Volume 32, Issue 2, 2002 (Special Issue)
Articles:
- The Role of Non-Market Valuation in Forest Management and Recreation Policy (Steve Harrison, Jeff Bennett and Clem Tisdell)
- Travel Cost Analysis of Recreation Value in the Wet Tropics World Heritage Area (Sally Driml)
- World Heritage Listing of Australian Natural Sites: Tourism Stimulus and its Economic Value (Clem Tisdell and Clevo Wilson)
- Assessing Rainforest Conservation Demands (John Rolfe and Jeff Bennett)
- Estimation of Costs and Benefits of the Community Rainforest Reforestation Program in North Queensland (Jean-Claude Eono and Steve Harrison)
- Whian Whian – State Forest or National Park: Community Attitudes and Economic Values (Stephen Duthy)
- Economic Evaluation of Proposed Long-Distance Walking Tracks in the Wet Tropics of Queensland (Averil Cook and Steve Harrison)
- Forestry Managers’ Perceptions of the Feasibility of Incorporating Non-Market Value Estimates into Financial Environmental Reporting (Kathleen Herbohn and Scott Henderson)
- The Impact of Noosa National Park on Surrounding Property Values: An Application of the Hedonic Price Method (L.J. Pearson, C. Tisdell and A.T. Lisle)
- Visual Disamenity in the Queensland Wet Tropics: Estimating the Economic Impacts of Overhead Transmission Lines (Steve Harrison)
- 11th Colin Clark Memorial Lecture – Asian Poverty: What can be done? (Peter McCawley)
- Investigating Stock Price Dynamics in an Oil-Dependent Economy: The Case of Kuwait (Ali Arifa, Khalifa H. Ghali and Imed Limam)
- Teaching Quantitative Methods in Economics: Alternatives to Theorem and Proof and Chalk and Talk (William E. Becker)
- Determinants of Profitability: Australian Evidence Using Tax Entities (Simon Feeny)
- The Yield Spread and Real Economic Activity: The Impact of Globalisation (K.M. Hawtrey)
- An Empirical Note on the Export-Led Growth Hypothesis: The Case of Malaysia (Mansor H. Ibrahim)
- Predicting Australian Growth and Recession Via the Yield Curve (Neil Dias Karunaratne)
- Has Korean Manufacturing Production Reached Its Full Potential? (Renuka Mahadevan)
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The Role of Non-Market Valuation in Forest Management and Recreation Policy
Steve Harrison, Jeff Bennett and Clem Tisdell
Pages: 1-10
Abstract:
Forests, and particularly those where native and mixed species are gown, provide a variety of non-wood values, important among which are recreation and environmental services. Substantial progress has been made in recent years in estimating economic values on these services. A considerable amount of research on forest values has been carried out recently in tropical and sub-tropical eastern Australia, some of which is reported in the following papers. The need for estimates of non-wood forest benefits is apparent, and it is clear that further development of techniques and a greater understanding of the way these values can be integrated into public-sector decision making is required.
Travel Cost Analysis of Recreation Value in the Wet Tropics World Heritage Area
Sally Driml
Pages: 11-26
Abstract:
Travel cost analysis for Australian tourists to the Wet Tropics of Queensland World Heritage Area was undertaken in order to derive a consumer surplus value for use in examining benefits of sustainable tourism to the area. Randall’s contention that travel cost analysis produces relative rather than absolute values of welfare was tested by using several different versions of travel cost specification, and found to be supported. Nevertheless, the analysis produced values of a magnitude that indicate high positive benefits from visitor use to the World Heritage Area, provided the area is managed to be ecologically sustainable.
World Heritage Listing of Australian Natural Sites: Tourism Stimulus and its Economic Value
Clem Tisdell and Clevo Wilson
Pages: 27-49
Abstract:
Australia has 14 areas inscribed on the UNESCO World Heritage list, on the basis of their globally outstanding natural and in some cases also cultural values. Many regard listing as prestigious and believe that it acts as a signalling device like a brand name. But to what extent and in what ways does the extra prestige bestowed by this listing translate into increased economic value for listed properties? This article deals with two main aspects of World Heritage listing. First, it examines the hypothesis that World Heritage listing increases tourist visitation numbers, drawing on international visitor time-series data for empirical evidence. It is found that although visitor numbers are likely to increase as a result of World Heritage listing, the increase is not as large as is often perceived. Some properties continue to experience low visitation rates despite World Heritage listing, and reasons for this phenomenon are advanced. Likely reasons for the inequalities in growth patterns of visits to different World Heritage properties are highlighted. Secondly, the article considers how the economic value of the tourism stimulus provided by World Heritage listing can be measured in principle and relates this to economic impact analysis and total economic valuation. Important and neglected limitations to the use of the travel cost method in this context are identified.
