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On the Consumer Value of Environmental Diversity

Author

Listed:
  • Michele Baggio

    (Department of Economics (Università di Verona) and Research Assistant,Department of Agricultural and Resource Economics, (University of Maryland))

  • Jean-Paul Chavas

    (Professor, Department of Agricultural and Applied Economics (University of Wisconsin, Madison))

Abstract

This paper develops a methodology for the valuation of the taste for diversity. The concerns about the contribution of diversity in the valuation of consumer goods typically arise when it is believed that the total value is The methodology we propose infers the economic value of diversity through fish market price by using a system of inverse demands to model the nature of this particular commodity. We develop our analysis of the consumer value of diversity using Luenberger’s benefit function (Luenberger, 1992). In this context, we show that the benefit function provides a conceptual framework to conduct a welfare analysis of the value of diversity in a system framework.

Suggested Citation

  • Michele Baggio & Jean-Paul Chavas, 2006. "On the Consumer Value of Environmental Diversity," Working Papers 35/2006, University of Verona, Department of Economics.
    • Handle: RePEc:ver:wpaper:35/2006
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    References listed on IDEAS

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    1. Eales, James S. & Unnevehr, Laurian J., 1994. "The inverse almost ideal demand system," European Economic Review, Elsevier, vol. 38(1), pages 101-115, January.
    2. Robert H. Beach & Matthew T. Holt, 2001. "Incorporating Quadratic Scale Curves in Inverse Demand Systems," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 83(1), pages 230-245.
    3. William A. Brock & Anastasios Xepapadeas, 2003. "Valuing Biodiversity from an Economic Perspective: A Unified Economic, Ecological, and Genetic Approach," American Economic Review, American Economic Association, vol. 93(5), pages 1597-1614, December.
    4. Luenberger, David G., 1992. "Benefit functions and duality," Journal of Mathematical Economics, Elsevier, vol. 21(5), pages 461-481.
    5. Daniele Moro & Paolo Sckokai, 2002. "Functional separability within a quadratic inverse demand system," Applied Economics, Taylor & Francis Journals, vol. 34(3), pages 285-293.
    6. K. K. Gary Wong & Keith R. McLaren, 2005. "Specification and Estimation of Regular Inverse Demand Systems: A Distance Function Approach," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 87(4), pages 823-834.
    7. Richard C. Bishop & Matthew T. Holt, 2002. "A semiflexible normalized quadratic inverse demand system: an application to the price formation of fish," Empirical Economics, Springer, vol. 27(1), pages 23-47.
    8. Angus Deaton, 1979. "The Distance Function in Consumer Behaviour with Applications to Index Numbers and Optimal Taxation," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 46(3), pages 391-405.
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    Cited by:

    1. Keith R. McLaren & K. K. Gary Wong, 2009. "The Benefit Function Approach to Modeling Price-Dependent Demand Systems: An Application of Duality Theory," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 91(4), pages 1110-1123.

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