Three reasons to use annual payments in contingent valuation surveys: Convergent validity,discount rates,and mental accounting

We present three arguments for using ongoing annual payments in contingent valuation (CV) surveys that estimate the benefit of a long-lasting environmental improvement. First, by matching the duration of the payments with the duration of the environmental benefits, survey respondents are spared from performing complicated present value calculations. Second, willingness to pay (WTP) estimates from CV surveys that include ongoing annual payments best match WTP estimates obtained using travel cost surveys. Third, respondents are less likely to face binding mental budget constraints with ongoing annual payments than with a larger one-time payment. In addition, respondents’ discount rates may be estimated by collecting non-hypothetical, individual time preference data as part of the valuation survey.     

Do exurban communities want more development?

Most land-use surveys of exurban residents focus on eliciting preferences for residential development and open space conservation. This article, in contrast, reports on a stated preference study of exurban residents that assesses the relative attractiveness of a variety of commercial and recreational land uses. Focus group participants and town planners proclaimed a demand for certain commercial services such as modern grocery stores and fine-dining restaurants, but survey respondents generally exhibit a strong preference for no additional development beyond the current rate of development. Results show that if additional development is to occur, then recreational services are generally preferred over more traditional commercial development. Combining two commercial services in a single development project are strongly preferred to stand-alone developments. Our approach illustrates how planners may uncover misconceptions about and priorities for land conversion through examining residents’ preferences.     

Personality and economic choices

There is substantial variation in individual preferences for public goods, yet much of that variation remains poorly understood. However, simple measures of personality can help to explain economic values and choices in a systematic way. In this paper, we examine the effects of personality on individual economic choices over public environmental goods. Based on three datasets from three separate stated preference studies, we use a hybrid choice econometric framework to examine the effects of personality on preferences for the status quo, changes in environmental quality, and costs of investing in environmental improvements. We find effects that are consistent across all datasets. Personality, a stable feature of an individual's character that is simple to measure, enriches explanations of why the demand for environmental goods varies across people, provides an indication of how different people are likely to react to the introduction of environmental policies, and explains substantial differences in Willingness to Pay.     

Social preferences for the design of biodiversity offsets for shorebirds in Australia

Understanding the social acceptability of biodiversity offsets is important to the design of offset policy. We used a discrete choice experiment to quantify preferences of Australians for a migratory shorebird offset in the context of an oil and gas development project. We surveyed a nationally representative sample of 1371 respondents on their preferences for current and prospective offset‐policy characteristics via an online questionnaire to inform policy design of the social dimensions related to offset acceptability. The majority of respondents accepted offsetting as a means to allow economic development; the option to reject development (and an offset) was selected in 13% of possible offset scenarios. Substituting protection of a species affected by the development with protection of a more endangered species was a desirable policy characteristic, as was having the offset implemented by a third party or the government rather than the company responsible for the development. Direct offset activities (e.g., improving degraded habitat) were preferred over indirect activities (e.g., a research program), and respondents were strongly against locating the offset at a site other than where the impact occurred. Positive and negative characteristics of offsets could be traded off by changing the number of birds protected by the offset. Our results show that Australians are likely to support increased flexibility in biodiversity‐offset policies, particularly when undesirable policy characteristics are compensated for.     

Radioactivity in drinking water: Expert opinion and policy choices

To examine the preferences of experts to selected economic and policy options in ground-water protection, we conducted an exploratory survey. We presented a group of 120 experts with an analysis of the problem of radium in drinking water supplies of Iowa, and requested their response to a variety of formal questions pertaining to specific issues related to the presence of radium in drinking water. Ninety-seven of the 120 responded. We observed definite preferences in responses to certain aspects of the problem, although in some cases their responses differed significantly due to such factors as length of ground-water related professional experience and residential status. When the presence of excessive radium in drinking water is identified, the respondents preferred immediate action in a world of incomplete knowledge over extensive future research; were willing to undertake personal action to seek radium-free water rather than wait for official action; and favoured local and state government involvement over federal intervention. Findings based on such exploratory surveys can be of much value in defining insightful research hypotheses for field testing. Confirmatory testing of such hypotheses to establish actual preferences in communities with excessive radium in drinking water is a valuable area for further research.     

