Techniques Used to Judge the Desirability of the Level of Services - Dissertation Example

Techniques Used to Judge the Desirability of the Level of Services Techniques used to judge the desirability of the level and composition of services provided The level and services provided by decision makers and politicians are high as expected by the society because they affect the citizens. Therefore, it is imperative that the techniques they adopt to make decisions will improve the effectiveness, accountability and attention and values of the services they have decided to give the people they govern. In some cases, the goals of decision maker and politicians is to ensure that there is citizen satisfaction where the government services are involved. In that, in public and private sector there is a difference in the implementation of decision because in private sector the decisions made for the desirability of services only affects individuals in that private organization. However, in public sector it is imperative to make decisions that are desirable because they affect the citizens in relation to the provision of government services. The willingness to pay and accept the economic concept of opportunity and benefit is said to be the concept of cost. In this essay, I will examine the various techniques that are used by politicians and decision makers to provide desirable services, as well as, the economic value and cost benefit analysis. The rationality of the techniques used by decision makers and politicians are used using two criteria first using the theoretical validity, which is consistent with the economic theory. Secondly, there is the market validity established whether the techniques provide values that are consistent with the market values. Variations in the environment can alter economic activities, as well as, the cause change in the monetary costs and revenue activities (Pimentel et al. (1995, P. 1118). These changes can be used to establish the revenues and costs that can be used to establish the worth of change in the surroundings. These techniques include the change-in-productivity where these technique illustrates how the market prices can be used to check worth of the output from a productive development in this case the environmental condition often affect the processes (Hidano, 2002. P. 67). Therefore, values for change in the atmosphere can be derivative from the allied change in productivity. Thus, an increase in output because of transformation is a measure of an increment in advantage and a decrease in output is an extent of an upsurge in cost. The technique is used in land conservation, watershed management, forest management, grazing and tourism. A good example of where the technique can be used is in cases where the economic influences of reducing productions of greenhouse gas. The advantages of this technique is that it is straightforward and direct. Secondly, the technique relies on observed market prices. Lastly, the technique depends on observed output altitudes. The limitations of change-in productivity technique is that the technique requires the definition of physical flows of output overtime. Secondly, to ensure that there is change in flow there must be a relationship to the change in the surroundings. The change- in- income technique focuses on change on wages and income and labor inputs. In that, income can be lost because of loss of work from premature illness, ill health or death. Problems that bring about change in income or labor inputs are instigated by environmental impacts such as pollution. Where income can be achieved due to the improvements in health, fewer deaths and postponed illness (Perman & Perman, 2011 P. 145). In that, if the change in well-being is due to the variation in the impact, the loss of healthiness is an environmental cost where the improvement is a conservational advantage. Therefore, when the link between ecological effect health and salary can be recognized, the effect can be esteemed as a modification in income. This technique has been used to assess the advantages to health from the control of sulphur oxide. It was established that when there is control of sulphur oxide concentration there is an increase in wages as there changes in working days more people go to work so less workdays are lost. The technique can also be used to establish changes in expenditures to measures gains as cost savings and losses as cost increased. For example, the price of corrosion of building because of pollution can be assessed in labor price to clean buildings. Therefore, the technique is used to value health benefits from pollution control (Alberini, 2010, p. 120). By so doing, the technique establishes whether people are agreeable to pay for the extra services in order to get good environmental quality. The techniques especially the change in cost technique is very important because it estimates the value benefits if improved health. Therefore, the economic value of the improved health to every individual determines how much the individual is enthusiastic to pay. Therefore, creating no necessary rapport between the amount and the change in income that the individual is agreeable to pay (Anderson, 2014, P. 78). Thus, the technique assumes that what a person makes is a measure of a person’s benefit to the society and for that reason a person should be equipped to pay the amount that is equal to the minimum amount to improve their health and save a life. The advantages of the Change-in –income technique include that the technique is straightforward to apply. Secondly, the technique values the actual damage. Lastly, the technique rests on the established actual data and procedures. The drawback to this technique is that the connection between pollution and health, as well as, the link between income and health have to be established for every application. Thirdly, there is the replacement cost technique, which identifies the expenditure that is indispensable to replace an environmental reserve or