Assessing Rainforest Conservation Demands
John Rolfe and Jeff Bennett
Pages: 51-67
Abstract:
Choice Modelling is a non-market valuation technique that can be used to assess peoples’ preferences for environmental protection where such information is not readily available from markets. The technique has a number of modelling and analytical strengths, and provides researchers with insights into how conservation values may be structured within society. The series of Choice Modelling applications reported in this paper explored the values that a sample of Brisbane residents held for protecting rainforests in Queensland and New South Wales, as well as in a variety of overseas locations. The results indicate that environmental, social and recreational values are important in determining potential support between different forest protection proposals. The modelling of decision pathways (through the application of nested logit models) indicates that the Brisbane residents surveyed were parochial in apportioning their support for rainforest protection. There is evidence that rainforests in Queensland are viewed as the most important to support, followed by those in other Australian states, and then those in overseas locations.
Estimation of Costs and Benefits of the Community Rainforest Reforestation Program in North Queensland
Jean-Claude Eono and Steve Harrison
Pages: 69-89
Abstract:
This paper reports the experiences in a study designed to estimate the total economic value of a reforestation program in North Queensland. The Community Rainforest Reforestation Program was commenced in 1993, with stated objectives relating to timber production, protection of degraded land, improvement in water quality and workforce training. The various perceived cost and benefit contributions of this program have been identified with the aid of surveys of landholders and local government. Estimates have been derived of program costs and, where possible, of the level of benefits within identified categories. On the basis of this analysis, the CRRP appears to be marginally justifiable in economic terms. Within the resources available for the study, some program benefits could not be valued, including the ‘social healing’ value following the bitter local controversy over World Heritage listing, and the research value gained from growing a wide variety of species of high-quality tropical rainforest timbers in plantations.
Whian Whian – State Forest or National Park: Community Attitudes and Economic Values
Stephen Duthy
Pages: 91-111
Abstract:
A contingent valuation study was undertaken to determine the level of community support for the dedication of Whian Whian State Forest in north-east NSW as a new national park. The study investigated the relative importance of a number of forest uses and the values held by the respondents that were important in determining their bid. Although this research was conducted during the final phase of the Comprehensive Regional Assessment of the forests of the Upper North East of New South Wales, there are a number of discrepancies between the finding reported here and the outcomes of the assessment. This suggests that the determination of the Regional Forest Agreements used criteria other than biophysical and socio-economic attributes. This study identified the ecosystem functions of water catchment protection and provision of habitat for endangered species as the two most important uses of Whian Whian State Forest. Training in sustainable forestry was rated extremely important in more cases (25.3%) than all other timber industry related uses presented. Respondents reflected a well-defined set of values relating to environmental and equity issues and placed less emphasis on issues relating to productive uses. Bequest, existence and non-consumptive use values were the strongest values relating to Whian Whian SF. The mean willingness to pay of respondents for the non-consumptive use and non-use values of Whian Whian SF was $18.89 per annum for three years, whilst the median was $10.00 per annum.
Economic Evaluation of Proposed Long-Distance Walking Tracks in the Wet Tropics of Queensland
Averil Cook and Steve Harrison
Pages: 113-129
Abstract:
An increasingly popular activity in the Wet Tropics of Queensland is bushwalking, which can provide benefits for both the visitors and the local community. While long-distance tracks – with huts and camp sites for overnight stays – are common in some countries (notably New Zealand), this appears to be an ecotourism opportunity which has been overlooked in North Queensland. A market model can be developed in which the supply (indicated by marginal cost) and demand (community willingness to pay) and efficient pricing for a proposed long-distance walking track are estimated. Where a track does not currently exist, transfer of demand estimates from other tracks and inferences about total market size are required. This paper discusses the economic modelling and estimation issues in evaluation of long-distance walking track proposals in the Wet Tropics of Queensland. Demand estimation (with reference to a visitor survey for the Thorsborne Trail on Hinchinbrook Island) and supply estimation in terms of track development and maintenance costs are examined.
