Valuing externalities from water supply: Status quo,choice complexity and individual random effects in panel kernel logit analysis of choice experiments

Choice experiments are often implemented with choice sets including one alternative depicting the status quo. Utility from status quo is experienced by the respondent, while utility associated with experimentally designed hypothetical alternatives is only conjectured by respondents. The effects of explicitly accounting for such a difference in the econometric analysis of the data are often unreported, or limited to fitting a ‘status quo’ constant. The paper proposes a model that explicitly accounts for these effects and attempts their decomposition using data from two choice modelling exercises designed to value the provision of environmental goods. Preferences for change versus status quo are explored with standard specifications along with a less usually applied error component analysis via mixed logit. The results suggest that alternatives offering changes from status quo do not share the same preference structure as the status quo alternative, and that estimates of spread parameters in zero-mean error components can be decomposed conditional on respondents' socio-economic characteristics. It is argued that these findings have implications for practitioners and their stance towards the strategies for the econometric analysis of choice modelling data for the purpose of valuation.     

Using a choice experiment to measure the environmental costs of air pollution impacts in Seoul

Air pollution, a by-product of economic growth, has been incurring extensive environmental costs in Seoul, Korea. Unfortunately, air pollution impacts are not treated as a commercial item, and thus it is difficult to measure the environmental costs arising from air pollution. There is an imminent need to find a way to measure air pollution impacts so that appropriate actions can be taken to control air pollution. Therefore, this study attempts to apply a choice experiment to quantifying the environmental costs of four air pollution impacts (mortality, morbidity, soiling damage, and poor visibility), using a specific case study of Seoul. We consider the trade-offs between price and attributes of air pollution impacts for selecting a preferred alternative and derive the marginal willingness to pay (WTP) estimate for each attribute. According to the results, the households' monthly WTP for a 10% reduction in the concentrations of major pollutants in Seoul was found to be approximately 5494 Korean won (USD 4.6) and the total annual WTP for the entire population of Seoul was about 203.4 billion Korean won (USD 169.5 million). This study is expected to provide policy-makers with useful information for evaluating and planning environmental policies relating specifically to air pollution.     

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.     

Residents' willingness to pay for improved liquid waste treatment in urban Ethiopia: results of choice experiment in Addis Ababa

This paper discusses residents’ willingness to pay (WTP) for improved liquid waste treatment in Addis Ababa based on data collected in 2011 using random parameter logit model. Findings indicate that respondents are willing to contribute for improved liquid waste treatment with higher quantity and quality. Their mean WTP for the medium improvement scenario is found to be 15.53 ETB (0.93 USD) per month. The compensation surplus tends to increase from the status quo to the alternative scenarios with aggressive improvement. Finally, the paper concludes by indicating the socioeconomic difference across households, and sub-cities need to be considered in designing environmental protection plans for the city.     

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.     

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.     

Integrating nature-based tourism and forestry in private lands under heterogeneous visitor preferences for forest attributes

Developing nature-based tourism in private lands calls for new mechanisms to consolidate the interests of the tourism industry, visitors, and landowners. This choice experiment study elaborates on the heterogeneity of visitors’ preferences and willingness to pay (WTP) for enhanced forest amenities and ecosystem services. The survey, targeting domestic and foreign tourists visiting the Ruka-Kuusamo area in Finland, considered four attributes: landscape quality, outdoor routes, forest biodiversity, and carbon sequestration. For observed heterogeneity, the visitors were grouped by their attitudes towards forest management. Unobserved heterogeneity in visitors’ choice behaviour and WTP was examined with the latent class model. While most visitors had environmentally friendly attitudes and were willing to pay, especially for enhanced landscape quality and biodiversity, considerable heterogeneity was revealed in terms of three segments with distinctive attitudes, choice behaviour and WTP. The variation in WTP has important implications for the design of a scheme of payments for environmental management.     

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.     

