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The Trade-off game
The concept The idea of a trade-off is fundamental to human behaviour and so to the making of choices. In any decision there are benefits to be gained and costs to be incurred and a trade-off is the act of weighing benefits and costs. In the trade-off game, respondents are offered two alternatives and are asked to choose between them. The alternatives are defined in terms of their outcomes, they differ in the level of one or more outcomes and one of the outcomes will be monetary. When to use it
The technique can be used to measure in monetary terms the benefits or costs of a given change in:
Table 5.2: A simple trade-off game: two alternatives with two outcomes Alternatives Outcomes Existing Situation New situation A B Money payments $0 $X Level of environmental Level A Level B service (low) (high)
The respondent is asked: What is the value of the payment $X at which you are indifferent between A and B? The sum $X is the willingness to pay for the given improvement in the level of environmental amenity. The trade-off can often be expressed as a simple question instead of a formal table. Questions can be posed to decision makers just as easily as to individuals in the community. Read and Sturgess (1992) recognise that the decision maker may ultimately have to make an implicit valuation so the valuation might as well be posed as a trade-off. They call this application of the technique the last resort. Bennett (1991) summarised the findings of the commission of inquiry into land use on Fraser Island in this way. For example, the conflict between commercial and recreational fishing was framed as follows: Are the increased recreational fishing benefits that would result from a ban on commercial fishing worth the $6 million loss the ban would cause? Sand mining competes with recreation and preservation. Bennett posed the following question: Are the $200 million benefits of sand mining worth the reduction in recreation and preservation benefits that would result? As Bennett argued, economic values are not designed to provide recommendations on the use of environmental resources. They set out the information which is relevant to decisions on resource allocation. A trade-off doesn't value anything, it presents information about environmental effects in a way that brings out the implicit valuation that the decision maker will have to make. Strengths and weaknesses The technique is a development of contingent valuation and so possesses similar strengths and weaknesses. It is superior to contingent valuation in the sense that the willingness to pay/accept question is more tightly posed and the alternative resource uses are more obviously defined. It is somewhat more cumbersome than contingent valuation in that the trade-off game requires more explanation to players. |
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©İsmail Güneş |