Alternative approaches to dealing with respondent uncertainty in contingent valuation: a comparative analysis

Several strategies have been proposed to deal with response uncertainty in contingent valuation. One approach, often applied to address issues of hypothetical bias, recodes and/or reweights responses according to stated levels of certainty but so far few analyses compare alternative recoding and reweighting strategies. We explore the choice among alternative strategies that exploit a numerical certainty scale obtained from a follow-up to the payment question in a valuation survey about a whale conservation program. Two novel variations of previously followed approaches perform best on our dataset in terms of the efficiency of estimates. The first one uses an exponential transformation of the numerical certainty scale as a weight in the willingness to pay regression. The other one is based on constructing a continuous willingness to pay variable with the highly certain "yes" and "no" original responses to the payment question as extreme values and with mid-point values that correspond to the original "don't know" responses. We find, though, that the effect of using different treatment strategies on mean willingness to pay is rarely statistically significant and we fail to detect a consistent effect on the efficiency of the estimation regardless of the strategy applied.     

Tourism and wetland conservation: application of travel cost and willingness to pay an entry fee at Ghodaghodi Lake Complex,Nepal

This study investigated the need and applicability of wetland tourism for resource conservation, using the case of Ghodaghodi Lake Complex, a Ramsar Site in western Nepal. The travel cost method (TCM) was used to determine the recreation potential of the lake complex, while the contingent valuation method (CVM) was used to calculate willingness of visitors to pay an entry fee as a payment vehicle for conservation. The per capita travel cost was found to be NPR 540 (US $7.71), while the mean willingness to pay an entry fee was NPR 34 (US $0.48) per visitor per entry. In addition, factors affecting wetland visitation rates and maximum willingness to pay were identified. Policy implications include the establishment of an entry fee system to offset conservation budgetary constraints, government investment in social benefits equating to at least per capita travel cost identified, and public‐private partnerships, with community participation in tourism promotion and wetland conservation.     

Valuing damage to historic buildings using a contingent market: a case study of road traffic externalities

Pricing of road transport at social marginal cost should make users aware of the cost of damaging the environment (external costs). Such an approach, however, requires a monetary estimate of this damage which can be difficult to derive. On the basis of a study carried out at Neuchâtel (Switzerland), the contingent valuation method was used to estimate the damage caused to buildings of historical and cultural value by traffic‐caused air pollution. In a survey, individuals were asked to contribute to a fund set up to finance the maintenance of pre‐selected historic buildings. A valuation function to predict willingness‐to‐pay responses is estimated.     

Valuing snorkeling visits to the Florida Keys with stated and revealed preference models

Coastal coral reefs, especially in the Florida Keys, are declining at a disturbing rate. Marine ecologists and reef scientists have emphasized the importance of establishing nonmarket values of coral reefs to assess the cost effectiveness of coral reef management and remediation programs. The purpose of this paper is to develop a travel cost-contingent valuation model of demand for trips to the Florida Keys focusing on willingness to pay (WTP) to preserve the current water quality and health of the coral reefs. The stated and revealed preference models allow the marginal valuation of recreationists to adjust depending on current and planned trip commitments in valuing nonmarginal policy changes in recreational opportunities. The integrated model incorporates key factors for establishing baseline amenity values for tourist dive sites, including perceptions of reef quality and dive conditions, the role of substitute sites, and the quality and availability of tourist facilities and recreation opportunities. The travel cost and WTP model differ in identifying critical variables and provide insight into the adjustment of trip decisions across alternative destination sites and the valuation of trips. In contrast to the travel cost model, a measure of the availability of substitute sites and total recreation activities does not have a significant impact on WTP valuations reported by snorkelers. Snorkelers engage in a relatively focused set of activities, suggesting that these recreationists may not shift expenditures to other sites or other recreation activities in the Florida Keys when confronted with increased access costs for the snorkeling experience.     

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.     

