Aggregating the benefits of environmental improvements: distance-decay functions for use and non-use values

One of the main problems in using environmental cost-benefit analysis is deciding on the relevant population: whose benefits should we count? This is important since aggregate benefits depend on both per-person benefit and the number of beneficiaries. Yet this latter term is often hard to evaluate. Distance-decay functions are one way of addressing this problem. In this paper, we present estimates of distance-decay functions for a particular environmental improvement, namely a reduction in low flow problems on the River Mimram in Southern England. We do this both for users and non-users, in the context of a contingent valuation study of the benefits of improving low flow conditions. We test whether distance-decay effects for mean Willingness to Pay are stronger for a single environmental good (the River Mimram, in this case) than for a more inclusive set (here, all rivers in Thames region which suffer from low flow problems). Finally, we explore the impact on part-whole bias, in terms of the relationship between WTP for an individual site and WTP for a more inclusive group of sites, of allowing for distance-decay effects.     

Contingent Valuation and Real Economic Commitments: Evidence from Electric Utility Green Pricing Programmes

This paper presents the findings of two 'green pricing' studies conducted to evaluate public support of utilities' investments in renewable energy technologies. These studies compared hypothetical WTP statements with actual payment commitments. The results of these studies indicate that the CVM can be an accurate indicator of an individual's WTP, but that it is an unreliable predictor of which individuals will actually pay. This has important implications for aggregating mean WTP estimates of the value of environmental benefits. It also suggests that market simulations can be useful for predicting programme participation rates when voluntary donations are used as a payment vehicle.     

WILLINGNESS TO PAY FOR FLOOD RISK REDUCTION AND ITS DETERMINANTS IN JAPAN1

ABSTRACT: This study aimed to clarify public preferences for flood control measures in Japan, willingness to pay (WTP), and the main factors involved in WTP by applying the contingent valuation method. Findings showed that most residents surveyed expected some flood control measures, and revealed a diversity of interest in river management. WTP levels for different measures ranged from a mean of ¥2,887 to ¥4,861 and from a median of ¥1,000 to ¥2,000. However, WTP for additional flood risk reduction beyond initial levels was found to be zero. This was considered to be because WTP for flood risk reduction must be determined within a multi‐risk context. WTP for flood control measures may increase with per capita income, individual preparedness, and/or experience with flooding, but may decrease with distance from a river, acceptability of flood risk, and provision of environmental information. Furthermore, perception of flood risk may increase WTP, while perception of other risks may decrease it. Methods of dealing with environmental risk that were proposed in the survey may have affected WTP levels.     

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.     

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).     

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.     

Valuation of National Park System Visitation: The Efficient Use of Count Data Models, Meta-Analysis, and Secondary Visitor Survey Data

The National Park Service (NPS) currently manages a large and diverse system of park units nationwide which received an estimated 279 million recreational visits in 2011. This article uses park visitor data collected by the NPS Visitor Services Project to estimate a consistent set of count data travel cost models of park visitor willingness to pay (WTP). Models were estimated using 58 different park unit survey datasets. WTP estimates for these 58 park surveys were used within a meta-regression analysis model to predict average and total WTP for NPS recreational visitation system-wide. Estimated WTP per NPS visit in 2011 averaged $102 system-wide, and ranged across park units from $67 to $288. Total 2011 visitor WTP for the NPS system is estimated at $28.5 billion with a 95% confidence interval of $19.7–$43.1 billion. The estimation of a meta-regression model using consistently collected data and identical specification of visitor WTP models greatly reduces problems common to meta-regression models, including sample selection bias, primary data heterogeneity, and heteroskedasticity, as well as some aspects of panel effects. The article provides the first estimate of total annual NPS visitor WTP within the literature directly based on NPS visitor survey data.     

经济集聚、收入差距对水污染影响的时空分析——基于中介效应和动态空间门槛效应检验

本研究将经济集聚、收入差距和化学需氧量（COD）排放强度纳入统一框架下，构建时空双向固定效应的动态空间杜宾模型（DSDM）和门槛空间动态面板模型（SDPTM），通过中国2011-2020年省级面板数据实证检验，考察经济集聚和收入差距对COD排放强度的影响机制。研究发现：①经济集聚呈“先促排、后减排”的倒“U”形特征，具有本地空间减排效应和空间溢出减排效应；②收入差距呈非线性的倒“N”形特征，具有本地空间减排效应，经济集聚在收入差距对COD排放的影响中存在门槛效应，当经济集聚超过门槛值1.1164时，收入差距的促排和减排效应均明显增强；③收入差距呈倒“N”形特征，具有空间溢出减排效应，且收入差距的长期空间溢出减排效应明显减弱；④收入差距在经济集聚时对COD排放强度的影响中起部分中介效应；⑤COD排放强度具有显著的时间和空间路径依赖性，经济集聚对COD排放的空间依赖特征的影响具有显著的区域异质性。     

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.     