human made good, asset or service. In that, expenditure accrued on replacement is a ration of the willingness to pay in order to continue receiving a certain advantage. Thus, the technique provides only a minimum approximation as more may have been consumed if it was established that it was necessary to do so. A good example, of where the technique can be used is when there is estimation of land degradation to the shire councils, as well as, how they may affect the environment and the people living in its surroundings. The advantage of this technique is that the auxiliary costs can often be valued relatively simply to ensure that the technique is extensively used (Bjørndal, 2010, P. 56). The replacement-cost technique are used to measure the benefit in cases where they are required to meet some informally sanctioned restriction on use of the surroundings. Additionally, the technique is advantageous in the sense that, the cost of a scheme to restore surroundings in order to meet socially resolute standards where the least value of the benefits are preserved. The weaknesses presented by this technique is that the replacement services and goods must be identical to or should at least be good replacements for the original goods and services. Secondly, replacement must restore the benefits lost because of environmental benefits and not advantages that are lost due to normal tear and wear. Thirdly, the method assumes that the advantage of the replacement surpasses the cost else, the cost would be incurred meaning that the replacement cost offers only a least estimate of the advantage. Fourthly, there is the preventive-expenditure technique where households are willing to pay in order to stop damage to their surroundings and so secure their level of satisfaction from it. Where the households make such expenditures, they trust that the aids from the damage that is circumvented surpasses the payments to avert it (Organization for Economic Co-operation and Development, 2006). Therefore, the preparedness to incur these incidentals illustrates the advantage from protection. The technique relates in cases where homes spend money to avert damage to their surroundings such as spending to prevent noise, fire, floods and decreases in water quality. The strengths or advantages of this technique is that the defensive behavior can be enthusiastically practical, or at least can be forecasted reasonably easily as it applies to individual households in instances with which they are accustomed. Secondly, the preventive expenditures are disbursed in markets. The advantages of this technique is that it makes it appropriate for wide claim, especially when the minimum nature of the advantage values can be put up in the analysis (Lazo, McClelland & Schulze, 1997 P. 376). The disadvantages of this technique is that it only gives a minimum approximation of the advantage in case the household spent extra than the actual cost to guard their status quo. Secondly, the defensive behavior may result to other benefits-expenditure on lagging in order to defend against noise and may offer heat insulation and the compensation for these other profits must be alienated in the analysis. The trade-off game is another technique that is used by politicians and decision makers because it is fundamental to human behavior and to the ma king of choices. In that, in any decision there are various benefits that are gained and cost is also incurred making the trade-off and act of weighing benefits and costs (Ruben, 2007. P. 123). In this technique, the respondents are given two alternatives and are requested to choose between them, where the alternatives are defined in terms of their outcomes as they differ in the level of one or more outcomes one of the outcomes is monetary. The technique is used to measure in monetary terms the benefit or costs of a given change in landscapes, pollution levels and recreational facilities. A good example, of using this technique is in the change income is greater of less than a change in an environmental effect. The advantages of this technique is that because it is a development of contingent valuation it has similar strengths and weakness. They include that the technique has contingent valuation in that there is willingness to pay or accept question is more tightly passed and the alternative resource uses are more obviously denied. The drawback of the technique is that it is somehow cumbersome than contingent valuation in that the trade-off game that requires more explanation to players. Lastly, the method that is used by politicians and policy makers in establishing the desirability of goods and services is the relocation cost technique. The technique has been held to be similar to the preventive–expenditure technique where the activities to maintain the level of satisfaction or productivity are costed (Lee & George, 2000. P. 96). In this technique, the activities concern relocation of individuals or the entire household or firm rather than the adjustment to secure an existing movement at an existing locality. The advantages of this technique is that it provides a straight way to integrate damages costs into the assessment of proposals. In the case of an improvement in environmental resource, it would cause some other facility or activity to relocate, where the repositioning costs are a genuine charge against the venture. The environmental resources offer a complex set of standards to individuals; hence benefiting the society. Environmental valuation is based on the supposition that individual are prepared to pay for environmental gains; hence, willing to accept reimbursement for some environmental damages. The environmental values that are associated with preserving the environmental resources include the indirect – use values, intrinsic values and non-use values. Therefore, Total economic value = indirect- use value + direct-use value + intrinsic value. Various methods have been created to help in the environmental valuation, and they include market