Big data refers to large, complex, potentially linkable data from diverse sources, ranging from the genome and social media, to individual health information and the contributions of citizen science monitoring, to large-scale long-term oceanographic and climate modeling and its processing in innovative and integrated “data mashups.” Over the past few decades, thanks to the rapid expansion of computer technology, there has been a growing appreciation for the potential of big data in environment and human health research. The promise of big data mashups in environment and human health includes the ability to truly explore and understand the “wicked environment and health problems” of the 21st century, from tracking the global spread of the Zika and Ebola virus epidemics to modeling future climate change impacts and adaptation at the city or national level. Other opportunities include the possibility of identifying environment and health hot spots (i.e., locations where people and/or places are at particular risk), where innovative interventions can be designed and evaluated to prevent or adapt to climate and other environmental change over the long term with potential (co-) benefits for health; and of locating and filling gaps in existing knowledge of relevant linkages between environmental change and human health. There is the potential for the increasing control of personal data (both access to and generation of these data), benefits to health and the environment (e.g., from smart homes and cities), and opportunities to contribute via citizen science research and share information locally and globally. At the same time, there are challenges inherent with big data and data mashups, particularly in the environment and human health arena. Environment and health represent very diverse scientific areas with different research cultures, ethos, languages, and expertise. Equally diverse are the types of data involved (including time and spatial scales, and different types of modeled data), often with no standardization of the data to allow easy linkage beyond time and space variables, as data types are mostly shaped by the needs of the communities where they originated and have been used. Furthermore, these “secondary data” (i.e., data re-used in research) are often not even originated for this purpose, a particularly relevant distinction in the context of routine health data re-use. And the ways in which the research communities in health and environmental sciences approach data analysis and synthesis, as well as statistical and mathematical modeling, are widely different. There is a lack of trained personnel who can span these interdisciplinary divides or who have the necessary expertise in the techniques that make adequate bridging possible, such as software development, big data management and storage, and data analyses. Moreover, health data have unique challenges due to the need to maintain confidentiality and data privacy for the individuals or groups being studied, to evaluate the implications of shared information for the communities affected by research and big data, and to resolve the long-standing issues of intellectual property and data ownership occurring throughout the environment and health fields. As with other areas of big data, the new “digital data divide” is growing, where some researchers and research groups, or corporations and governments, have the access to data and computing resources while others do not, even as citizen participation in research initiatives is increasing. Finally with the exception of some business-related activities, funding, especially with the aim of encouraging the sustainability and accessibility of big data resources (from personnel to hardware), is currently inadequate; there is widespread disagreement over what business models can support long-term maintenance of data infrastructures, and those that exist now are often unable to deal with the complexity and resource-intensive nature of maintaining and updating these tools. Nevertheless, researchers, policy makers, funders, governments, the media, and members of the general public are increasingly recognizing the innovation and creativity potential of big data in environment and health and many other areas. This can be seen in how the relatively new and powerful movement of Open Data is being crystalized into science policy and funding guidelines. Some of the challenges and opportunities, as well as some salient examples, of the potential of big data and big data mashup applications to environment and human health research are discussed.
Big Data in Environment and Human Health
Lora Fleming, Niccolò Tempini, Harriet Gordon-Brown, Gordon L. Nichols, Christophe Sarran, Paolo Vineis, Giovanni Leonardi, Brian Golding, Andy Haines, Anthony Kessel, Virginia Murray, Michael Depledge, and Sabina Leonelli
Bioeconomic models are analytical tools that integrate biophysical and economic models. These models allow for analysis of the biological and economic changes caused by human activities. The biophysical and economic components of these models are developed based on historical observations or theoretical relations. Technically these models may have various levels of complexity in terms of equation systems considered in the model, modeling activities, and programming languages. Often, biophysical components of the models include crop or hydrological models. The core economic components of these models are optimization or simulation models established according to neoclassical economic theories. The models are often developed at farm, country, and global scales, and are used in various fields, including agriculture, fisheries, forestry, and environmental sectors. Bioeconomic models are commonly used in research on environmental externalities associated with policy reforms and technological modernization, including climate change impact analysis, and also explore the negative consequences of global warming. A large number of studies and reports on bioeconomic models exist, yet there is a lack of studies describing the multiple uses of these models across different disciplines.