A criterion validity test of the contingent valuation method: comparing hypothetical and actual voting behavior for a public referendum

This study pursues external validation of contingent valuation by comparing survey results with the voting outcome of a Corvallis, Oregon, referendum to fund a riverfront improvement project through increased property taxes. Survey respondents hypothetically make a voting decision—with no financial consequences—on the upcoming referendum. The survey sample consists of respondents verified to have voted in the election. We use available precinct-level election data to compare the proportion of “yes” survey and referendum votes as well as estimate voting models and mean willingness to pay (WTP) based on the two sets of data. We find that survey responses match the actual voting outcome and WTP estimates based on the two are not statistically different. Contrary to similar studies, our statistical results do not depend on re-coding the majority of “undecided” survey responses to “no.” Furthermore, such a re-coding of responses may be inappropriate for our data set.     

Addressing social attitudes toward lethal control of wildlife in national parks

The extraordinary population growth of certain ungulate species is increasingly a concern in agroforestry areas because overabundance may negatively affect natural environments and human livelihoods. However, society may have negative perceptions of killing wildlife to reduce their numbers and mitigate damage. We used an online survey that included a choice experiment to determine Spanish citizens’ (n = 190) preferences toward wildlife population control measures related to negative effects of ungulate overabundance (negative impacts on vegetation and other wildlife species and disease transmission to livestock) in 2 agroforestry national parks in Spain. We used latent-class and willingness-to-pay in space models to analyze survey results. Two percent of respondents thought a national park should have no human intervention even if lack of management may cause environmental degradation, whereas 95% of respondents favored efforts to reduce damage caused by overabundant ungulate species. We estimated human well-being losses of survey respondents when sustainable effects of deer overabundance on the environment became unsustainable effects and well-being gains when sustainable effects transitioned to no visible effects. We found that the type of wildlife-control program was a very relevant issue for the respondents; indirect control in which killing was avoided was the preferred action. Sixty-six percent of respondents agreed with the option of hunters paying for culling animals to reduce ungulate impacts rather than management cost coming out of taxes, whereas 19% of respondents were against this option and willing to pay for other solutions in national parks. Our results suggest that killing wildlife in national parks could be a socially acceptable tool to manage overabundance problems in certain contexts, but it could also generate social conflicts.     

Price perceptions in water demand

Economists advocate for using the price mechanism to manage water scarcity, but complex nonlinear rate structures prevalent in markets for municipal water obscure price signals. We conduct a randomized field experiment that jointly elicits knowledge about the cost of water and examines the impact of improved information on demand by linking a survey to water billing records. Half of our sample of 30,000 single family homeowners are randomly sent an invitation to a survey that asks questions about the water bill and the costs of water-use activities (e.g. the cost of taking a shower), and subsequently provides personalized accurate information. Results show that consumers have poor information about the marginal price of water and overestimate the costs of using water. Respondents are relatively better informed about their total bill and water consumption. In aggregate, respondents increase water use in response to the survey, potentially due to learning that water is cheaper than they previously thought. Increased consumption is concentrated among low users who are more likely to over-estimate the costs of using water.     

Graduated stringency within collective incentives for group environmental compliance: Building coordination in field-lab experiments with artisanal gold miners in Colombia

Small-scale gold mining is important to rural livelihoods in the developing world but also a source of environmental externalities. Incentives for individual producers are the classic policy response for a socially efficient balance between livelihoods and the environment. Yet monitoring individual miners is ineffective, or it is very costly, especially on frontiers with scattered small-scale miners. We ask whether monitoring at a group level effectively incentivizes cleaner artisanal mining by combining lower-cost external monitoring with local collective action. We employ a mining-framed, threshold-public-goods experiment in Colombia's Pacific region, with 640 participants from frontier mining communities. To study compliance with collective environmental targets, we vary the target stringency, including to compare increases over time in the stringency versus decreases. We find that collective incentives can induce efficient equilibria, with group compliance – and even inefficient overcompliance – despite the existence of equilibria with zero contributions. Yet, for demanding targets in which the reward for compliance barely outweighs the cost, compliance can collapse. Those outcomes improve with past successes for easier targets, however, so our results suggest gain from building coordination via graduated stringency.     