Forestry Managers’ Perceptions of the Feasibility of Incorporating Non-Market Value Estimates into Financial Environmental Reporting
Kathleen Herbohn and Scott Henderson
Pages: 131-153
Abstract:
There is currently considerable interest in environmental economic valuation methods because of their importance in policy development and litigious issues. Several accountants have recently advocated these valuation techniques within accounting and reporting frameworks. Environmental accounting can incorporate financially quantified environmental externalities into conventional reporting systems, so that financial statements communicate the commercial and environmental performance of an organisation to its stakeholders to allow more fully-informed decisions. This paper examines the feasibility of developing a financial environmental reporting system for an Australian public sector forestry organization1. Data collected with the assistance of the organization were analysed using descriptive and inferential coding. Reactions of forest managers to the introduction of environmental reporting, and their implementation experience, were examined. Potential barriers to the reporting system include a lack of funding, internal resistance to economic valuations due at least in part to low knowledge levels in relation to non-market valuation methods, stakeholder resistance, and the absence of recognised environmental indices against which to report. Potential benefits include capacity to report on sustainability of forest management, and information with which to negotiate settlements with powerful stakeholders and to seek funding for public-good components of operations.
The Impact of Noosa National Park on Surrounding Property Values: An Application of the Hedonic Price Method
L.J. Pearson, C. Tisdell and A.T. Lisle
Pages: 155-171
Abstract:
This study deals with the valuation of a National Park in an urban area. The hedonic price method is used to estimate the impact of the headland section of Noosa National Park (NNP) on nearby unimproved land values. Unimproved land values of 641 house blocks surrounding NNP were used in a variety of regressions to provide values for both proximity and view of the park. The study found that a glimpse of NNP generates an increase of 7% in the land value. However, being in close walking distance to NNP has little impact upon the value of land. Properties located south of NNP headland were found to be valued at only 85% of comparable properties to the north. The variables with the greatest impact on price are direct distance to the ocean and a view of the ocean. If properties are closer to another urban park (not a national park), there is a strong negative relationship between price and distance to the park. But properties closest to NNP do not experience this relationship. It is suggested that disamenities of such a well-known park, including parking problems and ‘unsavoury characters’ may result in the direct distance to NNP not being a significant explanatory variable in relation to price. This information is useful to local governments with national parks within their borders who want to estimate the value of the park to their area, e.g. in relation to rates.
Visual Disamenity in the Queensland Wet Tropics: Estimating the Economic Impacts of Overhead Transmission Lines
Steve Harrison
Pages: 173-188
Abstract:
This paper examines procedures and findings in estimation of the ‘visual disamenity cost’ associated with installation of high-voltage overhead power lines in the Wet Tropics of Queensland1. The study was performed within a short timeframe and small budget, hence the need to design a relatively simple and cost-effective approach, yet one which would yield acceptable information on environmental values. An extensive literature review and advice from a number of resource economists indicated that there was little information from previous studies to support benefit transfer methodology. It was found possible to estimate disamenity costs to ecotourism operation (using a simplified travel cost approach), agricultural operations (based on compensation payments) and residential property values (through a simplified hedonic price approach). A planned contingent valuation of the intrusive effect of the transmission lines through rainforest areas did not proceed, due at least in part to the political sensitivity of this issue.
11th Colin Clark Memorial Lecture – Asian Poverty: What can be done?
Peter McCawley
Pages: 129-139
Abstract:
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Investigating Stock Price Dynamics in an Oil-Dependent Economy: The Case of Kuwait
Ali Arifa, Khalifa H. Ghali and Imed Limam
Pages: 141-158
Abstract:
The recent literature on stock markets has used modern time series techniques such as cointegration and causality to identify macroeconomic variables that cause stock index movements. But this type of investigation has to a large extent remained confined to markets belonging to well developed and diversified economies. Motivated by the lack of set-ups involving stock markets from economies with different profiles, this paper concentrates on the Kuwaiti stock market whose unique features as an oil-dependent economy render its investigation a useful exercise. Based on multivariate time-series techniques and using monthly data spanning the period September 1992 to December 1998, the investigation reveals three important factors that are believed to have long-term equilibrium effects on stock market prices in Kuwait. Oil prices, U.S. interest rates and real estate prices are found to form a cointegrating relationship with stock prices. The results in this paper indicate clearly a sharp contrast in terms of stock market dynamics between an oil-dependent economy like Kuwait’s and those of highly diversified economies. It is argued that the reported results are nevertheless logical in light of the unique features of the oil-dependent Kuwaiti economy.