Crop Rotation and Climate Change Adaptation in Argentina’s Agriculture Sector
Ariel R. Angeli, Federico E. Bert, Sandro Díez-Amigo, Yuri Soares, Jaquelina M. Chaij, Gustavo D. Martini, F. Martín Montané, Alejandro Pardo Vegezzi, and Federico Schmidt
During the past two decades, extensive agriculture, particularly soybean production, has progressively replaced other crops in Argentina. This transformation was driven by economic, technological, environmental, and organizational factors, such as the increasing demand for agricultural commodities, technological advances, organizational innovations, and climate fluctuations. The expansion of soybean production has brought a substantial increase in agricultural revenue for Argentina. However, the predominance of soybean cultivation poses significant challenges, such as diminished soil fertility, reduction and increased variability in crop yields, ecological imbalance, increased greenhouse gas (GHG) emissions, and vulnerability to climate change. Crop rotation, particularly balanced crop rotation, may result in very large positive impacts on soybean yields, especially in unfavorable climatic conditions such as those experienced during the La Niña ENSO phase in Argentina. In addition to this positive impact on agricultural productivity and climate adaptation, in some contexts crop rotation may also contribute to the reduction of GHG emissions, increased input energy efficiency, and improved environmental outcomes. The 2018 Argentinian Association of Regional Consortia for Agricultural Experimentation and Inter-American Development Bank (AACREA-IADB) Integrated Crop Rotation Database compiled and harmonized the information from agricultural diaries kept by Regional Consortia for Agricultural Experimentation (CREA) members in Argentina from 1998 to 2016. This new consolidated data set has replaced previous regional templates, and it is expected to continue to be expanded with new information periodically, offering opportunities for further research on the impact of crop rotation on climate adaptation and on other topics in agricultural and environmental economics.
Environmental accounting is an attempt to broaden the scope of the accounting frameworks used to assess economic performance, to take stock of elements that are not recorded in public or private accounting books. These gaps occur because the various costs of using nature are not captured, being considered, in many cases, as externalities that can be forwarded to others or postponed. Positive externalities—the natural resource—are depleted with no recording in National Accounts (while companies do record them as depreciation elements). Depletion of renewable resource results in degradation of the environment, which adds to negative externalities resulting from pollution and fragmentation of cyclic and living systems. Degradation, or its financial counterpart in depreciation, is not recorded at all. Therefore, the indicators of production, income, consumption, saving, investment, and debts on which many economic decisions are taken are flawed, or at least incomplete and sometimes misleading, when immediate benefits are in fact losses in the long run, when we consume the reproductive functions of our capital. Although national accounting has been an important driving force in change, environmental accounting encompasses all accounting frameworks including national accounts, financial accounting standards, and accounts established to assess the costs and benefits of plans and projects. There are several approaches to economic environmental accounting at the national level. Of these approaches, one purpose is the calculation of genuine economic welfare by taking into account losses from environmental damage caused by economic activity and gains from unrecorded services provided by Nature. Here, particular attention is given to the calculation of a “Green GDP” or “Adjusted National Income” and/or “Genuine Savings” as well as natural assets value and depletion. A different view considers the damages caused to renewable natural capital and the resulting maintenance and restoration costs. Besides approaches based on benefits and costs, more descriptive accounts in physical units are produced with the purpose of assessing resource use efficiency. With regard to natural assets, the focus can be on assets directly used by the economy, or more broadly, on ecosystem capacity to deliver services, ecosystem resilience, and its possible degradation. These different approaches are not necessarily contradictory, although controversies can be noted in the literature. The discussion focuses on issues such as the legitimacy of combining values obtained with shadow prices (needed to value the elements that are not priced by the market) with the transaction values recorded in the national accounts, the relative importance of accounts in monetary vs. physical units, and ultimately, the goals for environmental accounting. These goals include assessing the sustainability of the economy in terms of conservation (or increase) of the net income flow and total economic wealth (the weak sustainability paradigm), in relation to the sustainability of the ecosystem, which supports livelihoods and well-being in the broader sense (strong sustainability). In 2012, the UN Statistical Commission adopted an international statistical standard called, the “System of Environmental-Economic Accounting Central Framework” (SEEA CF). The SEEA CF covers only items for which enough experience exists to be proposed for implementation by national statistical offices. A second volume on SEEA-Experimental Ecosystem Accounting (SEEA-EEA) was added in 2013 to supplement the SEEA CF with a research agenda and the development of tests. Experiments of the SEEA-EEA are developing at the initiative of the World Bank (WAVES), UN Environment Programme (VANTAGE, ProEcoServ), or the UN Convention on Biological Diversity (CBD) (SEEA-Ecosystem Natural Capital Accounts-Quick Start Package [ENCA-QSP]). Beside the SEEA and in relation to it, other environmental accounting frameworks have been developed for specific purposes, including material flow accounting (MFA), which is now a regular framework at the Organisation for Economic Co-operation and Development (OECD) to report on the Green Growth strategy, the Intergovernmental Panel on Climate Change (IPCC) guidelines for the the UN Framework Convention on Climate Change (UNFCCC), reporting greenhouse gas emissions and carbon sequestration. Can be considered as well the Ecological Footprint accounts, which aim at raising awareness that our resource use is above what the planet can deliver, or the Millennium Ecosystem Assessment of 2005, which presents tables and an overall assessment in an accounting style. Environmental accounting is also a subject of interest for business, both as a way to assess impacts—costs and benefits of projects—and to define new accounting standards to assess their long term performance and risks.
