Actual averting expenditure versus stated willingness to pay

The purpose of this study is to perform a complete comparison of actual averting expenditure and stated willingness to pay measures, and to determine if the averting expenditure is a lower bound of the willingness to pay measured from contingent valuation experiment as suggested by literature. In addition to the single value comparison, Bootstrap, Krinsky and Robb, Jackknife, and Cameron are four simulation methods used to calculate confidence intervals for response function. Sample sizes of 100, 200, and 1000 are simulated 100 and 200 times respectively. A set of data with 540 households from a contingent policy referendum survey is employed for our purpose. Under a specific level of BOD improvement, a one-to-one single mean value comparison of the actual averting expenditure is greater than the mean willingness to pay from utility difference model. The empirical results are consistent with the theoretical expectation for expenditure difference that averting expenditure is a lower bound of willingness to pay generated from the contingent valuation method. A confidence interval, which contains the true mean willingness to pay at least 90% of the times, includes the actual averting expenditure as a lower bound of the mean willingness to pay as theory predicts.     

Comparing Fuzzy and Probabilistic Approaches to Preference Uncertainty in Non-Market Valuation

In seeking to value environmental amenities and public goods, individuals often have trouble trading off the (vague) good or amenity against a monetary measure. Valuation in these circumstances can best be described as fuzzy in terms of the amenity being valued, perceptions of property rights, and the numbers chosen to reflect values. In this paper, we apply fuzzy logic to contingent valuation, employing a fuzzy clustering approach for incorporating preference uncertainty obtained from a follow-up certainty confidence question. We develop a fuzzy random utility maximization (FRUM) framework where the perceived utility of each individual is fuzzy in the sense that an individual’s utility belongs to each cluster to some degree. The model is then applied to a Swedish survey that elicited residents’ willingness to pay for enhanced forest conservation and to a Canadian survey of agricultural landowners that elicited their willingness to accept compensation for a tree planting program. Both the WTP and WTA measures we obtain using the fuzzy approach are well below those obtained using standard probability methods. Based on goodness of fit measures and Monte Carlo experimentation, a case can be made for using a fuzzy preference approach for modeling preference uncertainty as opposed to incorporating respondent uncertainty within the random utility maximization framework.      

Treating respondent uncertainty in contingent valuation: A comparison of empirical treatments

This research examines the impact of uncertainty on contingent valuation responses using (1) a survey of Canadian landowners about willingness to accept compensation for converting cropland to forestry and (2) a survey of Swedish residents about willingness to pay for forest conservation. Five approaches from the literature for incorporating respondent uncertainty are used and compared to the traditional random utility model with assumed certainty. The results indicate that incorporating uncertainty has the potential to increase fit, but could introduce additional variance. While some methods for uncertainty can be an improvement over traditional approaches, it is imperative to exercise caution when making systematic judgments about the effect of uncertainty on contingent valuation responses.     

Cost credibility and the stated preference analysis of public goods

Two recent stated preference studies include questions that explore participants’ beliefs regarding the cost amount stated in the valuation question in relation to the cost to them if the project were implemented. Results from these studies suggest that a significant proportion of people do not believe these stated cost amounts. This paper explores the implications of participants answering valuation questions that are not consistent with their beliefs regarding stated costs. As an example, the paper develops a response model for dichotomous choice stated preference questions. Participants gather project information through the stated preference experiment, form a prior distribution of costs, update the distribution of costs based on a survey's stated cost and then respond to the dichotomous choice stated preference question. The model suggests that participants will not generally respond truthfully in the sense that they may say no to a stated cost that is less than their willingness to pay for a project or yes to a stated cost that is more than their willingness to pay. While the model findings suggest potentially serious problems with stated preference estimation, the observed patterns of disbelief from the empirical studies result in downwardly biased estimates of mean willingness to pay.     

The value of online banking to small and medium-sized enterprises: evidence from firms operating in the uae free trade zones

This study estimates the willingness to pay of small and medium-sized enterprises (SMEs) for a business online banking services. The estimation utilizes a contingent valuation method employing data from 400 SMEs in the United Arab Emirates free zones. An interval regression model is used to identify company characteristics affecting WTP. The results indicate an average WTP for online banking of $518.50 per month. Firms engaging in international trade value these services at least 10% more than those with only domestic operations. Other variables that significantly affect WTP include number of employees and the transportation cost of using traditional branch banking.     