and non-market grounded techniques (Pearce, 2006. P. 67). Market based techniques include fact ore production, defensive expenditures and producer/ consumer surplus. Surrogate markets techniques include travel cost and hedonic pricing. Non-market based valuation techniques include contingent valuation and choice experiments. In market-based methods, the economist choose to rely on direct evident market connections in order to place pecuniary worth on goods and services. The marketplaces enable economist to ration the individual willingness to pay to preserve or acquire environmental services. Consumers, on the other hand, reveal their partialities through the adoptions they make in allocating infrequent assets among the competing alternatives. In the factor of production approach the yield of any organization is a utility of various imperative inputs such as land, natural resources and capital (Hackett, 2011, P. 89). As factors of production, their role is to produce other goods in that, when a natural reserve has direct worth as a factor of creation and the effects of environmental degradation on the future output the resource can be identified. The subsequent economic value of the decline in invention or higher cost of manufacturing is measured. The use of this method in financial valuation of the environment has been help to be straightforward although it is limited to the possessions that are used in the construction of process of goods that are sold in markets. The surrogate market methods are used in the lack of unmistakably defined markets where the value of the environmental resources are derived from information that is acquired through surrogate markets. Where the most common methods that are used when monetizing ecological resources include property and labor. In the hedonic price method, the conservational valuation uses replacement markets for placing a value on eco-friendly quality. This method is commonly used in the real estate market in pricing the environmental values. This is because air, noise and water have been said to have a direct impact of the property values. Therefore, by comparing the properties that have the same properties or by scrutinizing the price of the property over time because the environmental conditions change over time and correcting all non-environmental factors. Having evidence in the accommodation market can be used in estimating the people preparedness to pay for the ecological quality. The non-markets methods can be used in the economic evaluation of the techniques where the Contingent Valuation Method elicits information in connection to the environmental preferences from individuals using surveys, interviews and questionnaires. When using the contingent method the assessor constructs a hypothetical market or case scenario that involves the decline or the improvement of the environment quality. By so doing, it measures the willingness of individuals to pay through utility fees or local property taxes. Additionally, it established the willingness of the people to pay for the improvement and accept monetary compensation in cases where there is decline in the environment quality. The use of questionnaires in the CVM in most instances takes the form of a simple flexible interrogation or may involve a command process or take it or leave- it propositions. In case of surveys, the examiners estimate the median and mean of preparedness to pay for an environmental development, as well as, accept improvement for a decline in environmental quality (Hein, 2010.P. 83). The CVM method is very supple and can be used to worth any environmental asset. It is important to value the environment because the world is comprised of ecosystems that are under inordinate stress from human effects where there is an increasing attention is been offered to non-use values. Environmental valuation techniques are determined by the belief that individuals self-interested and demonstrate inclinations that form the base of market interactions. The market interactions validate how individuals value ecological goods and services. Cost benefit analysis is used to estimate the value of creating a high system, schools or enforcing environmental protection. The policy makers measure the social marginal cost and social benefit marginal benefit for each project because all social things requires a cost-benefit analysis. The market interest rate should be used for discounting as they reflect the rate at which those in the economy and are willing to trade present for future consumption. The market rate reflect social preferences where the nominal interest rates are equal to the sum of the real rate of interest and inflationary expectations (Garrod & Willis, 2000 P. 48). Cost analysis has had many controversies because there is a strong probability that the world will suffer in the future because of global change in temperature. For that reason, finding the correct social discount rate for the benefits of reducing carbon dioxide emission and other greenhouse gases is imperative. In conclusion, there are various challenges that are presented by the techniques that are used by decision makers and politicians in establishing the desirable services for the people they govern. However, despite the drawbacks that are presented by the techniques they have proven to be very desirable in the sense that, they help in the evaluation of property and the environment ensuring that people get quality environmental benefits. In cases, where the air is not desirable the charges of the house decline ensuring that the individuals interested in the land get the quality. Therefore, understanding the techniques that are used by policy makers in making decisions VIN relation to the economics of the environment is vital. This is because it provides the actual estimates of the monetary amounts that individuals should pay. References Alberini, A. (2010). Valuation of environment-related health risks for children. 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