Development of Indicators to Assess Economic Vulnerabilities to Changes in Ecosystem Services: Case Study of Counties in Maryland,USA

We develop indicators showing the relative environmental burdens that human activities place on locales for a given level of economic benefits. The main purpose is to develop tools that allow us to examine the potential vulnerabilities within economies to changes in resource conditions. The indicators of pollution emission or resource consumption per job can be used to identify potential challenges to resource and industry managers and to compare areas in terms of their ability to adapt to change. For example, if a large number of area jobs are dependent on abundant water, this indicates a vulnerability to a reduction in water availability for industrial use. We develop a case study for 23 counties and 1 city in Maryland to examine the usefulness and limitations of the indicators. Our case study demonstrates that the indicators provide an informative view into patterns of local economic activity and use of an area’s environmental goods and services. In contrast to patterns for total environmental burdens (e.g., total SO₂ emissions) that are typically reported, the rates of environmental burden per job are not simply correlated with high or low economic output. Thus, the indicators represent distinct patterns of environmental burdens per job that reflect reliance on environmental services. The indicators have some limitations when used at this fine scale because they can misrepresent conditions in counties in which economic sectors are dominated by one or a few businesses. For this reason, the indicators are best used as a regional screening tool.     

Estimating the value of improved wastewater treatment: The case of River Ganga,India

In this paper we employ a stated preference environmental valuation technique, namely the choice experiment method, to estimate local public’s willingness to pay (WTP) for improvements in the capacity and technology of a sewage treatment plant (STP) in Chandernagore municipality, located on the banks of the River Ganga in India. A pilot choice experiment study is administered to 150 randomly selected Chandernagore residents and the data are analysed using the conditional logit model with interactions. The results reveal that residents of this municipality are willing to pay significant amounts in terms of higher monthly municipality taxes to ensure the full capacity of the STP is used for primary treatment and the technology is upgraded to enable secondary treatment. Overall, the results reported in this paper support increased investments to improve the capacity and technology of STPs to reduce water pollution, and hence environmental and health risks that are currently threatening the sustainability of the economic, cultural and religious values this sacred river generates.     

The potential role of stated preference methods in the Water Framework Directive to assess disproportionate costs

This paper examines the issue of disproportionate costs of Water Framework Directive (WFD) implementation using public surveys as a means to inform policy and decision making. Public taxpayers are asked their opinion regarding the implementation of the WFD and its costs. Taxpayers are expected to bear a large share of the cost of WFD implementation, be it through national taxation, local water pollution charges or higher market prices for water related goods and services. The paper's main objective is to illustrate the role of stated preference research to elicit public opinions and perceptions towards socially acceptable levels of water quality and public willingness to pay (WTP) for the expected environmental benefits of the WFD. Stated preference research can be used as a way to assess the concept of disproportionate costs to those who are expected to bear a large share of the costs of WFD implementation, and at the same time address the issue of public participation in the WFD. The survey results are used as a public consultation tool to inform policy and decision makers about public willingness and ability to pay for the implementation of the WFD. This measure can be used as one of the benchmarks to define disproportionate costs in a cost-benefit context.     

Resident Motivations and Willingness-to-Pay for Urban Biodiversity Conservation in Guangzhou (China)

The monetary assessment of biodiversity measures the welfare damages brought by biodiversity losses and the cost-benefit analysis of conservation projects in a socio-economic context. The contingent valuation method could include motivational factors to strengthen economic analysis of nature conservation. This study analyzed Guangzhou residents’ motivations and willingness-to-pay (WTP) for an urban biodiversity conservation program in the National Baiyun Mountain Scenic Area (BMSA). The peri-urban natural site, offering refuge to some endemic species, is under increasing development pressures for recreational and residential use. A questionnaire survey was conducted in the Guangzhou metropolitan area during June to October 2007. We interviewed face-to-face 720 stratified sampled households to probe residents’ attitudes towards the city’s environmental issues, motivations for urban nature conservation, and WTP for biodiversity conservation. Principal component analysis identified five motivational factors, including environmental benefit, ecological diversity, nature-culture interaction, landscape-recreation function, and intergenerational sustainability, which illustrated the general economic values of urban nature. Logistic regression was applied to predict the probability of people being willing to pay for the urban biodiversity conservation in BMSA. The significant predictors of WTP included household income and the factor nature-culture interaction. The median WTP estimated RMB149/household (about US$19.5/household) per year and an aggregate of RMB291 million (approximately US$19.5/household) per year and an aggregate of RMB291 million (approximately US38.2 million) annually to support the urban conservation project. Including public motivations into contingent valuation presents a promising approach to conduct cost-benefit analysis of public projects in China.     

