the other. It is the general purpose of this study to seek the nature of trade-offs between these two societal objectives. Emphasis is placed upon those qualities of the environment which are inadequately priced and allocated in the marketplace. The Meaning of Environmental Quality Despite higher per capita consumption of final goods and services, there is no assurance of improvement in the quality of life because of possible sacrifices of amenity and aesthetic services provided by the environment. The production and con­ sumption of intermediate and final goods and service's has affected the ability of the natural environment to provide desired aesthetic and amenity services. Aesthetic services of the natural environment, as defined in this study, are those characteristics of the natural environment 2 appreciated by people because of their beauty ajid which as external stimuli excite admiration and delight in the humaxt senses. Amenity services of the natural environment, on the other hand, refer less to beauty and more to those qualities of the environment which are simply pleasant and agreeable so as to make life more enjoyable. Air, for example, which is pleasant to breathe aoid free of smog, dust, and odors, aund other quality reducing contaminants refers to amenity services. Aesthetic services, for example, are provided by beauty in nature such as the shape and color of a flower, or the fall foliage of trees. Throughout this study, for convenience, environmental amenity services, amenity services, and amenities are used to represent amenity and aesthetic services provided by the environment but not allocated in the market system. Barkley and Seckler use a similar approach for nonmarketed services of the environment in terming non-market capital as the stock of amenities available at the beginning of a production period. A production period is begun "with a certain stock amd quality of air and water, open space, quiet, wildlife, natural beauty, health, and related items" (7, p. 39). Likewise, Freeman, in discussing the distribution of environmental quality, notes that two burdens imposed by air pollution are health effects and disutility and amenity losses, including physical damages to structures. He states that people prefer to reside in higher quality air because adverse effects "to health, amenities, or nonhuman property" can be avoided. However, since there is a 3 scarcity of areas with highest quality of air, land values will tend to be higher in such areas and occupied by households with highest incomes (31, pp. 262-263). Environmental quality, as used in this study, is a measure of amenity services flowing from natural resources in the environ­ ment. It is first useful to determine the physical meaining of environment before the term environmental quality is explored further. Daubenmire states that the term habitat can be used to denote a rather specific kind of environment or living space. More precisely, a habitat is "a constellation of interacting physical and biological factors which provide
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