Teaching Quantitative Methods in Economics: Alternatives to Theorem and Proof and Chalk and Talk
William E. Becker
Pages: 159-180
Abstract:
The recent literature on stock markets has used modern time series techniques such as cointegration and causality to identify macroeconomic variables that cause stock index movements. But this type of investigation has to a large extent remained confined to markets belonging to well developed and diversified economies. Motivated by the lack of set-ups involving stock markets from economies with different profiles, this paper concentrates on the Kuwaiti stock market whose unique features as an oil-dependent economy render its investigation a useful exercise. Based on multivariate time-series techniques and using monthly data spanning the period September 1992 to December 1998, the investigation reveals three important factors that are believed to have long-term equilibrium effects on stock market prices in Kuwait. Oil prices, U.S. interest rates and real estate prices are found to form a cointegrating relationship with stock prices. The results in this paper indicate clearly a sharp contrast in terms of stock market dynamics between an oil-dependent economy like Kuwait’s and those of highly diversified economies. It is argued that the reported results are nevertheless logical in light of the unique features of the oil-dependent Kuwaiti economy.
Determinants of Profitability: Australian Evidence Using Tax Entities
Simon Feeny
Pages: 181-202
Abstract:
This paper uses a sample of 194,007 tax entities from the Australian Tax Office tax return data to investigate the determinants of profitability. Panel data analysis is carried out at a 3-digit ANZSIC level of classification with regressions run for 120 industries. The empirical analysis is motivated by the Structure-Conduct-Performance framework. Results indicate that determinants of profitability differ between industries. In general, size of entity is positively related to profitability but industry characteristics have limited importance in explaining entity profitability. Unobserved entity heterogeneity and period effects are found to be important.
The Yield Spread and Real Economic Activity: The Impact of Globalisation
K.M. Hawtrey
Pages: 203-219
Abstract:
One of the enduring linkages between financial markets and the real economy is that the shape of the interest rate curve is seen as a good predictor of future output growth. However, little is known about the effect of globalisation on this relationship. This paper examines whether, in the wake of the internationalisation of the Australian economy during the past decade and a half, there is today an identifiable relationship between the foreign yield spread and Australian GDP growth. Using the US interest rate spread as a proxy for the world yield curve, a link is found to exist with Australian GDP growth. There is evidence the link has strengthened as the economy has seen greater exposure to globalisation.
An Empirical Note on the Export-Led Growth Hypothesis: The Case of Malaysia
Mansor H. Ibrahim
Pages: 221-232
Abstract:
The present empirical note re-examines the export-led growth hypothesis for the case of Malaysia. Using standard procedures of unit root testing, cointegration and error correction modelling, we find evidence for bi-directional causality between exports and real output per capita. Addressing the issue of exogeneity, we test for weak exogeneity and super exogeneity of exports within the error correction framework. We find evidence that exports are not weakly exogenous and subsequently, are not super exogenous. This result weakens the case for the export-led growth hypothesis. In the Malaysian context, the Lucas critique applies, namely, that the relationship between exports and real output per capita is not invariant to policy changes or regime shifts.
Predicting Australian Growth and Recession Via the Yield Curve
Neil Dias Karunaratne
Pages: 233-250
Abstract:
This slope of the yield curve has been estimated using quarterly data on real GDP and the nominal spread is proxied by the difference in returns from the 10 year bond rate and the 90 day bill rate. The time-series analysis after unit root tests using stationary variables revealed that the yield curve gives the best forecasts on real activity over a forecast horizon of one year (4 quarters) ahead. Non-nested tests of rival models of alternative financial indicators demonstrated that the yield curve outperforms other financial indicators as a robust predictor of future real activity. The Probit model forecasts of recessions indicated that the inverted slope of the yield curve for 4-quarter horizon gave the best recession prediction for Australia. The probit model predictions also gave probability estimates for the occurrence of recessions for different nominal spreads or slopes of the yield curve. The probit model predictions of recessions improved dramatically when a dynamic lag structure was incorporated. Empirical evidence demonstrates that the yield curve outperforms other financial indicators as a predictor of a recessions in Australia. It is a simple operational tool that can be validated using up-to-date data.
Has Korean Manufacturing Production Reached Its Full Potential?
Renuka Mahadevan
Pages: 251-260
Abstract:
This paper sheds some light on the relevance of the assimilation view for South Korea, whereby successful mastering of foreign technology in its adoption and use would lead to firms producing at their full potential output. This is investigated by studying the technical efficiency performance of firms in four manufacturing industries using firm-level data from 1980-94 and applying the random coefficient frontier model. Empirical results show that the assimilation view holds true in the heavy industries but not in the light industries. Although the rate of technical efficiency varied within the two industries, the variation was statistically significant only for firms in the heavy industries since the late 1980s.
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