Environmental Economics and Uncertainty: Review and a Machine Learning Outlook
Ruda Zhang, Patrick Wingo, Rodrigo Duran, Kelly Rose, Jennifer Bauer, and Roger Ghanem
Economic assessment in environmental science means measuring and evaluating environmental impacts, adaptation, and vulnerability. Integrated assessment modeling (IAM) is a unifying framework of environmental economics, which attempts to combine key elements of physical, ecological, and socioeconomic systems. The first part of this article reviews the literature on the IAM framework: its components, relations between the components, and examples. For such models to inform environmental decision-making, they must quantify the uncertainties associated with their estimates. Uncertainty characterization in integrated assessment varies by component models: uncertainties associated with mechanistic physical models are often assessed with an ensemble of simulations or Monte Carlo sampling, while uncertainties associated with impact models are evaluated by conjecture or econometric analysis. The second part of this article reviews the literature on uncertainty in integrated assessment, by type and by component. Probabilistic learning on manifolds (PLoM) is a machine learning technique that constructs a joint probability model of all relevant variables, which may be concentrated on a low-dimensional geometric structure. Compared to traditional density estimation methods, PLoM is more efficient especially when the data are generated by a few latent variables. With the manifold-constrained joint probability model learned by PLoM from a small, initial sample, manifold sampling creates new samples for evaluating converged statistics, which helps answer policy-making questions from prediction, to response, and prevention. As a concrete example, this article reviews IAMs of offshore oil spills—which integrate environmental models, transport models, spill scenarios, and exposure metrics—and demonstrates the use of manifold sampling in assessing the risk of drilling in the Gulf of Mexico.
The Environmental Kuznets Curve
David I. Stern
The environmental Kuznets curve (EKC) is a hypothesized relationship between environmental degradation and GDP per capita. In the early stages of economic growth, pollution emissions and other human impacts on the environment increase, but beyond some level of GDP per capita (which varies for different indicators), the trend reverses, so that at high income levels, economic growth leads to environmental improvement. This implies that environmental impacts or emissions per capita are an inverted U-shaped function of GDP per capita. The EKC has been the dominant approach among economists to modeling ambient pollution concentrations and aggregate emissions since Grossman and Krueger introduced it in 1991 and is even found in introductory economics textbooks. Despite this, the EKC was criticized almost from the start on statistical and policy grounds, and debate continues. While concentrations and also emissions of some local pollutants, such as sulfur dioxide, have clearly declined in developed countries in recent decades, evidence for other pollutants, such as carbon dioxide, is much weaker. Initially, many understood the EKC to imply that environmental problems might be due to a lack of sufficient economic development, rather than the reverse, as was conventionally thought. This alarmed others because a simplistic policy prescription based on this idea, while perhaps addressing some issues like deforestation or local air pollution, could exacerbate environmental problems like climate change. Additionally, many of the econometric studies that supported the EKC were found to be statistically fragile. Some more recent research integrates the EKC with alternative approaches and finds that the relation between environmental impacts and development is subtler than the simple picture painted by the EKC. This research shows that usually, growth in the scale of the economy increases environmental impacts, all else held constant. However, the impact of growth might decline as countries get richer, and richer countries are likely to make more rapid progress in reducing environmental impacts. Finally, there is often convergence among countries, so that countries that have relatively high levels of impacts reduce them more quickly or increase them more slowly, all else held constant.
