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.     

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.     

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.     

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.     

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.     

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.     

Economic amenity values of wildlife: Six case studies in Pennsylvania

The travel clost method (TCM) and contingent valuation method (CVM) were used to evaluate the economic value of six different ecotourism activities involving observation of wildlife in Pennsylvania. The six activities were: catch-and-release trout fishing; catch-and-release trout fishing with fly-fishing equipment; viewing waterfowl; watching elk; observing migration flights of raptors; and seeing live wildlife in an environmental education setting. TCM results provided significant statistical relationships between level of use and travel costs for the two types of trout fishing activities. CVM provided estimates of consumer surplus for the other four sites. The consumers' surplus value (1988 dollars) of all six activities to participants amounted to a total of more than $1.28 million annually—twice the total out-of-pocket expenditures of approximately $640,000 spent to visit the sites. The economic amenity values of the six activities compare favorably with similarly derived values in other studies for hunting, fishing, hiking, and backpacking in dispersed recreation environments and wilderness areas in western states.     

Towards the estimation of demand for recycling in Chile: The case of Santiago

In developing countries, the recycling of municipal solid waste (MSW) as an alternative to the traditional MSW management requires an economic sustainability valuation. From this perspective, the estimation of demand for recycling is crucial. In this paper, we study the case of recycling MSW in Santiago, Chile. We estimate the relation between the monthly amount of MSW separated voluntarily from apartments located in Santiago and the monthly price required to participate in a municipal recycling program. We consider the transference of the municipal cost savings to the owners of the apartments due to the amount of MSW separated for recycling, which is not collected and deposited in the current MSW system. For the estimation, we use concepts from environmental economics and psychology, analyzing the operation and municipal costs incurred by current MSW management and designing and applying a survey based on a contingent valuation method (CVM) approach. The results indicate that the percentage of MSW separated for recycling varies between a 27.98% and 33.18%, that only four MSW types are affected by a variation of the monthly price, and that a reduction of monthly collection trips in the current MSW system from 24 to 18 can be obtained. Additionally, we discuss a number of methodological aspects to be considered in a similar study of valuation of recycling in developing countries. Our conclusion is that Santiago has favorable conditions for the implementation of a recycling program as an alternative to the current MSW system.     

Revealing Preferences for Reductions of Public Risks: An Application of the CV Approach

In this paper the contingent valuation method (CVM) is applied to public risk reduction. Theory suggests that the size of the stated willingness to pay (WTP) for risk reduction depends on private activities aimed at reducing the risk level for the individual. The empirical results suggest that considering private averting activities increases the explanatory power of the estimated WTP function significantly. Thus, WTP passes the scope test which proposes that larger reductions from a larger baseline risk should be valued higher than lower risk reductions from a lower baseline risk. Furthermore, we demonstrate that the follow-up response format induces anchoring effects.     

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.     

Impact of Perceived Importance of Ecosystem Services and Stated Financial Constraints on Willingness to Pay for Riparian Meadow Restoration in Flanders (Belgium)

The strategic importance of ecosystem service valuation as an operational basis for policy decisions on natural restoration has been increasingly recognized in order to align the provision of ecosystem services with the expectation of human society. The contingent valuation method (CVM) is widely used to quantify various ecosystem services. However, two areas of concern arise: (1) whether people value specific functional ecosystem services and overlook some intrinsic aspects of natural restoration, and (2) whether people understand the temporal dimension of ecosystem services and payment schedules given in the contingent scenarios. Using a peri-urban riparian meadow restoration project in Flanders, Belgium as a case, we explored the impacts of residents’ perceived importance of various ecosystem services and stated financial constraints on their willingness-to-pay for the proposed restoration project employing the CVM. The results indicated that people tended to value all the benefits of riparian ecosystem restoration concurrently, although they accorded different importances to each individual category of ecosystem services. A longer payment scheme can help the respondents to think more about the flow of ecosystem services into future generations. A weak temporal embedding effect can be detected, which might be attributed to respondents’ concern about current financial constraints, rather than financial bindings associated with their income and perceived future financial constraints. This demonstrates the multidimensionality of respondents’ financial concerns in CV. This study sheds light on refining future CV studies, especially with regard to public expectation of ecosystem services and the temporal dimension of ecosystem services and payment schedules.     

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.     

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.     

Comparing the Economic Value of Mountain Biking Estimated Using Revealed and Stated Preference

This research compares non-market valuation techniques by applying a count data travel cost method (TCM) and dichotomous choice contingent valuation method (CVM) to a form of recreation for which it has not been previously applied: mountain biking. Due to mountain biking's increasing popularity these estimates of benefits may be useful in addressing conflicts. One of the most famous mountain biking sites in the US (Moab, Utah) was chosen as the site for which to apply these two models. The benefits that were estimated for trips taken in the spring of 1996 are US$205 and US$235,for the TCM and CVM, respectively.These values are not statistically different using conventional significant levels.     

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.     

The valuation of historical sites: a case study of Valdivia,Chile

The economic valuation of cultural heritage is an area of increasing interest and an important research topic in the emerging field of cultural economics. Many services and values associated with cultural heritage are not traded in markets, and their estimation requires methods developed for the valuation of non-market goods, such as those used in environmental economics. This paper applies the contingent valuation method with double dichotomous choice to estimate the value of historical sites in the city of Valdivia, Chile. The valuation exercise was implemented by designing a hypothetical guided walking tour to a cluster of historical sites in the city centre, and surveying tourists visiting the city during the summer of 2004. Parametric and non-parametric statistical methods were used to estimate the survival distribution and the mean and median estimates of the willingness-to-pay (WTP). The study emphasizes the importance of explicitly treating heterogeneous preferences and the sensitivity of the survival distribution to the estimation methods used.     

Valuing welfare impacts of climate change in coastal areas: a French case study

Beach protection has become a major issue in reducing coastal risks (erosion and flooding). It is thus advisable to study residents’ preferences for mitigation strategies. Willingness-to-pay (WTP) by permanent and secondary residents for flood protection provided to properties by Languedoc-Roussillon beaches (French Mediterranean coast) is investigated by a contingent valuation study. Results show that WTP is more influenced by risk perception variables than by socio-economic ones. The WTP is then extrapolated on the basis of different adaptation strategies (laissez-faire, managed retreat, denial etc.) which provided information about expected damage associated with sea level rise at the 2100 time horizon.     

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

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

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.     

Non-market valuation of off-highway vehicle recreation in Larimer County, Colorado: Implications of trail closures

Few economic studies are available to measure off-highway vehicle recreation benefits foregone when trails must be closed to protect the environment. This paper estimates the non-market benefits associated with off-highway vehicle (OHV) recreation on National Forest lands in Larimer County, Colorado. We use a contingent valuation model (CVM) to estimate benefits to OHV users, which includes dirt bike riders, all terrain vehicle (ATV) riders, and 4-wheel drive (4 × 4) users. Using CVM we find the mean consumer surplus estimates to be $78 per person per day. These results are consistent with the few previous estimates of OHV recreation benefits. This equates to a per trail per summer consumer surplus of at least between $219,467 and $296,876, and a county level surplus per summer to be at least between $796,447 and $1,077,367. These benefits can be compared to environmental costs to obtain a more complete picture of the effects of trail closure, as well as the negative spillovers to non-motorized users.