The social cost of carbon revisited

An estimate of the social cost of carbon (SCC) is crucial to climate policy. But how should we estimate the SCC? A common approach uses an integrated assessment model (IAM) to simulate time paths for the atmospheric CO₂ concentration, its impact on temperature, and resulting reductions in GDP. I have argued that IAMs have deficiencies that make them poorly suited for this job, but what is the alternative? I present an approach to estimating an average SCC, which I argue can be a useful guide for policy. I rely on a survey of experts to elicit opinions regarding (1) probabilities of alternative economic outcomes of climate change, but not the causes of those outcomes; and (2) the reduction in emissions required to avert an extreme outcome, i.e., a large climate-induced reduction in GDP. The average SCC is the ratio of the present value of lost GDP from an extreme outcome to the total emission reduction needed to avert that outcome. I discuss the survey instrument, explain how experts were identified, and present results. I obtain SCC estimates of $200/mt or higher, but the variation across experts is large. Trimming outliers and focusing on experts who expressed a high degree of confidence in their answers yields lower SCCs, $80 to $100/mt, but still well above the IAM-based estimates used by the U.S. government.     

Strategic implications of counter-geoengineering: Clash or cooperation?

Solar geoengineering has received increasing attention as an option to temporarily stabilize global temperatures. A key concern is that heterogeneous preferences over the optimal amount of cooling combined with low deployment costs may allow the country with the strongest incentive for cooling, the so-called free-driver, to impose a substantial externality on the rest of the world. We analyze whether the threat of counter-geoengineering technologies capable of negating the climatic effects of solar geoengineering can overcome the free-driver problem and tilt the game in favour of international cooperation. Our game-theoretical model of countries with asymmetric preferences allows for a rigorous analysis of the strategic interaction surrounding solar geoengineering and counter-geoengineering. We find that counter-geoengineering prevents the free-driver outcome, but not always with benign effects. The presence of counter-geoengineering leads to either a climate clash where countries engage in a non-cooperative escalation of opposing climate interventions (negative welfare effect), a moratorium treaty where countries commit to abstain from either type of climate intervention (indeterminate welfare effect), or cooperative deployment of solar geoengineering (positive welfare effect). We show that the outcome depends crucially on the degree of asymmetry in temperature preferences between countries.     

Intertemporal quota arbitrage in multispecies fisheries

In the management of natural resources, regulation often induces behavioral responses by resource users that ultimately undermine stated policy objectives. Examples of these unintended consequences have been associated with regulations ranging from the Endangered Species Act to laws governing clean air. In this paper we investigate an unintended behavioral response that can be triggered by conservation measures in multispecies fishery management, which leads to increased targeting of the species the conservation measures are meant to protect. Harvest is subject to stochastic variation, with output partially determined by the probability of encountering species of interest, either due to targeting or avoidance. Given the right conditions, an intertemporal arbitrage opportunity arises due to the fact that by targeting a stock in the current period, the probability of encountering that stock in the next period, when announced conservation measures are implemented, decreases. We present an empirical case study that supports the findings of the theoretical model. The results indicate that, by targeting so called weak stocks, some New England fishermen are willing to trade off increased costs today for increased expected profits in the future. To prevent the potentially harmful effects of this behavioral response, a manager may adopt precautionary provisions at the time a quota reduction is announced, or alternatively allow the industry to bank part of its current season's quota in order to alleviate the consequences of the reduction in the ensuing period. These results highlight the challenge of developing effective conservation strategies.     

Public Preferences for Compensatory Mitigation of Salt Marsh Losses: a Contingent Choice of Alternatives

Abstract:  Human activities continue to eliminate or degrade wetlands that provide rich habitat for many species. Compensatory mitigation, including creation of new wetlands, restoration of previously degraded wetlands, or preservation of existing wetlands, is one policy option that seeks to maintain no net loss of wetland habitat. Public support of wetland mitigation is essential because the public incurs the cost for many mitigation projects in the form of higher taxes. Therefore, public preferences should be considered when decisions are made about wetland mitigation options. We used a contingent-choice survey in Rhode Island to identify factors affecting public support for different types of compensatory wetland mitigation. Results were based on 640 survey responses. The amount of wetland lost during the original development project had no significant effect on the preferred mitigation alternative. Preferences for preservation, restoration, and no-action alternatives varied according to respondents' gender, education, and income. Certain general considerations applied, however, regardless of mitigation type. Respondents were willing to incur increases in taxes and fees for most mitigation projects. The larger the mitigation project and the lower the cost, the more likely it was to gain public support. The presence of endangered species contributed to public support, but less significantly than public access. Public access can be critical to public support, particularly if the size of the wetland is small or the cost is high. If the cost of providing public access, such as a boardwalk or viewing tower, is relatively small, the gain in public support for mitigation expenditures may well allow a substantial expansion of the area involved in mitigation projects and thus a greater increase in the amount of habitat conservation.     