Willingness to pay for electric vehicles and their attributes

This article presents a stated preference study of electric vehicle choice using data from a national survey. We used a choice experiment wherein 3029 respondents were asked to choose between their preferred gasoline vehicle and two electric versions of that preferred vehicle. We estimated a latent class random utility model and used the results to estimate the willingness to pay for five electric vehicle attributes: driving range, charging time, fuel cost saving, pollution reduction, and performance. Driving range, fuel cost savings, and charging time led in importance to respondents. Individuals were willing to pay (wtp) from $35 to $75 for a mile of added driving range, with incremental wtp per mile decreasing at higher distances. They were willing to pay from $425 to $3250 per hour reduction in charging time (for a 50 mile charge). Respondents capitalized about 5 years of fuel saving into the purchase price of an electric vehicle. We simulated our model over a range of electric vehicle configurations and found that people with the highest values for electric vehicles were willing to pay a premium above their wtp for a gasoline vehicle that ranged from $6000 to $16,000 for electric vehicles with the most desirable attributes. At the same time, our results suggest that battery cost must drop significantly before electric vehicles will find a mass market without subsidy.     

Are There Income Effects on Global Willingness to Pay for Biodiversity Conservation?

This paper is concerned with the empirical relationship between biodiversity conservation values and income. We use random effects panel models to examine the effects of income, and then GDP per capita, on willingness to pay for habitat and biodiversity conservation. In a meta-analysis, 145 Willingness To Pay estimates for biodiversity conservation where existence value plays a major role were collected from 46 contingent valuation studies across six continents. Other effects included in the meta-analysis were the study year; habitat type; continent; scope as presented to respondents; whether WTP bids were for preventing a deterioration or gaining an improvement in conservation, whether a specific species or specific habitat was protected; whether the questionnaire used a dichotomous choice or an open-ended format; distribution format; and the choice of payment vehicle. GDP per capita seemed to perform as well as an explanatory variable as respondent’s mean stated income, indicating that it is wealth in society as a whole which determines variations in WTP. Even if large variation, our main conclusion is, that the demand for biodiversity conservation rises with a nation’s wealth, but the income elasticity of willingness to pay is less than one.     

Using Choice Experiments to Value the Environment

This paper we outline the “choice experiment” approach to environmental valuation. This approach has its roots in Lancaster's characteristics theory of value, in random utility theory and in experimental design. We show how marginal values for the attributes of environmental assets, such as forests and rivers, can be estimated from pair-wise choices, as well as the value of the environmental asset as a whole. These choice pairs are designed so as to allow efficient statistical estimation of the underlying utility function, and to minimise required sample size. Choice experiments have important advantages over other environmental valuation methods, such as contingent valuation and travel cost-type models, although many design issues remain unresolved. Applications to environmental issues have so far been relatively limited. We illustrate the use of choice experiments with reference to a recent UK study on public preferences for alternative forest landscapes. This study allows us to perform a convergent validity test on the choice experiment estimates of willingness to pay.     

Theoretical incentive properties of contingent valuation questions: Do they matter in the field?

Green et al. (1998) [Green, D., Jacowitz, K.E., Kahneman, D., McFadden, D., 1998. Referendum contigent valuation, anchoring, and willingness to pay for public goods. Resource and Energy Economics 20 (2), 85−116] show theoretically that stated preference questions about public services can be framed in such ways that if the subjects accept the frame the payoff­maximizing behavior will be to answer truthfully. One key element of such a theoretically incentive­compatible framing is that the (hypothetical) decision rule specified in the survey instrument is understood to be a majority rule rather than the efficiency rule typically used in cost­benefit analysis. We conducted field experiments in Germany and Switzerland to test if a referendum framing as suggested by Green et al. is effective in reducing strategic misrepresentation in a contingent valuation setting. We did not find the expected effects of the framing treatments on stated willingness to pay or on individuals' (stated) beliefs about the social choice context. The results do not support hopes that a theoretically incentive compatible framing could be purposefully used to invoke the specific beliefs about the linkage between responses and policy implementation that would make stated preference questions incentive compatible.     