Market Failures, the Environment, and Human Health
Knowledge of the important role that the environment plays in determining human health predates the modern public health era. However, the tendency to see health, disease, and their determinants as attributes of individuals rather than characteristics of communities meant that the role of the environment in human health was seldom accorded sufficient importance during much of the 20th century. Instead, research began to focus on specific risk factors that correlated with diseases of greatest concern, i.e., the non-communicable diseases such as cardiovascular disease, asthma, and diabetes. Many of these risk factors (e.g., smoking, alcohol consumption, and diet) were aspects of individual lifestyle and behaviors, freely chosen by the individual. Within this individual-centric framework of human health, the standard economic model for human health became primarily the Grossman model of health and health care demand. In this model, an individual’s health stock may be increased by investing in health (by consuming health services, for example) or decreased by endogenous (age) or exogenous (smoking) individual factors. Within this model, individuals used their available resources, their budget, to purchase goods and services that either increased or decreased their health stock. Grossman’s model provides a consumption-based approach to human health, where individuals purchase goods and services required to improve their individual health in the marketplace. Grossman’s model of health assumes that the goods and services required to optimize good health can be purchased through market-based interactions and that these goods and services are optimally priced—that the value of the goods and services are reflected in their price. In reality, many types of goods and services that are good for human health are not available to purchase, or if they are available they are undervalued in the free market. Across the environmental and health literature, these goods and services are, today, broadly referred to as “ecosystem services for human health.” However, the quasi-public good nature of ecosystem services for human health means that the private market will generate a suboptimal environment for both individual and public health outcomes. In the face of continued austerity and scarce public resources, understanding the role of the environment in human health may help to alleviate future health care demand by decreasing (or increasing) environmental risk (or benefits) associated with health outcomes. However, to take advantage of the role that the environment plays in human health requires a fundamental reorientation of public health policy and spending to include environmental considerations.
Material and Energy Flow Analysis
Vincent Moreau and Guillaume Massard
The concept of metabolism takes root in biology and ecology as a systematic way to account for material flows in organisms and ecosystems. Early applications of the concept attempted to quantify the amount of water and food the human body processes to live and sustain itself. Similarly, ecologists have long studied the metabolism of critical substances and nutrients in ecological succession towards climax. With industrialization, the material and energy requirements of modern economic activities have grown exponentially, together with emissions to the air, water and soil. From an analogy with ecosystems, the concept of metabolism grew into an analytical methodology for economic systems. Research in the field of material flow analysis has developed approaches to modeling economic systems by assessing the stocks and flows of substances and materials for systems defined in space and time. Material flow analysis encompasses different methods: industrial and urban metabolism, input–output analysis, economy-wide material flow accounting, socioeconomic metabolism, and more recently material flow cost accounting. Each method has specific scales, reference substances such as metals, and indicators such as concentration. A material flow analysis study usually consists of a total of four consecutive steps: (a) system definition, (b) data acquisition, (c) calculation, and (d) interpretation. The law of conservation of mass underlies every application, which implies that all material flows, as well as stocks, must be accounted for. In the early 21st century, material depletion, accumulation, and recycling are well-established cases of material flow analysis. Diagnostics and forecasts, as well as historical or backcast analyses, are ideally performed in a material flow analysis, to identify shifts in material consumption for product life cycles or physical accounting and to evaluate the material and energy performance of specific systems. In practice, material flow analysis supports policy and decision making in urban planning, energy planning, economic and environmental performance, development of industrial symbiosis and eco industrial parks, closing material loops and circular economy, pollution remediation/control and material and energy supply security. Although material flow analysis assesses the amount and fate of materials and energy rather than their environmental or human health impacts, a tacit assumption states that reduced material throughputs limit such impacts.