Generating spatially optimized habitat in a trade‐off between social optimality and budget efficiency

Auctions have been proposed as alternatives to payments for environmental services when spatial interactions and costs are better known to landowners than to the conservation agency (asymmetric information). Recently, an auction scheme was proposed that delivers optimal conservation in the sense that social welfare is maximized. I examined the social welfare and the budget efficiency delivered by this scheme, where social welfare represents the difference between the monetized ecological benefit and the conservation cost incurred to the landowners and budget efficiency is defined as maximizing the ecological benefit for a given conservation budget. For the analysis, I considered a stylized landscape with land patches that can be used for agriculture or conservation. The ecological benefit was measured by an objective function that increases with increasing number and spatial aggregation of conserved land patches. I compared the social welfare and the budget efficiency of the auction scheme with an agglomeration payment, a policy scheme that considers spatial interactions and that was proposed recently. The auction delivered a higher level of social welfare than the agglomeration payment. However, the agglomeration payment was more efficient budgetarily than the auction, so the comparative performances of the 2 schemes depended on the chosen policy criterion–social welfare or budget efficiency. Both policy criteria are relevant for conservation. Which one should be chosen depends on the problem at hand, for example, whether social preferences should be taken into account in the decision of how much money to invest in conservation or whether the available conservation budget is strictly limited.     

Trophy hunters’ willingness to pay for wildlife conservation and community benefits

In the face of fundamental land‐use changes, the potential for trophy hunting to contribute to conservation is increasingly recognized. Trophy hunting can, for example, provide economic incentives to protect wildlife populations and their habitat, but empirical studies on these relationships are few and tend to focus on the effects of benefit‐sharing schemes from an ex post perspective. We investigated the conditions under which trophy hunting could facilitate wildlife conservation in Ethiopia ex ante. We used a choice experiment approach to survey international trophy hunters’ (n = 224) preferences for trips to Ethiopia, here operationalized as trade‐offs between different attributes of a hunting package, as expressed through choices with an associated willingness to pay. Participants expressed strong preferences and, consequently, were willing to pay substantial premiums for hunting trips to areas with abundant nontarget wildlife where domestic livestock was absent and for arrangements that offered benefit sharing with local communities. For example, within the range of percentages considered in the survey, respondents were on average willing to pay an additional $3900 for every 10 percentage points of the revenue being given to local communities. By contrast, respondents were less supportive of hunting revenue being retained by governmental bodies: Willingness to pay decreased by $1900 for every 10 percentage points of the revenue given to government. Hunters’ preferences for such attributes of hunting trips differed depending on the degree to which they declared an interest in Ethiopian culture, nature conservation, or believed Ethiopia to be politically unstable. Overall, respondents thus expressly valued the outcomes of nature conservation activities—the presence of wildlife in hunting areas—and they were willing to pay for them. Our findings highlight the usefulness of insights from choice modeling for the design of wildlife management and conservation policies and suggest that trophy hunting in Ethiopia could generate substantially more financial support for conservation and be more in line with conservation objectives than is currently the case.     

Cost‐effectiveness of conservation payment schemes for species with different range sizes

Payments to compensate landowners for carrying out costly land‐use measures that benefit endangered biodiversity have become an important policy instrument. When designing such payments, it is important to take into account that spatially connected habitats are more valuable for many species than isolated ones. One way to incentivize provision of connected habitats is to offer landowners an agglomeration bonus, that is, a bonus on top of payments they are receiving to conserve land if the land is spatially connected. Researchers have compared the cost‐effectiveness of the agglomeration bonus with 2 alternatives: an all‐or‐nothing, agglomeration payment, where landowners receive a payment only if the conserved land parcels have a certain level of spatial connectivity, and a spatially homogeneous payment, where landowners receive a payment for conserved land parcels irrespective of their location. Their results show the agglomeration bonus is rarely the most cost‐effective option, and when it is, it is only slightly better than one of the alternatives. This suggests that the agglomeration bonus should not be given priority as a policy design option. However, this finding is based on consideration of only 1 species. We examined whether the same applied to 2 species, one for which the homogeneous payment is best and the other for which the agglomeration payment is most cost‐effective. We modified a published conceptual model so that we were able to assess the cost‐effectiveness of payment schemes for 2 species and applied it to a grassland bird and a grassland butterfly in Germany that require the same habitat but have different spatial‐connectivity needs. When conserving both species, the agglomeration bonus was more cost‐effective than the agglomeration and the homogeneous payment; thus, we showed that as a policy the agglomeration bonus is a useful conservation‐payment option.     

