Willingness to pay for safe drinking water: Evidence from Parral, Mexico

A referendum-format contingent valuation (CV) survey is used to elicit household willingness to pay responses for safe and reliable drinking water in Parral, Mexico. Households currently adopt a variety of averting and private investment choices (e.g., bottled water consumption, home-based water treatment, and installation of water storage facilities) to adapt to the existing water supply system. These revealed behaviors indicate the latent demand for safer and more reliable water services, which is corroborated by the CV survey evidence. Validity findings include significant scope sensitivity in WTP for water services. Further, results indicate that households are willing to pay from 1.8% to 7.55% of reported household income above their current water bill for safe and reliable drinking water services, depending upon the assumptions about response uncertainty.     

Exploring Values,Context and Perceptions in Contingent Valuation Studies: The CV Market Stall Technique and Willingness to Pay for Wildlife Conservation

Public preferences for conservation and environmental management may be identified in willingness to pay (WTP) studies. Normally part of a contingent valuation exercise, WTP studies elicit monetary estimates of non-market economic goods. This paper describes a new approach to WTP, the CV Market Stall, a technique that adds a discursive, qualitative dimension to contingent valuation. It is suggested that the CV Market Stall technique is a good method for exploring attitudes and responses to environmental project proposals. The flexible format, with an emphasis upon information provision, discussion and learning would also allow contingent valuation to be extended to much more complex and uncertain environmental issues.     

Stakeholder Willingness to Pay for Watershed Restoration in Rural Bolivia1

Abstract: Two CVM surveys were administered to 211 urban households and 188 rural farmer‐irrigators in the Comarapa watershed in Bolivia, South America, to estimate stakeholder willingness to pay (WTP) for a proposed upper watershed restoration program. Mean monthly household WTP to improve drinking water was $1.95 (65% of current charges), while mean annual WTP among farmer‐irrigators to improve irrigation water was $17 per hectare (34% of current costs). Aggregated to the entire population of households and farmer‐irrigators total WTP is $77,400 per year, which is 77% of the minimum cost to implement a watershed restoration program.     

Impact of Socio-demographic Factors on Willingness to Pay for the Reduction of a Future Health Risk

Knowledge of socio-demographic factors affecting attitudes to and perception of risk is an important instrument in enhancing efficiencies of interventions. The authors evaluated whether socio-demographic variables affected attitudes to an environmental issue (securing future drinking water). An important aspect was the delay between time of environmental pollution and time of human exposure and thereby potential health risk. Gender, education, place of residence and age all influenced the extent to which individuals were willing to allocate present resources to alleviate a future problem. Specifically, people above the age of 50 appeared more reluctant to pay for an intervention against a future potential health threat. The authors found a significant correlation between attitude and willingness to pay (WTP). In the authors' scenarios, the WTP variable worked more as a dichotomous variable than as a continuous variable, stressing the importance and relevance of the WTP=0 answers.     

Information and Willingness to Pay in a Contingent Valuation Study: The Value of S. Erasmo in the Lagoon of Venice

This paper reports on a contingent valuation (CV) study eliciting willingness to pay (WTP) for a public program for the preservation of lagoon, beach and infrastructure in the island of S. Erasmo in the Lagoon of Venice, Italy. We use split samples to investigate the effect of providing a summary of reasons for voting in favor and against the program before the referendum valuation question. Reminding respondents of the reasons for voting for or against the program increases WTP among less highly educated respondents, and decreases WTP among more highly educated respondents.     

Residents' willingness to pay for improved liquid waste treatment in urban Ethiopia: results of choice experiment in Addis Ababa

This paper discusses residents’ willingness to pay (WTP) for improved liquid waste treatment in Addis Ababa based on data collected in 2011 using random parameter logit model. Findings indicate that respondents are willing to contribute for improved liquid waste treatment with higher quantity and quality. Their mean WTP for the medium improvement scenario is found to be 15.53 ETB (0.93 USD) per month. The compensation surplus tends to increase from the status quo to the alternative scenarios with aggressive improvement. Finally, the paper concludes by indicating the socioeconomic difference across households, and sub-cities need to be considered in designing environmental protection plans for the city.     

Willingness to pay towards a public good: how does a refund option affect stated values?