ESTIMATING THE BENEFITS OF PHOSPHORUS POLLUTION REDUCTIONS: AN APPLICATION IN THE MINNESOTA RIVER1

ABSTRACT: In order to make economically efficient decisions about water quality improvements, data on both the costs and benefits of these improvements is needed. However, there has been little research on the benefits of reducing phosphorus pollution which implies that policy decisions are not able to make the comparison of costs and benefits that is essential for economic efficiency. This research attempts to ameliorate this situation by providing an estimate of the benefits of a 40 percent reduction in phosphorus pollution in the Minnesota River. A 1997 mail survey gathered information on Minnesota residents'use of a recreational site on the Minnesota River, the Minnesota Valley National Wildlife Refuge, and their willingness to pay for phosphorus reductions in the Minnesota River. The random effects probit model used in this research to investigate household willingness to pay for phosphorus pollution reductions in the Minnesota River incorporates recent innovations in nonmarket valuation methodology by using both revealed and stated preference data. This model estimated annual household willingness to pay for phosphorus reductions in the Minnesota River at $140. These results may be used in combination with cost estimates to determine the economic efficiency of phosphorus clean up.     

USING CONTINGENT VALUATION AND BENEFIT TRANSFER TO EVALUATE WATER SUPPLY IMPROVEMENT BENEFITS1

ABSTRACT: Many water systems in small cities and rural areas throughout the United States are facing water quality and supply problems. These problems are typically not the result of an unexpected event, but are the result of growth trends or decreasing water quality experienced over several years. This analysis uses the contingent valuation and benefit transfer methods to evaluate the willingness to pay for a rural water system in northcentral Montana. Both of the procedures resulted in similar values, ranging from about $4.05 to $7.50 per household per month for urban residents and $5.40 to $11.50 per household per month for rural residents, which is equal to 11 percent to 23 percent of current average water costs. The willingness to pay estimates do not include non-household water users. This analysis shows that useful planning information can be obtained from relatively inexpensive contingent valuation mail survey data and the benefit transfer method as long as the limitations of the data are understood. The willingness to pay for ensuring good quality rural water supplies in the future is likely to be low compared to the costs of extensive diversion and treatment systems. Willingness to pay estimates provide decision makers with information that can be used to avoid building a large water supply system that water users do not want to connect to because of high costs.     

Valuation of open space and conservation features in residential subdivisions

Conservation subdivision design has been promoted as a way to protect ecologically sensitive areas while maintaining housing densities comparable to standard subdivisions, but many developers and planners question the appeal of conservation design to consumers. This study was conducted to compare economic aspects of conservation subdivision design to standard subdivision design in the midwestern United States. Three methods were used to determine the value homebuyers have for embedded conservation features in residential areas: transactional analyses (to indicate the value homebuyers have expressed for such features in the past); hedonic analyses (to determine the proportion of present value of homes attributable to such features); and contingent valuation (to examine willingness to pay according to homebuyers' preferred features, an indicator of potential future investment). Transactional analyses were based on assessment and transaction data for homes in three conservation-oriented subdivisions and three standard subdivisions in Cedar Rapids, Iowa, United States. Hedonic price models were also derived from assessment and transaction data. Contingent valuation analyses were based on a survey of residents in the same six subdivisions. Transactional data indicated higher 5-year appreciation rates for conservation versus standard subdivision design. Hedonic price models revealed that well-integrated conservation features (e.g. protected stream corridors) within subdivisions have a positive effect on home prices. Sixty-six percent of all respondents indicated willingness to pay for more embedded open space. Maximum willingness to pay was related to several factors including income, gender, desired level of open space, and concern about urban development. Overall, these results indicate that consumer demand and willingness to pay for conservation subdivision design are positive and should not be considered a barrier to implementation.     

Stated willingness to pay as hypothetical behaviour: Can attitudes tell us more?

The fact that people only state a hypothetical willingness to pay (WTP) in contingent valuation surveys still causes much debate. Doubters are sceptical about the reliability and validity of contingent valuation estimates, that is, whether people will actually pay the amount stated in the survey. Parallel to this discussion, social psychologists have conducted a great deal of research on the determinants of actual behaviour, particularly attitudes. Therefore, the objective of this paper is to analyse the relationship between different kinds of attitudes and behaviour. Based on this analysis, a composite attitude-behaviour model is developed and estimated using data from a contingent valuation about the river Elbe in Germany. The results show that attitudes towards the behaviour are the immediate antecedent of the behavioural intention. Accordingly, it is suggested that these attitudes along with attitudes towards the good in question and general attitudes should be measured in order to increase predictive validity.     

Effects of spatial and temporal scales on cultural services valuation

The monetary valuation of ecosystem services has proved to be a powerful tool for influencing management decisions, as it can be used to quantify the relative importance of various ecosystem functions. However, these valuation methods are rarely implemented with adequate care; in particular, they do not consider spatial and temporal variations in the services offered and demanded. This paper examines the effect of heterogeneity on the valuation of cultural services offered by the Doñana natural protected area in Spain. We apply the zonal travel cost method at various spatial scales, and the individual travel cost method at various temporal scales. We conclude that economic valuation techniques must account for spatial and temporal heterogeneity if they are to provide accurate and realistic information.     

