A new recoding method for treating protest responses in contingent valuation studies using travel cost data

In this paper, it is proposed one method to recode protest responses applicable to the simple dichotomous format valuation question made to visitors to natural environment in contingent valuation studies. Those respondents that give a protest response but have a travel cost greater than the bid proposed in the valuation question are recoded as an affirmative answer to the proposed payment. The economic justification lies in the minimum willingness to pay for enjoying the environment that travel cost reveals, while valuation question tries to obtain information about respondent maximum willingness to pay. Recoding allows to recover information and to improve estimates, accuracy. It also avoids computational complexity associated with sample selection models used to avoid biases derived from excluding protest responses.     

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.     

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.     

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.     

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.     

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 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.     

On the value of large predators in Sweden: a regional stratified contingent valuation analysis

This paper contributes with an applied policy analysis of the predator preservation policy in Sweden. We estimate the overall mean willingness to pay (WTP) for preserving the four large predators in the Swedish fauna by applying the contingent valuation method. Using survey data from 2004 we find that 50 percent of the Swedish population is willing to contribute financially toward implementation of the predator policy package, and that the estimated overall mean WTP is approximately SEK 290. Further, we test for spatial differences in attitudes and WTP and find that respondents in Stockholm have the highest overall mean WTP, while respondents living in wolf-territories have the lowest. Our mean WTP measure is flawed with upward bias, since we cannot estimate the willingness to accept for those with clearly negative preferences regarding the predator policy package (e.g. hunters). In this paper, we set their WTP equal to zero. Thus, we cannot rule out the possibility that the mean willingness to pay is, in fact, negative, i.e. the social-value of implementing the predator policy is negative. Finally, the estimates of the overall WTP are sensitive to response-uncertainty. When the respondents indicate uncertainty about their valuation, they tend to state higher values.     

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.     

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.     

ECONOMIC VALUATION OF RIPARIAN BUFFER AND OPEN SPACE IN A SUBURBAN WATERSHED1

Abstract: This study evaluates the economic value of riparian buffers and open space in a suburban watershed through two nonmarket valuation methods. A contingent valuation survey was implemented in the Dardenne Creek watershed, a suburban watershed of the St. Louis metropolitan area in Missouri, to evaluate the residents' perceptions of and willingness to pay (WTP) for adopting riparian buffers and preserving farmland in a hypothetical real estate market. A hedonic pricing model based on actual sale prices of homes in the watershed was applied to estimate the market value of open space and other environmental conditions such as flood zone and stream proximity in the study area. The results showed that residents' WTP was consistent with the economic values of open space and proximity to streams embedded in existing home prices. Through a better understanding of residents' perceptions and values, riparian buffer and open space programs can be designed and promoted to achieve greater implementation success and environmental benefit.     

Ecosystem Management on Public Lands: An Application of Optimal Externality to Timber Production

While there are increasing numbers of non-consumptive forest uses on public lands, some silvicultural management systems provide little flexibility for the realization of non-commodity values. Traditional economic decision-making tools, such as net present value, are often applied in a manner which inadequately accounts for the full value of the resource. As a result, sub-optimal management practices are often implemented. By applying a marginal analysis of the optimal externality of different silvicultural systems, it is possible to identify the optimal timber management strategy in terms of the total costs of the timber harvest under alternative uses. Although difficulties arise in valuing non-consumptive uses, contingent valuation with averting costs estimates can establish a lower bound on society's willingness to pay for foregone timber harvesting. Low impact harvest operations and “new forestry” techniques, such as selection harvest cuts, are helpful in reducing the external costs of timber cutting. Therefore, the implementation of such systems may actually increase the socially optimal area of public lands to be harvested under a multiple-use designation.     

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 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.     

‘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).     

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.     

RESERVOIR WATER LEVEL IMPACTS ON RECREATION,PROPERTY, AND NONUSER VALUES1

ABSTRACT: Wise interbasin management of Southeastern U.S. water resources is important for future development. Alabama‐Coosa‐Tallapoosa and Apalachicola‐Flint‐Chattahoochee River basins' water usage has evolved from power generation to multiple uses. Recreation and housing have become increasingly valuable components. Changing use patterns imply changing resource values. This study focused on six Alabama reservoirs, using contingent valuation questions in on‐site, telephone, and mail surveys to estimate impacts on lakefront property values, recreational expenditures, and preservation values for scenarios of permanent changes to reservoir water quantity. As summer full‐pool duration decreased, lakefront property value decreased, and as duration increased, property values increased, but at a lesser rate. Similar findings occurred for winter draw down alternatives. Permanent one‐foot reductions in summer full‐pool water levels resulted in a 4 to 15 percent decrease in lakefront property values. Recreational expenditures decreased 4 to 30 percent for each one‐foot lowering of reservoir water levels. Current nonusers of the six reservoirs showed strong preferences for protecting study reservoirs with willingness to pay values of 47 per household or approximately 29 million for the entire six‐reservoir watershed basin area. Resource management based on historic use patterns may be inappropriate and more frequent and comprehensive valuation of reservoir resources is needed.