The Endowment Effect and Expected Utility

The endowment effect, which is well documented in the contingent valuation literature, alters people's preferences according to a reference point established in an elicitation question. In particular, the utility that people place on a bundle is both a positive function of the quantities of the goods comprising the bundle, and a negative function of any loss (real or hypothetical) that the elicitation question asks them to incur. Biases such as this have lead some to reject the contingent valuation method as a means of quantifying costs and benefits in favour of other methods of preference elicitation such as standard gambles. But, most preference elicitation methods used by economists require people to express their preferences for one good in terms of their willingness to forego some of another good. Consequently, it is reasonable to expect that, and prudent to check whether, an endowment effect is also evident in other methods of preference elicitation such as von Neumann-Morgenstern's standard gambles. Internal inconsistencies in the standard gamble method from the experimental economics literature and from a study into the value of non-fatal road injuries are shown to be evidence that an endowment effect is also at work in standard gambles.     

WILLINGNESS TO PAY FOR AMATEUR SPORT AND RECREATION PROGRAMS

A contingent valuation method (CVM) survey in Alberta, Canada, allows estimation of the household willingness to pay (WTP) for enhancements in the province's extensive sport and recreation programs. The estimated annual WTP of $18 per household for small enhancements in the programs far exceeds the estimated WTP of households in the United States to avoid the loss of major league sports teams, as determined in previous CVM studies. Those opposed to gambling, which helps to fund the Alberta programs, are more likely to favor using income taxes to finance expansions. ( JEL H41, L83)     

Using contingent valuation to elicit public preferences for water fluoridation

The methods and results of a contingent valuation survey to elicit public preferences for water fluoridation are reported. The study demonstrates that not only is it important to acknowledge that there will be losers from the introduction of such a programme but that losers must be allowed to express a value for the magnitude of their perceived loss. Two methods of valuing this loss are explored. Conventional willingness to accept compensation questions are compared with questions in which losers are asked to state their willingness to pay to prevent their water being fluoridated. The results provide tentative support for asking willingness to pay to prevent questions instead of willingness to accept questions when evaluating certain types of public good. The issue of protest responses in contingent valuation surveys is also highlighted and discussed.     

WILLINGNESS TO PAY FOR DESERT PROTECTION

This paper uses a referendum-style survey approach known as dichotomous-choice contingent valuation to estimate the benefits of restricting the uses of 6.9 million acres of desert land. Statistical techniques estimate the value to California residents of creating three new national parks and 76 new wilderness areas in the high and low deserts of eastern California. The total amount that California residents would be willing to pay to enact desert protection legislation ranges from $177 million to $448 million per year. This estimate hinges on the assumptions that (i) the residents who did not complete and return the survey questionnaire ("nonrespondents") would receive no benefits from desert protection and (ii) the estimate of willingness to pay for the "respondents" is unbiased.     

Linking forestry, sustainability and aesthetics

In forest planning, little research has been devoted towards examining how visual-impact assessment can improve the public acceptance of forest activities and augment forest sustainability. The objective of the present work is to review the methods of aesthetic assessment of forest landscapes, which will help the implementation of visual-impact assessment in sustainable forestry. From the numerous techniques of landscape evaluation that have been devised in recent years, the expert approach techniques have dominated in environmental management practices and the perception-based approach in research. The non-market economic valuation techniques are essentially trade-off methods and not aesthetic assessments by themselves. Revealed preference methods, such as hedonic-price, use actual market choices of individuals to get their preferences towards non-market attributes, and stated preference methods, such as contingent valuation method, rely on surveys to get directly the individual's willingness to pay for the non-market attributes. Psychophysical preference modelling is a popular quantitative holistic technique of landscape evaluation and if used in combination with indirect aesthetic evaluation methods might create new standards and protocols for techniques of objectively estimating public perception of aesthetic quality and thus to enhance social sustainability in forest space.     

Effect of substitutes in contingent valuation for a private market good

Economic theory predicts a decrease in valuation as the availability of substitutes increases. This paper describes a contingent valuation (CV) survey that investigates the effect of substitutes on valuation of private market goods. Using an approach that compares willingness to pay (WTP) values elicited from a CV question that accounts for substitutes with WTP values elicited from a similar question without substitutes, we find that allowing for substitutes can moderate WTP values. For the item valued in this study, a hamburger sandwich, allowing for substitutes was associated with a reduction of from 10% to 16% in stated values.     

