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Alexandra Butler21

Group 1: Comment on "Casey_2008_Ecological_Economics"

This paper implements a choice experiment model to measure the willingness to accept an increased risk in oil spills in indigenous communities in the Amazon. There is a general consensus among economists that poor communities only have direct use value for environments. The surveys in this experiment were meant to measure the non use value that indigenous populations attribute to their environment in the Amazon.
We found some interesting and thought provoking results in this paper. To start, it is important to note that the community does not value monetary compensation as much as improved schools and health. This is particularly interesting, given that 62% of the surveyed population only received an elementary level education. Even though these people are not educated, they still place a high value on education. This also raises a few concerns, though, regarding how much knowledge the sample population has of the risks of an oil spill. It is possible that these people would only have a true understanding of the potential damages associated with oil spills if they had experienced one in the past. Furthermore, the average age of the sample is 41. We think that it would be interesting to do this same experiment with a younger generation. Would younger members of the community still place such a high value on education? If these younger men and women had not previously experienced the damage from an oil spill, would they be willing to accept a higher risk? Another interesting factor in this model is the reputation of the oil company, Petrobras. The corporation, which gives 1% of its profits directly to universities in Brazil, has a good reputation in the community. If the company had an unfavorable reputation, would the results be different? This would be another interesting variable to consider in future studies.
One final question we have is whether or not the results from this paper could be universally applied. This study looks at a specific indigenous population. It could be very possible, though, that not all poor communities have non use values for the environment. Would the same results hold for a population in a woodland region or a coastal area? It would be interesting to study poor populations in urban areas. Are there any non use values for the environment in a setting where natural resources aren't as prevalent? Unlike communities in the Amazon, poor populations in cities do not have a strong day-to-day relationship with natural resources. They are not as dependent on the environment. We, then, wonder if poor communities surrounded by cities and skyscrapers would have any non use values for city parks, rivers, or clean air. If they still have a non use value, then it would provide further evidence that conventional assumptions of economists concerning poor communities and non use value would be false.


Group 2: Flores, Retzloff, Smith, Travis

Article: “Willingness to accept compensation for the environmental risks of oil transport on the Amazon: A choice modeling experiment”

This article attempts to examine the non-use value indigenous (poor) communities place on environmental protection/conservation. The traditional economic belief is that environmental quality is a luxury good that is too expensive for poor people, however, this article proves otherwise. While the study cannot be perfectly controlled to reflect 100% of the non-use values (and differentiate them from the direct use values), the evidence is suggestive that non-use values do exist in the poor indigenous communities in the Amazon.

In ECON 280 (Development Economics), we frequently compared increases in income (capital deepening) to investments in human capital (education, healthcare, etc.). If the income of the impoverished increases, that does not necessarily mean that the poor will spend more on education and healthcare, which would improve their wellbeing--they could spend the money however they please. However, investments in healthcare and education will increase the poor’s well-being and thus give them more opportunities to attain higher paying jobs and a better life, which will in turn increase their income. One result we found most interesting in this article was that instead of monetary compensation (in the case of an oil spill), communities expressed strong preferences for better education and better healthcare (despite the fact that only approximately 62% of people surveyed indicated that they had not received greater than an elementary school education). In the context of this paper, we believe that investments in human capital would also decrease an individual’s dependence on the Amazon for work and resources, thus reducing the potential negative impact of an oil spill on that individual’s utility.

After reading this article, we were left wondering about the true impacts of an oil spill on indigenous communities along the Amazon. The potentially devastating impacts are only briefly discussed in the paper, and the topic (we would imagine) could be an article in and of itself. Along the same lines, we are curious about the extent and occurrences of past oil spills in the Amazon and how they might have affected the survey results. In class, we touched on the idea of how the United States perspective on oil companies/spills (Exxon Valdez and the BP oil spill) might differ from the Brazilian perspective (according to what we have learned about it through this paper).

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