University of Tennessee, Knoxville TRACE: Tennessee Research and Creative Exchange Doctoral Dissertations Graduate School 8-2004 Integrating Geographic Information Systems and Remote Sensing with Spatial Economic and Mixed Logit Models for Environmental Valuation Aaron Raymond Wells University of Tennessee - Knoxville Follow this and additional works at: https://trace.tennessee.edu/utk_graddiss Part of the Life Sciences Commons Recommended Citation Wells, Aaron Raymond, "Integrating Geographic Information Systems and Remote Sensing with Spatial Economic and Mixed Logit Models for Environmental Valuation. " PhD diss., University of Tennessee, 2004. https://trace.tennessee.edu/utk_graddiss/1378 This Dissertation is brought to you for free and open access by the Graduate School at TRACE: Tennessee Research and Creative Exchange. It has been accepted for inclusion in Doctoral Dissertations by an authorized administrator of TRACE: Tennessee Research and Creative Exchange. For more information, please contact [email protected]. To the Graduate Council: I am submitting herewith a dissertation written by Aaron Raymond Wells entitled "Integrating Geographic Information Systems and Remote Sensing with Spatial Economic and Mixed Logit Models for Environmental Valuation." I have examined the final electronic copy of this dissertation for form and content and recommend that it be accepted in partial fulfillment of the requirements for the degree of Doctor of Philosophy, with a major in Natural Resources. Donald G. Hodges, Major Professor We have read this dissertation and recommend its acceptance: David Ostermeier, Bill Park, Mary Evans, Chris Clark Accepted for the Council: Carolyn R. Hodges Vice Provost and Dean of the Graduate School (Original signatures are on file with official studentecor r ds.) To the Graduate Council: I am submitting herewith a dissertation written by Aaron Raymond Wells entitled "Integrating Geographic Information Systems and Remote Sensing with Spatial Econometric and Mixed Logit Models for Environmental Valuation." I have examined the final paper copy of this dissertation for form and content and recommend that it be accepted in partial fulfillment of the requirements for the degree of Doctor of Philosophy, with a jor in Natural Resources. We have read this dissertation �£� W:9�±>4 Acceptance for the Council: Studies INTEGRATING GEOGRAPHIC INFORMATION SYSTEMS AND REMOTE SENSING WITH SPATIAL ECONOMETRIC AND MIXED LOGIT MODELS FOR ENVIRONMENTAL VALUATION A Dissertation Presented for the Doctorate of Philosophy Degree The University of Tennessee, Knoxville / Aaron Raymond Wells August2004 Acknowledgements I would like to thank Dr. Don Hodges for the opportunity to study Forest and Natural Resource Economics at the University of Tennessee. Dr. Hodges has provided tremendous support during all phases of the research, during the written and oral comprehensive examinations, in promoting my research, and academic pursuits. I appreciate his trust that I would be able to balance research commitments and academic work. I would like to thank my committee members Dr. David Ostermeier, Dr. Bill Park, Dr. Mary Evans, and Dr. Chris Clark for all of their comments, guidance, support, and time. The papers within this document have been improved considerably as a result of their oversight. I would also like to thank Dr. Christian Vossler and Dr. Murat Munkin for all of their help in conceptualizing and estimating the econometric models. I would like to thank Charles Sims for his insight and tolerance of my behavior over the last couple of years. I would like to thank Aaron Pierce for his help with the forested wetlands paper and all of the field data he has shared with me. Additionally, I would like to thank personnel at the Hatchie National Wildlife Refuge and Brownsville, TN office of The Nature Conservancy for their help with the forested wetlands paper. I would like to thank Dr. Mark Fly, Becky Stevens and April Griffin for their assistance with the design and administration of the choice modeling survey. I would also like to thank Martha Thompson, LaVetta Robertson, Susan Caldwell, and Sharon Farrell for all their assistance over the last several years. Finally, I would like to thank my wife Jessica for her support and understanding during this process. The road has certainly being long and challenging and I appreciate her patience. I would also like to thank my parents, grandmother, brothers, sister, extended family, and friends for understanding that going months in between phone calls was nothing personal, just research. 11 Abstract This research focuses on the Emory and Obed Watersheds in the Cumberland Plateau in Central Tennessee and the Lower Hatchie River Watershed in West Tennessee. A framework based on market and nonmarket valuation techniques was used to empirically estimate economic values for environmental amenities and negative externalities in these areas. The specific techniques employed include a variation of hedonic prioing and discrete choice conjoint analysis (i.e., choice modeling), in addition to geographic information systems (GIS) and remote sensing. Microeconomicmodels of agent behavior,including random utility theory and profit maximization, provide the principal theoretical foundation linking valuation techniques and econometric models. The generalized method of moments estimator for a first­ order spatial autoregressive function and mixed logit models are the principal econometric methods applied within the framework. The dissertation is subdivided into three separate chapters written in a manuscript format. The first chapter provides the necessary theoretical and mathematical conditions that must be satisfied in order for a forest amenity enhancement program to be implemented. Such a program is possible and would yield an efficient outcome under three conditions: (1) contributors are willing to pay an amount that maximizes the utility they derive from forest amenities; (2) an intermediary party sets a compensation price based on contributor aggregate willingness to pay such that the social value of the program is maximized; and (3) a participating landowner maximizes profit given this incentive. The second chapter evaluates the effect of forest land cover and information about future land use change on respondent preferences and willingness to pay for alternative hypothetical forest amenity enhancement options. Land use change information and the amount of forest land cover significantly influenced respondent preferences, choices, and stated willingness to pay. Hicksian welfare iii estimates for proposed enhancement options ranged from $57.42 to $25.53, depending on the policy specification, information level, and econometric model. The third chapter presents economic values for negative externalities associated with channelization that affect the productivity and overall market value of forested wetlands. Results of robust, generalized moments estimation of a double logarithmic first-order spatial autoregressive error model (inverse distance weights with spatial dependence up to 1500m) indicate that the implicit cost of damages to forested wetlands caused by channelization equaled -$5,438 ha·1• Collectively, the results of this dissertation provide economic measures of the damages to and benefits of environmental assets, help private landowners and policy makers identify the amenity attributes preferred by the public, and improve the management of natural resources. iv - Table of Contents 1. Introduction and Overview 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 00 1 Introduction 00 000 00 0 00 000 00 00 00 0 00 0 000 000 000 000 00 000 0000 000 00 000 0000000 000000 Oo0 000 Oo 0 00 0 000 000 2 Objectives 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 00 9 Study Area Descriptions 00 00 0 00 0000 00 000 000 000 0 000 000 00 0000 00 0000 Oo0 00000 000 000 0 000 00 0000 0000 10 Methods Review oooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooo 12 Hedonic Price Method oooooooooooooooooooooooooooooooooooooooooooo� ooooooooooooooooooooo 13 Choice Modeling 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 00 16 References 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 22 20 Forest Amenity Provision Within a Compensation Framework 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 00 25 Abstract 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 26 Introduction 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 00 26 Compensation Framework 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 000 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 29 Utility Maximization: Contributor 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 32 Value Maximization: Third Party 0 0 oo 000 0000 00000 000 000 00 0 0 00 0 0000 0 0 00 Ooo 0 0 0 0 000000 000 38 ProfitMaximization: