Value of Improved Information about Forest Protection Values, with Application to Rainforest Valuation
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World Bank, Washington, DC
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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 problems studied here, a principal
who wishes to preserve a resource sets a price to offer to a
seller without knowing precisely the protection value or
opportunity value, to the seller. The value of information
related to more precise information about the protection
value for the principal 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 the resource when it
should be saved), and increases the principal’s ex ante
expected utility value. This paper applies the model to
Amazon rainforest protection and considers the hypothetical
value of perfect information. The analysis finds that the
value of perfect information 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. The value of perfect information also depends on
the nature of buyer-seller interactions, and is higher in
the altruistic case, where the principal has full concern
for the outcome for the seller.
Palabras clave
PURCHASE PRICE, RISKS, PRODUCTION, VALUATION, CARBON, INTEREST, EXPECTATIONS, AGRICULTURAL PRODUCTION, OBJECTS, RESOURCE MANAGEMENT, INFORMATION, RESOURCE ALLOCATION, TIMBER, EMISSIONS, WELFARE, GROSS VALUE, EFFECTS, DISTRIBUTION, VARIABLES, ASYMMETRIC INFORMATION, UTILITY VALUE, INFORMATION ANALYSES, DECISIONS, PAYMENTS, PROBABILITIES, CDF, WILLINGNESS TO PAY, KNOWLEDGE, INFLUENCE, MATHEMATICS, DOCUMENT, DOMAIN, RENT, PROBABILITY, IMPERFECT INFORMATION, TRANSFERS, CASES, CARBON TAXES, MARKETS, ORGANIZATIONS, WTP, EXPECTED VALUES, ECONOMICS LITERATURE, BENEFIT ANALYSIS, RESEARCH, ENVIRONMENTAL ECONOMICS, NATURAL RESOURCES, UTILITY, CLASSIFICATION, CONTINGENT VALUATION, EFFICIENCY, PRIVATE INFORMATION, TAXES, RESOURCES, EQUITY, ENVIRONMENTAL VALUATION, RISK NEUTRAL, OPPORTUNITY COST, CLIMATE CHANGE, POLICIES, VALUES, ECONOMIC RESOURCES, VALUE, DEFORESTATION, ABATEMENT, UTILITY FUNCTION, INEFFICIENCY, EXPECTED VALUE, EXPENDITURES, AGRICULTURE, PROPERTY, DECISION MAKING, INFORMATION ANALYSIS, MEASUREMENT, ENVIRONMENT, BENCHMARK, ECONOMIC THEORY, ECONOMICS, CASE, MANAGEMENT, TRADE, LAND, THEORY, OBJECT, EXPECTED UTILITY, RISK, INFORMATION MODEL, BARGAINING, SUPPLY, OPTIMAL ALLOCATION, GAME THEORY, RISK MANAGEMENT, STANDARD, ECONOMISTS, PERFECT INFORMATION, CONCEPTS, ENVIRONMENTAL, OUTCOMES, NATURAL RESOURCE ECONOMICS, AGRICULTURAL USES, DEVELOPMENT POLICY, FUTURE RESEARCH