Modeling the Impact of Environment on Infectious Diseases
Giovanni Lo Iacono and Gordon L. Nichols
The introduction of pasteurization, antibiotics, and vaccinations, as well as improved sanitation, hygiene, and education, were critical in reducing the burden of infectious diseases and associated mortality during the 19th and 20th centuries and were driven by an improved understanding of disease transmission. This advance has led to longer average lifespans and the expectation that, at least in the developed world, infectious diseases were a problem of the past. Unfortunately this is not the case; infectious diseases still have a significant impact on morbidity and mortality worldwide. Moreover, the world is witnessing the emergence of new pathogens, the reemergence of old ones, and the spread of antibiotic resistance. Furthermore, effective control of infectious diseases is challenged by many factors, including natural disasters, extreme weather, poverty, international trade and travel, mass and seasonal migration, rural–urban encroachment, human demographics and behavior, deforestation and replacement with farming, and climate change. The importance of environmental factors as drivers of disease has been hypothesized since ancient times; and until the late 19th century, miasma theory (i.e., the belief that diseases were caused by evil exhalations from unhealthy environments originating from decaying organic matter) was a dominant scientific paradigm. This thinking changed with the microbiology era, when scientists correctly identified microscopic living organisms as the pathogenic agents and developed evidence for transmission routes. Still, many complex patterns of diseases cannot be explained by the microbiological argument alone, and it is becoming increasingly clear that an understanding of the ecology of the pathogen, host, and potential vectors is required. There is increasing evidence that the environment, including climate, can affect pathogen abundance, survival, and virulence, as well as host susceptibility to infection. Measuring and predicting the impact of the environment on infectious diseases, however, can be extremely challenging. Mathematical modeling is a powerful tool to elucidate the mechanisms linking environmental factors and infectious diseases, and to disentangle their individual effects. A common mathematical approach used in epidemiology consists in partitioning the population of interest into relevant epidemiological compartments, typically individuals unexposed to the disease (susceptible), infected individuals, and individuals who have cleared the infection and become immune (recovered). The typical task is to model the transitions from one compartment to another and to estimate how these populations change in time. There are different ways to incorporate the impact of the environment into this class of models. Two interesting examples are water-borne diseases and vector-borne diseases. For water-borne diseases, the environment can be represented by an additional compartment describing the dynamics of the pathogen population in the environment—for example, by modeling the concentration of bacteria in a water reservoir (with potential dependence on temperature, pH, etc.). For vector-borne diseases, the impact of the environment can be incorporated by using explicit relationships between temperature and key vector parameters (such as mortality, developmental rates, biting rate, as well as the time required for the development of the pathogen in the vector). Despite the tremendous advancements, understanding and mapping the impact of the environment on infectious diseases is still a work in progress. Some fundamental aspects, for instance, the impact of biodiversity on disease prevalence, are still a matter of (occasionally fierce) debate. There are other important challenges ahead for the research exploring the potential connections between infectious diseases and the environment. Examples of these challenges are studying the evolution of pathogens in response to climate and other environmental changes; disentangling multiple transmission pathways and the associated temporal lags; developing quantitative frameworks to study the potential effect on infectious diseases due to anthropogenic climate change; and investigating the effect of seasonality. Ultimately, there is an increasing need to develop models for a truly “One Health” approach, that is, an integrated, holistic approach to understand intersections between disease dynamics, environmental drivers, economic systems, and veterinary, ecological, and public health responses.
Monitoring and Modeling of Outdoor Air Pollution
Air pollution has been a major threat to human health, ecosystems, and agricultural crops ever since the onset of widespread use of fossil fuel combustion and emissions of harmful substances into ambient air. As a basis for the development, implementation, and compliance assessment of air pollution control policies, monitoring networks for priority air pollutants were established, primarily for regulatory purposes. With increasing understanding of emission sources and the release and environmental fate of chemicals and toxic substances into ambient air, as well as atmospheric transport and chemical conversion processes, increasingly complex air pollution models have entered the scene. Today, highly accurate equipment is available to measure trace gases and aerosols in the atmosphere. In addition, sophisticated atmospheric chemistry transport models—which are routinely compared to and validated and assessed against measurements—are used to model dispersion and chemical processes affecting the composition of the atmosphere, and the resulting ambient concentrations of harmful pollutants. The models also provide methods to quantify the deposition of pollutants, such as acidifying and eutrophying substances, in vegetation, soils, and freshwater ecosystems. This article provides a general overview of the underlying concepts and key features of monitoring and modeling systems for outdoor air pollution.