A new meta-analysis on the WTP/WTA disparity

This study reports a new meta-analysis of papers that elicit willingness-to-pay (WTP) and willingness-to-accept compensation (WTA) measures of value for the same good. We investigate the effects of type of good and several survey-design features on the WTP/WTA disparity, measured as the logarithm of the ratio of mean WTA to mean WTP. Confirming Horowitz and McConnell?s (2002) pioneering meta-analysis, we find the disparity is smaller for ordinary private goods than for public and non-market goods, that it is not solely an artifact of using hypothetical transactions or other weak experimental or survey methods, and that it is smaller for studies using student subjects. In addition, we find that the disparity is smaller when subjects have experience valuing the good in real markets or through repeated experimental trials. In contrast to Horowitz and McConnell, we find the disparity is significantly smaller in studies using incentive-compatible elicitation mechanisms. The disparity is smaller in more recent studies, an effect that is attributable only in part to changes in study characteristics.     

Desires and Management Preferences of Stakeholders Regarding Feral Cats in the Hawaiian Islands

Feral cats are abundant in many parts of the world and a source of conservation conflict. Our goal was to clarify the beliefs and desires held by stakeholders regarding feral cat abundance and management. We measured people's desired abundance of feral cats in the Hawaiian Islands and identified an order of preference for 7 feral cat management techniques. In 2011 we disseminated a survey to 5407 Hawaii residents. Approximately 46% of preidentified stakeholders and 20% of random residents responded to the survey (1510 surveys returned). Results from the potential for conflict index revealed a high level of consensus (86.9% of respondents) that feral cat abundance should be decreased. The 3 most common explanatory variables for respondents’ stated desires were enjoyment from seeing feral cats (84%), intrinsic value of feral cats (12%), and threat to native fauna (73%). The frequency with which respondents saw cats and change in the perceived abundance of cats also affected respondent's desired abundance of cats; 41.3% of respondents stated that they saw feral cats daily and 44.7% stated that the cat population had increased in recent years. Other potential environmental impacts of feral cats had little affect on desired abundance. The majority of respondents (78%) supported removing feral cats from the natural environment permanently. Consensus convergence models with data from 1388 respondents who completed the relevant questions showed live capture and lethal injection was the most preferred technique and trap‐neuter‐release was the least preferred technique for managing feral cats. However, the acceptability of each technique varied among stakeholders. Our results suggest that the majority of Hawaii's residents would like to see effective management that reduces the abundance of feral or free‐roaming cats. Deseos y Preferencias de Manejo de las Partes Interesadas con Respecto a los Gatos Ferales en las Islas Hawaianas.     

Prospect theory and energy efficiency

Investments in energy efficiency entail uncertainty, and when faced with uncertainty consumers have been shown to behave according to prospect theory: preferences are reference-dependent and exhibit loss aversion, and probabilities are subjectively weighted. Using data from a choice experiment eliciting prospect theory parameters, I provide evidence that loss-averse people are less likely to invest in energy efficiency. Then, I consider policy design under prospect theory when there are also externalities from energy use. A higher degree of loss aversion implies a higher subsidy to energy efficiency. Numerical simulations suggest that the impact of prospect theory on policy may be substantial.     

Longitudinal Analysis of Attitudes Toward Wolves

Understanding individual attitudes and how these predict overt opposition to predator conservation or direct, covert action against predators will help to recover and maintain them. Studies of attitudes toward wild animals rely primarily on samples of individuals at a single time point. We examined longitudinal change in individuals’ attitudes toward gray wolves (Canis lupus). In the contiguous United States, amidst persistent controversy and opposition, abundances of gray wolves are at their highest in 60 years. We used mailed surveys to sample 1892 residents of Wisconsin in 2001 or 2004 and then resampled 656 of these individuals who resided in wolf range in 2009. Our study spanned a period of policy shifts and increasing wolf abundance. Over time, the 656 respondents increased agreement with statements reflecting fear of wolves, the belief that wolves compete with hunters for deer (Odocoileus virginianus), and inclination to poach a wolf. Endorsement of lethal control of wolves by the state and public hunting of wolves also increased. Neither the time span over which respondents reported exposure to wolves locally nor self‐reported losses of domestic animals to wolves correlated with changes in attitude. We predict future increases in legal and illegal killing of wolves that may reduce their abundance in Wisconsin unless interventions are implemented to improve attitudes and behavior toward wolves. To assess whether interventions change attitudes, longitudinal studies like ours are needed. Análisis Longitudinal de las Actitudes Hacia Lobos