Evaluating the Role of Nonuse Values in Estimating the Benefits of a National Closed-Cycle-Cooling Retrofit Requirement

A national closed-cycle-cooling-retrofit (retrofit) requirement will affect fish that are both caught and uncaught.  Uncaught fish do not have a traditional use value and are therefore categorized as having potential nonuse values.  Nonuse values are the values that people may hold for a resource independent of their use (i.e., some people may benefit simply from knowing the resource exists—either because they want it to be available for people to use in the future or because they believe the resource has some inherent right to exist). 

Currently, the only methods available for estimating nonuse values are survey-based techniques that ask respondents to value, choose, rate, or rank natural resource services in a hypothetical context.   Because these methods rely on respondents stated intentions and not their actual choices, the reliability of this approach for providing meaningful estimates for policy decisions is questionable.  The relevant literature has long noted and thoroughly documented the difference between people’s stated intentions and actual behaviors.  With respect to evaluating the benefits of a national retrofit requirement, preliminary investigations suggest extreme sensitivity of aggregate benefits to relatively small changes in willingness-to-pay (WTP) estimates (WTP is the metric used to develop nonuse values).  The corresponding imprecision in aggregated nonuse-value   estimates may be the difference between a national rule that is justified on a benefit-cost basis and one that is not.   The causes of imprecision can be categorized in the following three general areas:

1. Survey Instrument and Sampling Approach
2. Incorporating Statistical Uncertainty into the Experimental Design
3. Weighting and Extrapolation of Survey Results 

This presentation discusses the potential causes and implication of imprecision in each of these areas and identifies ways that they can be addressed to improve the potential validity of national estimates.