Multi-Objective Robust Planning Tools
Jazmin Zatarain Salazar, Andrea Castelletti, and Matteo Giuliani
Shared water resource systems spark a number of conflicts related to their multi sectorial, regional, and intergenerational use. They are also vulnerable to a myriad of uncertainties stemming from changes in the hydrology, population demands, and climate change. Planning and management under these conditions are extremely challenging. Fortunately, our capability to approach these problems has evolved dramatically over the last few decades. Increased computational power enables the testing of multiple hypotheses and expedites the results across a range of planning alternatives. Advances in flexible multi-objective optimization tools facilitate the analyses of many competing interests. Further, major shifts in the way uncertainties are treated allow analysts to characterize candidate planning alternatives by their ability to fail or succeed instead of relying on fallible predictions. Embracing the fact that there are indeterminate uncertainties whose probabilistic descriptions are unknown, and acknowledging relationships whose actions and outcomes are not well-characterized in planning problems, have improved our ability to perform diligent analysis. Multi-objective robust planning of water systems emerged in response to the need to support planning and management decisions that are better prepared for unforeseen future conditions and that can be adapted to changes in assumptions. A suite of robustness frameworks has emerged to address planning and management problems in conditions of deep uncertainty. That is, events not readily identified or that we know so little about that their likelihood of occurrence cannot be described. Lingering differences remain within existing frameworks. These differences are manifested in the way in which alternative plans are specified, the views about how the future will unfold, and how the fitness of candidate planning strategies is assessed. Differences in the experimental design can yield diverging conclusions about the robustness and vulnerabilities of a system. Nonetheless, the means to ask a suite of questions and perform a more ambitious analysis is available in the early 21st century. Future challenges will entail untangling different conceptions about uncertainty, defining what aspects of the system are important and to whom, and how these values and assumptions will change over time.
Optimal and Real-Time Control of Water Infrastructures
Ronald van Nooijen, Demetris Koutsoyiannis, and Alla Kolechkina
Humanity has been modifying the natural water cycle by building large-scale water infrastructure for millennia. For most of that time, the principles of hydraulics and control theory were only imperfectly known. Moreover, the feedback from the artificial system to the natural system was not taken into account, either because it was too small to notice or took too long to appear. In the 21st century, humanity is all too aware of the effects of our adaptation of the environment to our needs on the planetary system as a whole. It is necessary to see the environment, both natural and hman-made as one integrated system. Moreover, due to the legacy of the past, the behaviour of the man-madeparts of this system needs to be adapted in a way that leads to a sustainable ecosystem. The water cycle plays a central role in that ecosystem. It is therefore essential that the behaviour of existing and planned water infrastructure fits into the natural system and contributes to its well-being. At the same time, it must serve the purpose for which it was constructed. As there are no natural feedbacks to govern its behaviour, it will be necessary to create such feedbacks, possibly in the form of real-time control systems. To do so, it would be beneficial if all persons involved in the decision process that establishes the desired system behaviour understand the basics of control systems in general and their application to different water systems in particular. This article contains a discussion of the prerequisites for and early development of automatic control of water systems, an introduction to the basics of control theory with examples, a short description of optimal control theory in general, a discussion of model predictive control in water resource management, an overview of key aspects of automatic control in water resource management, and different types of applications. Finally, some challenges faced by practitioners are mentioned.
