Using Geographically Weighted Choice Models to Account for the Spatial Heterogeneity of Preferences

In this paper, we investigate the use of geographically weighted choice models for modelling spatially clustered preferences. We argue that this is a useful way of generating highly‐detailed spatial maps of willingness to pay for environmental conservation, given the costs of collecting data. The data used in this study come from a discrete choice experiment survey of public preferences for the implementation of a new national forest management and protection programme in Poland. We combine these with high‐resolution spatial data related to local forest characteristics. Using locally estimated discrete choice models we obtain location‐specific estimates of willingness to pay (WTP). Variation in these estimates is explained by characteristics of the forests close to where respondents live. These results are compared with those obtained from a more typical, two stage procedure which uses Bayesian posterior means of the mixed logit model random parameters to calculate location‐specific estimates of WTP. We find that there are indeed strong spatial patterns to the benefits of changes to the management to national forests. People living in areas with more species‐rich forests and those living nearer bigger areas of mixed forests have significantly different WTP values than those living in other locations. This kind of information potentially enables a better distributional analysis of the gains and losses from changes to natural resource management, and better targeting of investments in forest quality.     

Convergent validity in contingent valuation: an application to the willingness to pay for national climate change mitigation targets in Germany

This stated preferences survey determines the willingness to pay (WTP) for climate change mitigation policies using a representative sample of the German population. WTP is compared across three valuation question formats in a split sample design: the dichotomous choice (DC) referendum, the dissonance minimizing (DM) referendum and the two‐way payment ladder (TWPL). The influence of multinational cooperation on WTP is assessed by variation in the hypothetical scenarios. We demonstrate that the DM referendum and the TWPL, two question formats that induce similar response incentives, yield equal mean WTPs. Multinational cooperation did not change WTP in any of the question formats. Implications for current contingent valuation practice are discussed.     

Stated Attribute Non‐attendance in Successive Choice Experiments

Attribute non‐attendance in choice experiments affects willingness‐to‐pay (WTP) estimates and therefore the validity of the method. A recent strand of literature uses attenuated estimates of marginal utilities of ignored attributes. Following this approach, we propose a generalisation of the mixed logit model, whereby the distribution of marginal utility coefficients of a stated non‐attender has a potentially lower mean and lower variance than those of a stated attender. Model comparison shows that our shrinkage approach fits the data better and produces more reliable WTP estimates. We further find that while reliability of stated attribute non‐attendance increases in successive choice experiments, it does not increase when respondents report having ignored the same attribute twice.     

Protester or non‐protester: a binary state? On the use (and non‐use) of latent class models to analyse protesting in economic valuation*

In the analysis of stated preferences studies, it is often assumed that protesting is a discretely measured item only occurring among those who are not willing to pay. However, various studies have recently shown that protest beliefs are as well held by respondents who state a positive willingness to pay (WTP). Using latent class (LC) models, we investigate the extent of heterogeneity with respect to protest beliefs among all respondents of two contingent valuation studies. The advantage of LC models is that classes of individuals are endogenously identified and no selection bias is introduced by ad hoc definitions of protesters. Further we investigate whether it is possible to identify a class of non‐protesters. Finding a group of pure non‐protesters could indicate how strongly stated WTP in the whole sample is affected by protest beliefs. For both samples, we find a class with strong protest beliefs but no pure non‐protest class. Overall, our results suggest that LC models might not be the first choice to determine unbiased WTP measures, but they provide valuable insights into the degree of protesting expressed by different groups and corresponding determinants of group membership.     

How Sure Can You Be? A Framework for Considering Delivery Uncertainty in Benefit Assessments Based on Stated Preference Methods

The economic valuation of benefits resulting from environmental policies and interventions often assumes that environmental outcomes are certain. In fact, these outcomes are typically uncertain. This article proposes a methodological approach to incorporate delivery uncertainty into benefit estimation based on stated preference methods. In the study design of a choice experiment survey on land‐based climate change mitigation, we explicitly include delivery uncertainty as the risk that a proposed mitigation project fails to deliver emission savings. We find that respondents’ preferences do not change significantly after being confronted with choices that included risk of failure. However, failure risk itself does have an important impact on the preferences for delivering emission reductions. We show that delivery uncertainty can have a large impact on stated preference estimation of benefits of public programmes. This result should condition conclusions drawn from ex‐ante environmental cost‐benefit analyses that make use of such benefit estimates.     

