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Development of an Individual-Tree Basal Area Increment Model using a Linear Mixed-Effects Approach

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Inferring Economic Impacts from a Program's Physical Outcomes: An Application to Forest Protection in Thailand.

Wumeng He¹, Orapan Nabangchang², Krista Erdman³

¹Economics and Management School, Wuhan University, Wuhan, Hubei China.

Environmental & Resource Economics

|March 6, 2023

Summary

This study introduces a new method to measure the economic impact of environmental programs using physical outcomes. The approach, applied to mangrove protection in Thailand, revealed a significant economic value saved, highlighting program effectiveness.

Keywords:

Forest Impact evaluation Mangrove Propensity score matching Protected area Random utility model Roy model Thailand Treatment effect

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Area of Science:

Environmental economics
Econometrics
Forestry science

Background:

Estimating the average treatment effect on the treated (ATT) is common for government program evaluations.
Interpreting ATT can be challenging for environmental programs with physical outcomes like avoided deforestation.
Existing methods struggle to directly infer economic impacts from physical environmental data.

Purpose of the Study:

To develop an approach for inferring economic impacts from physical outcomes in environmental program evaluations.
To adapt the average treatment effect on the treated (ATT) estimation for economic interpretation using propensity-score matching.
To introduce a weighted ATT metric for assessing the economic impact of protection programs.

Main Methods:

Utilizing propensity-score matching to estimate the average treatment effect on the treated (ATT).
Developing a weighted ATT, where weights are derived from the propensity of being treated (protected).
Applying the weighted ATT to a case study of mangrove protection in Thailand (1987-2000).

Main Results:

The Thai government's mangrove protection program avoided the loss of 12.8% of the economic value of the protected areas.
This economic impact estimate is approximately 25% smaller than the conventional ATT for avoided deforestation (17.3 percentage points).
Program effectiveness was lower in areas where the government perceived higher net benefits of protection, indicating potential inefficiencies.

Conclusions:

The weighted ATT provides a more nuanced economic interpretation of environmental program impacts than the conventional ATT.
Government protection programs can be evaluated for their economic efficiency by comparing weighted and conventional ATT measures.
Findings suggest a need to align program implementation with areas of greatest need and potential economic benefit to maximize effectiveness.