Review of the State of the Art in Analysis of the Economics of Water Resources Infrastructure
Water resources represent an essential input to most human activities, but harnessing them requires significant infrastructure. Such water control allows populations to cope with stochastic water availability, preserving uses during droughts while protecting against the ravages of floods. Economic analysis is particularly valuable for helping to guide infrastructure investment choices, and for comparing the relative value of so called hard and soft (noninfrastructure) approaches to water management. The historical evolution of the tools for conducting such economic analysis is considered. Given the multimillennial history of human reliance on water infrastructure, it may be surprising that economic assessments of its value are a relatively recent development. Owing to the need to justify the rapid deployment of major public-sector financing outlays for water infrastructure in the early 20th century, government agencies in the United States—the Army Corps of Engineers and the Bureau of Reclamation—were early pioneers in developing these applications. Their work faced numerous technical challenges, first addressed in the drafting of the cost-benefit norms of the “Green Book.” Subsequent methodological innovation then worked to address a suite of challenges related to nonmarket uses of water, stochastic hydrology, water systems interdependencies, the social opportunity cost of capital, and impacts on secondary markets, as well as endogenous sociocultural feedbacks. The improved methods that have emerged have now been applied extensively around the world, with applications increasingly focused on the Global South where the best infrastructure development opportunities remain today. The dominant tools for carrying out such economic analyses are simulation or optimization hydroeconomic models (HEM), but there are also other options: economy wide water-economy models (WEMs), sociohydrological models (SHMs), spreadsheet-based partial equilibrium cost-benefit models, and others. Each of these has different strengths and weaknesses. Notable innovations are also discussed. For HEMs, these include stochastic, fuzz, and robust optimization, respectively, as well as co-integration with models of other sectors (e.g., energy systems models). Recent cutting-edge work with WEMs and spreadsheet-based CBA models, meanwhile, has focused on linking these tools with spatially resolved HEMs. SHMs have only seen limited application to infrastructure valuation problems but have been useful for illuminating the paradox of flood management infrastructure increasing the incidence and severity of flood damages, and for explaining the co-evolution of water-based development and environmental concerns, which ironically then devalues the original infrastructure. Other notable innovations are apparent in multicriteria decision analysis, and in game-theoretic modeling of noncooperative water institutions. These advances notwithstanding, several issues continue to challenge accurate and helpful economic appraisal of water infrastructure and should be the subject of future investigations in this domain. These include better assessment of environmental and distributional impacts, incorporation of empirically based representations of costs and benefits, and greater attention to the opportunity costs of infrastructure. Existing tools are well evolved from those of a few decades ago, supported by enhancements in scientific understanding and computational power. Yet, they do appear to systematically produce inflated estimations of the net benefits of water infrastructure. Tackling existing shortcomings will require continued interdisciplinary collaboration between economists and scholars from other disciplines, to allow leveraging of new theoretical insights, empirical data analyses, and modeling innovations.
State of the Art of Hedonic Pricing
Dennis Guignet and Jonathan Lee
Hedonic pricing methods have become a staple in the environmental economist’s toolkit for conducting nonmarket valuation. The hedonic pricing method (HPM) is a revealed preference approach used to indirectly infer the value buyers and sellers place on characteristics of a differentiated product. Environmental applications of the HPM are typically focused on housing and labor markets, where the characteristics of interest are local environmental commodities and health risks. Despite the fact that there have been thousands of hedonic pricing studies published, applications of the methodology still often grapple with issues of omitted variable bias, measurement error, sample selection, choice of functional form, effect heterogeneity, and the recovery of policy-relevant welfare estimates. Advances in empirical methodologies, increased quality and quantity of data, and efforts to link empirical results to economic theory will surely further the use of the HPM as an important nonmarket valuation tool.
The Value of the Environment in Recreation
Natural environments represent background settings for most outdoor recreation activities, which are important non-consumptive benefits that people obtain from nature. Recreation has been traditionally considered a non-market service because it is practiced free of charge in public spaces and therefore of secondary relevance for the economy. Although outdoor recreation in natural parks became relevant during the 19th century, the increased popularity of recreation after the Second World War required tools for the assessment of recreational benefits, which were not considered in the evaluation of investments in recreational facilities, and increasing spending for recreational equipment captured the attention of outdoor recreation as an economic sector. In the 1990s, it was observed that many recreational activities were commercialized and started being considered equally important to tourism as a means to boost the economy of local communities. The expansion of outdoor recreation is reflected in a growing interest in the economic aspects, including cost–benefit calculations of the investments in recreational facilities and research on appropriate methods to evaluate the non-market benefits of recreation. The first economic technique used for valuing recreation was the travel cost method that consisted in the assessment of a demand curve, where the demanded quantity is the number of trips to a specific site and the cost is the unit cost of travel to the destination. After this first intuition, the number of contributions on recreation valuation exponentially grew, and new methods were proposed, including methods based on stated preferences for recreation that can be used when travel cost data that reveal consumers’ behavior are not available. A regular assessment of recreational benefits has several advantages for public policy, including the evaluation of investments and information on visitor profile and preferences, income, and price elasticity, which are essential to understand the market of outdoor recreation and propose effective strategies and recreation-oriented management. The increasing environmental pressure associated with participation in outdoor recreation required effective conservation activities, which in turn posed limitations to economic activities of local communities who live in contact with natural resources. Therefore, a balance between environmental, social, and economic interests is essential for recreational destination to avail of benefits without conflicts among stakeholders.