Attribute-based analysis of hunters’ lease preferences

Understanding of hunter preferences for hunting lease attributes is important to landowners because such knowledge provides key information for managing and marketing fee-hunting in order to maximize revenues. Premised on this insight, we used attribute based modeling to investigate how hunter preferences for potential leases were influenced by lease and hunter-specific attributes. A mail survey of Mississippi licensed hunters provided the necessary data. Estimation results based on McFadden conditional logit regression suggested that lease attributes including game diversity, lease location relative to hunter residence, lease size, lease duration and lease rate influenced willingness to pay for additional units of lease attributes. Depending on the specific levels of these attributes, WTP could vary as much as $5.70 per acre. Of the hunter-specific attributes, age and income significantly influenced hunter decision to buy a lease or opt for status quo. Results of this study should assist landowners in increasing financial returns from fee-hunting endeavors through appropriate changes to their hunting access policies and wildlife management activities in response to hunter preferences regarding lease attributes.     

Estimating willingness to pay for a threatened species within a threatened ecosystem

This study conducts a choice experiment to determine the willingness to pay for Palouse Prairie conservation. The giant Palouse earthworm (Driloleirus americanus), a rare species endemic to the Palouse region, is included as an attribute of conservation and serves as a method for determining the willingness to pay for protecting the species. This method evaluates the value of the earthworm as an attribute of an overall willingness to pay for threatened ecosystem preservation rather than a direct willingness to pay for protecting the species. This method is expected to yield a more accurate measure of willingness to pay for rare species. The annual willingness to pay per household for the giant Palouse earthworm is $20.45 based on the conditional logit model and $19.30 based on the mixed logit model. Ranking and relative importance are included as methods for representing a non-monetary value and importance of the giant Palouse earthworm.     

Listening to locals on payments for environmental services

Payments for Environmental Services (PES) is gaining recognition worldwide as a serious option for conservation of ecosystems, as well as potentially improving the livelihoods of people providing environmental services. However, little attention has been paid to research on views of local people in their potential roles as service providers. In this research we explore perspectives of poor people living in a National Park in Vietnam, where introduction of PES is being considered. In-depth interviews and workshops were conducted – with strong emphasis on the use of visual techniques, to help facilitate learning processes and provide insight into local perspectives. From the research, two models were developed to indicate general factors that influence the likelihood of people adopting, and adhering to, PES schemes. We suggest these models can be used to guide the design of PES. Our findings also reveal three main requirements important in design of pro-poor PES: (1) Thorough scoping studies for ensuring that schemes are based on sound understanding of potential providers' perspectives and context. (2) Such studies should emphasise qualitative research and draw on participatory tools, to facilitate open dialogue and co-learning by researchers and participants. (3) Policy makers should consider designing hybridized schemes, i.e., in which PES concepts are combined with integrated conservation and development.     

The effect of experience on choosing where to go: an application to a choice experiment on forest recreation

The main objective of this paper is to investigate the impact of experience on the choice of visits to forests in a stated discrete choice experiment. Recent literature has indicated that experiences with the environmental services valuated may increase the respondents' certainty in their choice of hypothetical alternatives. We apply two indicators of experiences: the number of visits and the number of different forests visited during the last year. Applying the generalized multinomial logit model, we find that an increase in the number of visits to forests makes respondents' choices more predictable. However, the number of different forests visited reduces the predictability of choices. Furthermore, we investigate the relationship between respondents' experience of forest recreation and the self-reported choice certainty, controlling for respondents' social-demographics and other design characteristics. Finally, we show that self-reported choice certainty is positive correlated with the scale factor, as expected.     