Household willingness to pay for stream restoration on private and public land: Evidence from the Baltimore metropolitan region

Stream restoration is one of the most widely used interventions to mitigate urban stormwater impacts and improve water quality. Government agencies have typically focused urban stream restoration efforts on public lands that they already own, even though a substantial portion of stream miles in highly urbanized areas occur on privately owned land. Yet, limited research exists to distinguish household willingness to pay (WTP) for stream restoration occurring on private versus public land. In this study, we use a choice experiment to analyze how household WTP for stream restoration attributes vary by land ownership and distance to the restoration project. Our empirical results indicate that streambank stabilization approaches have positive WTP estimates that are substantially larger in magnitude than those related to riparian vegetation management for clearing or planting trees. In general, estimated total household WTP for each of the four restoration design scenarios on public land is higher than when the same restoration design is located on private land. Nonetheless, estimated household WTP for each restoration design scenario on private land is substantial, retaining the majority of the value found on public land in all cases.     

Costs and benefits of improving wild salmon passage in a regulated river

This paper presents a cost-benefit analysis (CBA) of a trade-off between salmon and hydropower production in the Ume/Vindel River, northern Sweden. A distinctive element of this analysis is that estimated changes in resource conditions are based on detailed river-specific data. A salmon population model was used to develop the scenario and a novel willingness to pay (WTP) question, which caters for uncertainty in a different manner, provided an interval estimate. Non-use values are the major contributors to the benefit (96–517 millions of Swedish kronor (MSEK)) of increasing the stock of wild salmon. Sensitivity analysis suggests that the opportunity costs in terms of lost electricity are typically higher than the estimated benefits.     

An assessment of household willingness to pay for curbside recycling: a comparison of payment card and referendum approaches

Curbside recycling is a tool that communities use to reduce the need for landfill space. This study provides contingent valuation estimates of household willingness to pay (WTP) to continue a curbside recycling program in the face of budget cuts. Comparisons of two forms of the contingent valuation method (CVM) are provided: a single bounded referendum and a payment card. Neither approach emerges as unambiguously superior. Response rates were virtually identical. Both approaches show that support for curbside recycling is highly sensitive to price. Regression results from the payment card provided a more thorough identification of socio-demographic variables associated with WTP than the referendum, but the explanatory power of the two regressions did not differ significantly. The referendum estimates of mean WTP exceed those from the payment card, although the disparities are less than those typically reported in the CVM literature. Local policy makers cited the CVM results as influencing their decisions regarding funding options for the future of the program, and seemed to appreciate the fact that the two approaches provided a fairly narrow range of estimates of WTP. In an era when more of the burden of financing of environmental programs is being shifted to the local level, use of CVM to estimate the WTP of consumers for highly disaggregated goods and services designed to achieve environmental improvement will likely become more relevant to local decision makers who are interested in understanding their constituents' views.     

‘Been There Done That’: Disentangling Option Value Effects from User Heterogeneity When Valuing Natural Resources with a Use Component

Endogeneity bias arises in contingent valuation studies when the error term in the willingness to pay (WTP) equation is correlated with explanatory variables because observable and unobservable characteristics of the respondents affect both their WTP and the value of those variables. We correct for the endogeneity of variables that capture previous experience with the resource valued, humpback whales, and with the geographic area of study. We consider several endogenous behavioral variables. Therefore, we apply a multivariate Probit approach to jointly model them with WTP. In this case, correcting for endogeneity increases econometric efficiency and substantially corrects the bias affecting the estimated coefficients of the experience variables, by isolating the decreasing effect on option value caused by having already experienced the resource. Stark differences are unveiled between the marginal effects on WTP of previous experience of the resource in an alternative location versus experience in the location studied, Newfoundland and Labrador (Canada).     

Convergent validity between willingness to pay elicitation methods: an application to Grand Canyon whitewater boaters

We directly compare trip willingness to pay (WTP) values between dichotomous choice contingent valuation (DCCV) and discrete choice experiment (DCE) stated preference surveys of private party Grand Canyon whitewater boaters. The consistency of DCCV and DCE estimates is debated in the literature, and this study contributes to the body of work comparing the methods. Comparisons were made of mean WTP estimates for four hypothetical Colorado River flow-level scenarios. Boaters were found to most highly value mid-range flows, with very low and very high flows eliciting lower WTP estimates across both DCE and DCCV surveys. Mean WTP precision was estimated through simulation. No statistically significant differences were detected between the two methods at three of the four hypothetical flow levels.     

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.     