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.     

Valuation of crop genetic resources in Kaski, Nepal: farmers' willingness to pay for rice landraces conservation

Crop genetic resources constitute an important aspect of biodiversity conservation, both because of their direct value to the farmers and due to their indirect global value. This study uses the contingent valuation method to document the economic value of crop genetic resources based on the farmers' willingness to pay for conservation. A total of 107 households in Kaski, Nepal were surveyed in November 2003. Their mean willingness to pay was USD 4.18 for in situ and USD 2.20 for ex situ conservation per annum. Landholding size, household size, education level, socio-economic status, sex of respondent, number of crop landraces grown, and knowledge on biodiversity influenced the willingness to pay for in situ conservation, whereas only landholding size and household size influenced the willingness to pay for ex situ conservation. The respondents were willing to contribute more for in situ than ex situ conservation because of the additional effect of direct use and direct involvement of the farmers in in situ conservation. This study supports the view that economic valuation of crop genetic resources can assist the policy makers in setting conservation priorities.     

Information Disclosure Requirements and the Effect of Soil Contamination on Property Values

This paper extends previous research assessing the effects of environmental pollution on property values, and the specific issue of information disclosure requirements on future real estate transactions. Given that various information disclosure requirements were imposed in most US states during the 1990s, it is important to begin to understand their anticipated effects. Using a case of soil contamination in Corpus Christi, TX, USA, this paper applies the contingent valuation method using telephone survey data to investigate the effect of a split-sample information disclosure treatment concerning soil contamination on the willingness to pay of potential home buyers. The authors apply a mixture modelling approach to better explain the effect of the information disclosure requirement.     

Analysing Conflict between Cultural Heritage and Nature Conservation in the Australian Alps: A CVM Approach

The contingent valuation method (CVM) can be useful for assessing the non-market economic values associated with government land use decisions. A particular variant of CVM, which is based on dichotomous choice responses, has become widely used. Previous studies have employed a variety of techniques for analysing dichotomous choice CVM data to produce estimates of economic welfare changes. This paper summarizes these analytical options, and illustrates their application in a case study concerning cattle grazing on the Bogong High Plains in the Australian Alps. This case study is one of the few to assess the non-market economic value of cultural heritage conservation using contingent valuation, and is also unusual in that the competing values are both non-market in character. Nature conservation and heritage values were separately measured using two independent surveys. Mean willingness to pay for nature conservation and cultural heritage were estimated using a range of parametric and nonparametric methods.     

Ecosystem services in infrastructure planning – a case study of the projected deepening of the Lower Weser river in Germany

We consider how ecosystem services can be incorporated into water infrastructure planning by studying the projected deepening of the Lower Weser river channel in Germany. We recalculate the project's benefit–cost ratio by integrating the monetary value of changes in different ecosystem services, as follows: (1) the restoration costs of a mitigation measure for a loss in fresh water supply for agricultural production in the estuary region, (2) the costs of a loss in habitat services, transferring the willingness to pay from a contingent valuation study to the area assessed in the environmental impact assessment, and (3) the benefits of emissions savings induced by more efficient shipping, taking a marginal abatement cost approach. We find that including monetary values for ecosystem service changes leads to a substantial drop in the benefit–cost ratio. On this basis, we argue for a reform of the standard cost–benefit analysis to facilitate more complete welfare assessments.     

Social influences on expressed willingness to pay: results of a deliberative monetary valuation study in Colombia

Deliberative monetary valuation (DMV) methods can support environmental decision making by enabling the exchange of arguments and information to produce more democratic outcomes. The product of a valuation may be an array of expressions of willingness to pay (WTP) by individuals or a collectively agreed monetary value. Concerns have been raised, however, as to whether this product is an outcome of thoughtful and independent decision-making or influenced by social pressures to conform. Our study examines this issue and addresses concerns about the use of DMV, based on a public deliberation of forest conservation in Colombia. We analyzed the impacts of social conformity on WTP under two different decision scenarios: individual and collective. The results suggest that the impacts of social conformity are greater when a collective decision is required. These findings indicate that tensions between the differing goals of DMV could undermine its democratic promise.     

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.     

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).