An optimization model for integrated urban planning: development and application to Algeria's Reghaïa and Heraoua municipalities

In this paper, I develop an optimization model for integrated urban planning for land use at the municipality level, in which decisions arise from an area-based weighted-GDP maximisation algorithm whose weights represent the sustainability and implementability of the land uses. The model favours the involvement of stakeholders in urban governance, but does not use complicated assessment procedures for non-economic indicators or relative weights to combine economic, social and environmental indicators; instead, the integration between economic activities and environmental status is represented objectively and non-linearly by referring to initial and sustainability conditions. The model accounts for both human and environmental dynamics by adopting a spatial structure that permits compromises between economic information (available at a macro level) and ecological information (available at a micro level). A single value is attached to each urban governance, with an elicitation of future decisions (including acceptance of the status quo) and the ability to provide an evaluation of past decisions: some environmental policies are considered. The model’s predictions are based on reasonably reliable knowledge that can be easily collected, with reliability determined by calculating the confidence level. The resulting urban governance can then be presented and further analysed within a geographical information system. A case study of the model’s application to Algeria’s Regha?a and Heraoua municipalities provides insights into optimal urban governance, with and without water quantity or quality policies, in terms of resource sustainability, sectoral development, and pollution sustainability. I also assess the previous master plan in terms of the land uses suggested by the model.     

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.     

Environmental accounting as a management tool in the Mediterranean context: the Spanish economy during the last 20 years

Although human presence is one of the main characteristics of the Mediterranean identity since ancient times, a false dialectic between conservation and social-economic development has emerged in recent decades. On the one hand, an economic growth policy is taken as the paradigm of social-economic development; on the other hand, there is a multi-scale conservation policy, in which natural protected areas, as patches of preserved nature, are used as one of the main tools to deal with the challenge of sustainability. The Mediterranean Basin is the habitat of many unique species and one of the 25 main biodiversity hotspots in the world, and as a consequence a strong conservation policy has been used to protect environmental values. At the same time, Mediterranean countries are deeply involved in promoting strong economic growth policies, which are not always compatible with environmental ones. In this paper, Spain has been studied as one model of this situation. Due to political reasons, Spanish economic growth and conservationist policies were pursued together during the last 20 years. As a result, Spain owns one of the largest networks of natural protected areas in Western Europe, and at the same time it has experienced one of the strongest periods of economic growths in the European and Mediterranean context during the 1980s and 1990s. An historical series of resource use in five annual periods in the last 20 years of conservation policy, and the effects on the preservation of natural capital have been investigated by means of the eMergy (spelled with an 'm') synthesis approach, which was used to characterize the flow of environmental services supplied by ecosystems, but not in monetary terms. This study shows that Spain is becoming less self-sufficient and more inefficient in resource use, comprehensively measured in eMergy terms. A large part of Spain's economy depends on imported goods and services, and most economic activities are based on tourist services and associated construction, which promotes intensification in the urban use of the territory and more intense environmental impacts and resource use intensification of those countries supplying the raw materials. The consequence is a decoupling of the Spanish economy from local environmental services and the increase of Ecological footprint of Spain, measured by means of eMergy-based indicators. In spite of the increase in number, area and associated budget of the natural protected areas and other conservation measures, the general sustainability of the nation is decreasing.     

Pimp Your Landscape: A Tool for Qualitative Evaluation of the Effects of Regional Planning Measures on Ecosystem Services

The article presents the platform “Pimp your landscape” (PYL), which aims firstly at the support of planners by simulating alternative land-use scenarios and by an evaluation of benefits or risks for regionally important ecosystem services. Second, PYL supports an integration of information on environmental and landscape conditions into impact assessment. Third, PYL supports the integration of impacts of planning measures on ecosystem services. PYL is a modified 2-D cellular automaton with GIS features. The cells have the major attribute “land-use type” and can be supplemented with additional information, such as specifics regarding geology, topography and climate. The GIS features support the delineation of non-cellular infrastructural elements, such as roads or water bodies. An evaluation matrix represents the core element of the system. In this matrix, values in a relative scale from 0 (lowest value) to 100 (highest value) are assigned to the land-use types and infrastructural elements depending on their effect on ecosystem services. The option to configure rules for describing the impact of environmental attributes and proximity effects on cell values and land-use transition probabilities is of particular importance. User interface and usage of the platform are demonstrated by an application case. Constraints and limits of the recent version are discussed, including the need to consider in the evaluation, landscape-structure aspects such as patch size, fragmentation and spatial connectivity. Regarding the further development, it is planned to include the impact of land management practices to support climate change adaptation and mitigation strategies in regional planning.