ESTIMATION OF POTENTIAL REDUCTIONS IN RECREATIONAL BENEFITS DUE TO SEDIMENTATION1

ABSTRACT: A travel cost model is developed to estimate the potential reductions in recreational benefits from sedimentation in Reelfoot Lake in northwestern Tennessee. In addition to the consumer surplus estimates generated by the model, three other aspects of the study were significant. First, the study applied a relatively untested methodology for deriving the opportunity cost of travel time. The study resulted in a value that is less than one-half of the Water Resource Council's “one-third of the wage rate” rule-of-thumb. Second, water quality perceptions were unsuccessfully incorporated into the model as a demand shifter. This raised questions as to the appropriate manner in which perceptions could be included in a travel cost model. Finally, a simple methodology was outlined by which estimates of the recreational value of Reelfoot Lake could be used to suggest how much cost could be justified for soil erosion control on agricultural land surrounding the lake.     

Household Demand for Waste Recycling Services

Municipalities everywhere are coping with increasing amounts of solid waste and need urgently to formulate efficient and sustainable solutions to the problem. This study examines the use of economic incentives in municipal waste management. Specifically, we address the issue of recycling, if and when this waste management option is—on social welfare grounds—a preferred solution.A number of studies have recently assessed the monetary value of the externalities of alternative solid waste management options. In the present context, these subsidies could be interpreted as the implicit value of the benefits from reducing environmental externalities associated with landfilling as perceived by local government authorities. We surmise that the difference between mean households willingness to pay (WTP) for recycling services, via the purchase of a subsidized waste disposal facility, and the above (proxy) value of externalities reflects the difference between private and public perception regarding the negative externality associated with landfilling. We believe that this information is useful in determining the level of subsidization needed (if at all) to sustain any recycling program.The study is unique in the sense that its conclusions are based on revealed household behavior when faced with increased disposal costs, as well as information on WTP responses in hypothetical but related (and, therefore, familiar) scenarios. The article also explores the influence of the subsidization schemes on recycling rates. It was found that with low levels of effort needed to participate in a curbside recycling program, households participation rates are mainly influenced by economic variables and age, and households are willing to pay a higher price for the recycling scheme. When the required effort level is relatively high, however, households would pay a lower price, and the rate is influenced mainly by their environmental commitment and by economic considerations. We found that in both cases a subsidy would be required in order to achieve an efficient level of recycling. The median price that households are willing to pay for recycling devices is found to be about NIS 370 (New Israeli Shekel, approximately $90).     

Economic and social effects analysis of mineral development in China and policy implications

Mineral development has contributed greatly to China's economic and social development. Many challenges remain, however, including environmental pollution and resource waste in practice, as well as a dearth of systematic theoretical research. The goal of this study is to analyze the economic and social effects of various mineral developments in China from diversified perspectives, so as to provide the basis for the formulation of China's mineral development policy. The input–output effects, industrial linkage effects and income distribution effects of different mining industries are quantitatively analyzed by adopting basic hypotheses of input–output economics, industrial linkage model and income distribution antitheses based on the latest available official data from China Statistical Yearbook from 2004 to 2010 and the 2007 Input–Output Table of China. The empirical results obtained in this study indicate that all mineral development industries, especially coal mining and washing, and petroleum and natural gas extraction industries, have given a strong impetus to the increase of China's fixed asset investment and GDP. Moreover, they have provided a large number of jobs, thereby alleviating ongoing employment pressure, and they have also played a positive role in promoting China's technology investment. The analysis of industrial linkages demonstrates that mining industries are basic to the national economy and produce a significant impetus to its downstream industries, but create weak pull effects in terms of national economic development. From the perspective of income distribution, mining industries play an important role in increasing China's fiscal revenue and per capital income. Hence, China's mineral development policy should (1) encourage additional investment in technology for exploration and development to insure sufficient supply and expand the input effects; (2) attract additional talent to work in remote regions; (3) optimize the industrial structure and promote the industrial transformation in resource regions; (4) adjust the interest distribution between the central and local governments to enable the local regions to become more self-sufficient; and (5) enhance the legal environment so that companies can more readily undertake their social responsibilities voluntarily.     

Scope effects of respondent uncertainty in contingent valuation: evidence from motorized emission reductions in the city of Nairobi,Kenya

This study analyzed the scope effects of respondent uncertainty in contingent valuation (CV) by evaluating whether willingness to pay (WTP) estimates were sensitive to changes in the magnitudes of motorized emission reductions in the city of Nairobi, Kenya. The WTP estimates were elicited through the conventional payment card (PC), stochastic payment card (SPC) and the polychotomous payment card (PPC) formats. While SPC and PPC formats were used to capture respondent uncertainty, the PC format captured respondent certainty regarding the amounts individuals were WTP for emission reductions. Based on parametric and nonparametric analysis, results show that certain (PC) respondents stated significantly larger WTP amounts for larger emission reductions than for smaller reductions. Conversely, uncertain (SPC and PPC) respondents stated smaller amounts for larger emission reductions than certain (PC) respondents. The implication is that though respondents were sensitive to the scope of motorized emission reductions, respondent uncertainty lowered their sensitivity to scope.