Mandatory taxes and/or voluntary contributions are commonly adopted as the payment vehicle when eliciting willingness to pay (WTP) in environmental valuation studies. While mandatory taxes may arouse negative feelings, voluntary contributions may lead to strategic behaviour (over bidding) or free riding (under bidding). In this paper, we explore an alternative payment vehicle which avoids the draconian undertones associated with taxes and may be more incentive compatible than a voluntary contribution – a tax that incorporates a refund option. The template for such a payment vehicle is the value added tax charged to tourists in Ireland, but which can be reclaimed on exiting the country. In the context of raising public funds to support the conservation of rural countryside landscape, a comparison is made between the elicited WTP via a mandatory tax and that elicited via the alternative payment method incorporating a refund option. While we observe similar participation rates between the two payment methods, the refund option reveals a higher stated WTP.     

Willingness to pay for waste management improvement in Dhaka city, Bangladesh

We employed the contingent valuation method to estimate the willingness to pay of the respondents to improve the waste collection system in Dhaka city, Bangladesh. Our objective was to estimate how WTP differs between respondents who received or did not receive door to door waste collection. The methodology consisted of asking people directly about their willingness to pay an additional waste collection service charge to cover the costs of a new waste management project. The mean value of WTP for areas that received waste collection service areas was higher than for residents of areas that did not but the difference was not statistically significant. The aggregate value of WTP of the respondents in Dhaka city was 7.6 million Taka (USD0.1 million).     

Contingent Valuation and Real Economic Commitments: A Private Good Experiment

The ultimate test of the accuracy of contingent valuation methods (CVM), in measuring benefits, is whether subjects will actually pay the amounts that they say they would be willing to pay in a CVM study. An experiment was conducted in which the maximum WTP of potential visitors to enter Warkworth Castle was compared against the acceptance of an entrance ticket at their stated CV price, thus providing a real monetary test of value and behavioural intention. Only 40% of potential visitors at the Castle gate were willing to make a real economic commitment following their CV WTP responses. Whilst the CVM results were found to be comparable with other CVM studies in terms of content and construct validity, they clearly failed a criterion validity test, even when the CVM survey was juxtaposed to the behavioural intention stage. CVM studies need to adopt stringent criteria in deciding the 'truthfulness' and 'legitimacy' of WTP responses, if CVM is to provide accurate and robust estimates of the value of environmental goods.     

Lexicographic preference in biodiversity valuation: Tests of inconsistencies and willingness to pay

Previous contingent valuation (CV) studies on biodiversity have indicated that as much as one-quarter of the respondents show lexicographic preferences when facing biodiversity-money trade-offs. This behaviour is incompatible with welfare theory underlying CV, and thus questions the validity and reliability of the outcome of CV of changes in biodiversity. However, it is difficult from CV responses to distinguish between strict and modified lexicographic preferences, and those attaching a high value to biodiversity. This paper adds to the empirical evidence showing that what at first hand seems to represent strict lexicographic preferences is at most representing modified lexicographic preferences, and probably rather represent just high valuation of biodiversity. Data on both hypothetical and actual willingness to pay (WTP) from a CV study on biodiversity were used to perform tests of inconsistent attitudes to estimate the maximum share of non-compensatory preferences for biodiversity. The results show that there are very few respondents in the group that consistently state high preference for biodiversity preservation and show clear reluctance to trade-off biodiversity with other goods. However, this group also had higher WTP, both hypothetical and actual, than the reference group. This is consistent with exchange preferences and steep indifference curves. Thus, people with lexicographic preferences for biodiversity are probably less numerous than previously indicated.     

Hypothetical and Real Economic Commitments,and Social Status,in Valuing a Species Protection Programme

There has been a long-running debate on the reliability and validity of the contingent valuation method, connected with the hypotheticality of the situation when respondents are asked to state their willingness to pay (WTP) for species protection (the so-called 'hypothetical bias'). Additionally, a number of recent arguments regarding donations to good causes and the benefits of achieving social status have questioned the motives of respondents who have stated their WTP. An experiment at the University of Klagenfurt tested for hypothetical bias by asking participants to state their hypothetical and real WTP for a species protection programme in the Hohe Tauern national park. Hypothetical and real WTP differed significantly. Additionally, it emerged that the pure ecological motive for stating a WTP might be concealed by arguments about donating in order to achieve social status and contributing to a good cause.     