Economic valuation of habitat defragmentation: A study of the Veluwe, the Netherlands

This paper offers an economic value assessment of a nature protection programme in the Veluwe, the Netherlands. This programme involves two defragmentation scenarios: the first scenario connects the central part of the Veluwe with river forelands in a north-eastern direction (i.e. the meadows of the IJssel river), while the second scenario is focussed on defragmentation in a south-western direction (i.e. the meadows of the Rhine river). The valuation is based on a questionnaire that was administered during face-to-face interviews in the area and through the Internet. We employ a contingent valuation approach to assess the respondents' willingness to pay for the realisation of the defragmentation scenarios. It appears that the mean willingness to pay (WTP) for the two defragmentation scenarios is € 162.2 (lognormal distribution) per respondent. Because the Veluwe is considered a nature park of national importance, we performed an aggregation of individual WTP estimates over Dutch households. With the resulting aggregate estimates we can compare the total costs and benefits of the two scenarios for habitat defragmentation in the Veluwe. In addition, we test whether respondents value the two scenarios equally. We also check whether the methods of data collection (face-to-face interviews and Internet questionnaires) have distinct influences on the stated WTP responses.     

Testing the Effectiveness of Certainty Scales,Cheap Talk,and Dissonance-Minimization in Reducing Hypothetical Bias in Contingent Valuation Studies

Stated preference methods such as contingent valuation and choice modeling are subject to various biases that may lead to differences between actual and hypothetical willingness to pay. Cheap talk, follow-up certainty scales, and dissonance minimization are three techniques for reducing this hypothetical bias. Cheap talk and certainty scales have received considerable attention in the literature, but dissonance minimization has not previously been experimentally tested. Using a four-way split sample design involving over 600 subjects, results from an actual referendum on provision of a quasi-public good were compared with three similar but contingent referenda employing the three bias-reducing techniques. Hypothetical bias was again present. Certainty scales, when properly calibrated, and dissonance minimization were found to be most effective in reducing the bias.     

Are Korean consumers willing to pay a tax for a mandatory BSE testing programme?

The outbreaks of mad cow disease (BSE) have significantly increased the demand for food safety programs in the Korean beef market. Two issues that are getting much attention are about whether Korea should implement mandatory testing of slaughtered domestic cattle for BSE and whether consumers are willing to pay a tax for the programme. No study, however, has examined consumers’ willingness to pay (WTP) a tax for a BSE testing programme. We conducted a contingent valuation (CV) study using a double-bounded dichotomous choice approach to estimate Korean consumers’ valuation for a mandatory BSE testing programme on slaughtered domestic cattle that are 21 months or older. Our results show that the sample-population adjusted mean estimate of WTP a tax per year is 4482 KRW (US $4.01) per household. This suggests that Korean consumers have a strong preference for a mandatory testing of domestic cattle for BSE. This study also found that Korean consumers’ WTP for the programme is greater than estimated implementation costs of the programme. These results imply that implementing a mandatory BSE testing programme in Korea could confer positive consumer welfare.     

Willingness to pay for environmental goods in Norway: A contingent valuation study with real payment

The study seeks to determine the maximum willingness to pay (MWTP) among a random sample of Norwegians, for membership in the largest environmentalist association in Norway, Norges Naturvernforbund (NNV). The study includes three stages: (1) a contingent valuation study, testing hypothetical MWTP; (2) those whose stated MWTP is at or above the current membership fee are then asked to pay this fee; (3) those individuals who do not pay in stage 2 are interviewed, and asked to consider revising their MWTP statement. The study is seemingly the first of its kind in comparing hypothetical and actual MWTP by typing valuation of a public good (the environment) to the value of a private good (membership of the NNV). The results show a rather poor correspondence between hypothetical and actual MWTP, since only 6 out of 64 who stated that they were willing to pay the membership fee in stage 1, actually paid this voluntarily in stage 2. Possible reasons for this discrepancy are discussed, on the basis of data from the telephone interview in stage 3, and on information gathered in stage 1. The data indicate that a substantial part of this discrepancy is due to MWTP being overstated in stage 1, but that other reasons also are important.     

基于条件价值法的绿色基础设施社会 效用评估——以苏州金鸡湖景区为例

绿色基础设施的开发利用不仅要考虑经济可行性,即政府或私人投资者的直接成本和收入,还要考虑外部性的社会福利或成本。基于随机抽样调查,针对苏州金鸡湖绿色基础设施的特点,利用条件价值法(Contingent Valuation Method,CVM)对其非使用价值进行货币化评估,并分析了相关影响因素。研究结果表明,苏州金鸡湖保护式开发的平均支付意愿满足理性选择理论,性别和年龄等社会因素对支付意愿有显著影响,整体社会效益明显。研究结论有助于政府和公众从社会效用角度审视绿色基础设施,为政府城市更新、生态恢复等决策的制定提供理论支持。