How do Consumers Perceive Electric Vehicles? A Comparison of German Consumer Groups

Abstract

Electric vehicles (EVs) are currently being discussed as a promising means to increase the energy efficiency and sustainability of today's transport systems. While technological progress and cost reduction are certainly crucial topics for their successful diffusion, consumer acceptance is another issue that warrants further analysis. Based on a large online survey (N?=?969), we compared four consumer groups which differ in their likelihood to purchase an EV with regard to their socio-demographic characteristics, their willingness to pay (WTP) and their perceptions of EVs. The findings indicate that early users in Germany are most likely to be middle-aged men living with their families in a multi-vehicle household who have a higher WTP for an EV. Perceived compatibility of an EV with personal needs seems to be the most influential factor on the stated willingness to purchase an EV. With regard to the promotion of EVs, strengthening their environmental advantages and providing financial incentives for purchase are rated as important measures by a majority of the sample, while performance characteristics which are comparable to conventional vehicles seem to be less important for most participants. Based on the data analyses, we provide recommendations for measures regarding the further development and promotion of EVs.     

Tourist Support for Marine Protection in Nha Trang,Viet Nam

Environmental planners often propose tourism as a means of financing programmes to protect significant environmental areas. Surveys of tourists can provide useful information about the significance of environmental problems, trade-offs among policy objectives, willingness to pay (WTP) for protection programmes and preferences for different payment mechanisms. In Khanh Hoa Province, the provincial People's Committee, the Ministry of Fisheries and the World Conservation Union are working to implement Viet Nam's first marine protected area (MPA) in Nha Trang Bay. This paper reports the results of a survey of local and other Vietnamese and foreign tourists to islands that will be included in the MPA. The majority of respondents thought rubbish on the beaches, water pollution and vendors on beaches were problems and that the MPA was a good idea. Foreign tourists were significantly more likely to perceive environmental problems than were Vietnamese tourists, and persons who agreed there were environmental problems were significantly more likely to support the concept of an MPA, despite the potential for possible economic effects with distributive consequences. WTP for protection was modest and positively correlated with education and income. Although foreign tourists were on average willing to pay more, a larger proportion of Vietnamese tourists were willing to pay some amount to support the MPA. Analyses indicate that changes in income and education expected with economic development will increase both awareness of problems and WTP for protection. The results of this analysis are both encouraging and cautionary. The need for an MPA is clearly recognized by most tourists, and most tourists are willing to pay small fees to support the MPA. Given that education has significant impacts on both perceptions of problems and WTP, educational programmes may be an effective strategy for managing the competing objectives of protection and use.     

Farmers' willingness to participate in best management practices in Kentucky

This paper investigates farmers' willingness to participate in Best Management Practices (BMPs) through a proposed Water quality trading (WQT) program in Kentucky. This analysis includes two parts: the first part is to investigate the factors influencing farmers' current usage of BMPs; the second part is to estimate farmers' willingness to implement BMPs given different levels of compensation given in a survey. The results show that farmers who participate in the conservation programs are more likely to use BMPs, but these farmers may not accept the offer to implement additional BMPs. Farmers' experiences about BMPs are more likely to persuade them to adopt additional BMPs than the level of compensation. The results find that using riparian buffers, fencing off animals and building up waste storage facilities are responsive to the levels of compensation offered.     

Preventing land loss in coastal Louisiana: estimates of WTP and WTA

A dichotomous-choice contingent-valuation survey was conducted in the State of Louisiana (USA) to estimate compensating surplus (CS) and equivalent surplus (ES) welfare measures for the prevention of future coastal wetland losses in Louisiana. Valuations were elicited using both willingness to pay (WTP) and willingness to accept compensation (WTA) payment vehicles. Mean CS (WTP) estimates based on a probit model using a Box-Cox specification on income was $825 per household annually, and mean ES (WTA) was estimated at $4444 per household annually. Regression results indicate that the major factors influencing support for land-loss prevention were income (positive, WTP model only), perceived hurricane protection benefits (positive), environmental and recreation protection (positive), distrust of government (negative), age (positive, WTA model only), and race (positive for whites).     

A comparison of alternative contingent valuation elicitation treatments for the evaluation of complex environmental policy

Attempts to evaluate the economic benefits associated with complex environmental policies, using the contingent valuation (CV) method, have been dogged by controversy. In particular, debate has centred on the influence of embedding and related effects on the validity of CV willingness-to-pay (WTP) estimates. This paper discusses these effects in the context of identifying the most appropriate WTP elicitation treatment to evaluate the willingness to pay for the various elements of a multi-dimensional environmental policy. The findings of an empirical experiment demonstrate that a top-down allocation treatment, which uses independent sub-samples for individual policy components, provides the most reliable treatment to value all aspects of a multi-dimensional policy, whilst also overcoming embedding bias problems.     

Estimating the Benefits of Agri-environmental Policy: Econometric Issues in Open-ended Contingent Valuation Studies

This paper reports on an open-ended Contingent Valuation Method study of the conservation benefits of Environmentally Sensitive Areas (ESAs) in Scotland. The ESA scheme is a central component of agri-environmental policy in the UK, and an interesting policy question concerns the extent of non-market benefits generated by such ESAs. The econometric issues we raise in this paper revolve around bid curves. Bid curves are estimated in open-ended Contingent Valuation Method (CVM) studies for three reasons. These are: (1) as a test of theoretical validity; (2) as a test of discriminant validity; and (3) as a means of benefits transfer. Within the first and last of these aims, the partial relationship between willingness to pay (WTP) and independent variables such as income is of interest. There are several econometric issues involved in estimating such relationships, First, the selection process implicit in obtaining positive WTP bids should be explicitly modelled. Second, many CVM surveys suffer from item non-response with respect to 'sensitive' questions such as the respondent's income; these non-responses may be non-random in nature. Finally, it is possible to dis-aggregate the effect of marginal changes in, say, income on WTP into two elements, namely: an effect on the probability that the individual will be willing to pay something; and secondly, an effect on how much they are willing to pay.     

Air quality assessment by contingent valuation in Ji'nan, China

Along with urbanization and environmental deterioration within China, many residents' desire for improved air quality has increased. To address this topic, this study focuses on the relationship between poor air quality and residents' willingness to pay for improved air quality in the city of Ji'nan. As a means of quantifying an individual's willingness to pay (WTP) for improved air quality, a contingent valuation method (CVM) was employed. A sample of 1500 residents was chosen, based on the stratified sampling method. The respondents' WTP was then elicited through a series of face-to-face interviews, conducted using a range of hypothetical, open-ended scenario questions. The results showed that 59.7% of respondents were able to express a positive WTP, and that the average WTP was 100 Chinese Yuan (CNY) per person, per year. In order to establish the relationship between endogenous variables and WTP, both a Probit model on the probability of a positive WTP, and a stepwise regression model were constructed. Most parameters in the econometric analysis demonstrated the expected results. It was found that annual household income, expenditure on the treatment of respiratory diseases and workers in the family significantly influenced WTP. The rates of positive WTP and the monetary amount were also larger for men than for women. Unlike developed countries, most respondents regard air quality improvement as a government responsibility in that more than 40% of respondents had no incentive to bear the costs of attempting to achieve better air quality, indicating a relatively low environmental consciousness.     

Income and distance-decay effects on willingness to pay estimated by the contingent valuation method

This study suggests a methodology for enhancing accuracy in evaluating amenity by the contingent valuation method when household's willingness to pay (WTP) is dependent to its income and the distance between a respondent's residence and the location of a target facility. Using a linear city model, this study demonstrates the influences of income and distance-decay effects on WTP. Simulations are performed to check the validity of the model, as well as to predict consequences when income and distance-decay effects are not properly treated. Finally, the suggested methodology is applied to two real cases. The estimation results from a structural model show that the calculated total benefit varies largely when income and distance-decay effects exist and are ignored. Also, an ad hoc model generates significantly different estimates from the utility difference model this study adopted. The difference in estimates suggests that the total benefit has to be estimated by a structural model.     

Can you be bothered? The role of participant motivation in the valuation of species conservation measures

Group-based approaches to the elicitation of stated preferences are considered particularly suitable for valuing unfamiliar or complex environmental goods. While such exercises provide participants with detailed information and time to think and deliberate, they require a considerable degree of motivation from the respondents. Effects of motivation on willingness to pay (WTP) tend to be ignored within the valuation research community, although similar effects have been reported in psychological literature. In this study, a novel approach using video recordings and behaviour coding of participants in group-based Market Stall meetings was employed to measure motivation as well as its impact on WTP and the theoretical and convergent validity of stated WTP. Indicators of motivation correlated significantly with both WTP statements and their validity, with more motivated individuals stating higher and more valid bids. These findings suggest that the recognition of motivation is an important novel element of research into stated preferences, particularly with respect to usefulness and quality of WTP measures.