The value of green walls to urban biodiversity

Despite increased interest in the implementation of green walls in urban areas and the recognised benefits of monetary valuation of ecosystem services, no studies have been undertaken to estimate the economic value of biodiversity they provide. The valuation of natural resources allows policy makers to justify resource allocation. Using the Southampton, UK, as a case study, this paper estimates the public’s perceived value of green walls to urban biodiversity, in the form of their willingness to pay (WTP). Estimates were derived using a random parameter model that accounted for socio-economic and attitudinal determinants of choice, using choice experiment data. Three green infrastructure policies were tested; two green wall designs (‘living wall’ and ‘green façade’) and an ‘alternative green policy’; and compared against ‘no green policy’. Results indicated a WTP associated with green infrastructure that increases biodiversity. Attitudinal characteristics such as knowledge of biodiversity and aesthetic opinion were significant, providing an indication of identifiable preferences between green policies and green wall designs. A higher level of utility was associated with the living wall, followed by the green façade. In both cases, the value of the green wall policies exceeds the estimated investment cost; so our results suggest that implementation would provide net economic benefits.     

The optimal diffusion of mitigation options for environmental management

A new direction for evaluating pollution policy is proposed, focused on optimal investment pathways for mitigation capital. The approach allows practitioners to draw directly from key principles in the diffusion literature. A two‐stage, policy‐development framework is introduced. The first stage consists of empirical modelling to assess optimal diffusion pathways for diverse mitigation options. The second involves determining the relative strengths of different policy actions to address diffusion rates or maximum levels of adoption that diverge from optimal levels. The advantages of this new approach are demonstrated in an agri‐environmental context, concerning the off‐site impacts of intensive agriculture on water quality. The viewpoint provided by the novel approach establishes the importance of adoptability – alongside the traditional measures of abatement effectiveness and cost – for mitigation practices in policy assessment. The key role that durable mitigation capital plays in addressing dynamic externalities is demonstrated, alongside the importance of structured diffusion cascades for alternate mitigation options.     

Value elicitation for multiple quantities of a quasi‐public good using open ended choice experiments and uniform price auctions

Choice experiments and experimental auctions have become popular mechanisms for estimating willingness to pay (WTP). However, these methods have primarily been used for estimating WTP for single units of goods. We analyze the results from experimental auctions and choice experiments in the context of multiple quantities of a quasi‐public good (animal welfare product). We show that the use of WTP values for a single unit of a product, a common practice in experimental valuation literature, can result in underestimation of aggregate demand. We use and compare open ended choice experiments (OECE), second price Vickrey auctions, and random Nth price auctions as mechanisms for valuing WTP. Our results also suggest that individual level demand estimates from OECE are less elastic than demand estimates from uniform price auctions.     

Statistical Modelling of Incentive Design Under Limited Information ‐ The Case of Public Access to Farmland

This paper explores the use of statistical modelling to aid efficient policy design for the provision of environmental goods on farms under conditions of adverse selection. The specific case of incentive‐based schemes to enhance the supply of public access to farmland is used as an example. A range of site willingness‐to‐pay (WTP) distributions are used to explore the benefits derived from policies designed under different levels of information. Where no individual farm information is available, low payment rates are optimal, but efficient market creation may not be possible. Increasing the information set allows discretion in pricing and entry: optimal payment rates and net benefits are higher and the pay‐off from procuring improved information can be substantial. Such benefits are reduced where there is a welfare cost associated with increased government expenditure. Optimal policies are sensitive to the skewness of the WTP distributions. Mechanisms for increasing the information set available to policy makers are discussed.     

Design Factors Influencing Willingness‐to‐Pay Estimates in the Becker‐DeGroot‐Marschak (BDM) Mechanism and the Non‐hypothetical Choice Experiment: A Case of Biofortified Maize in Zambia

Two of the experimental methods used to estimate willingness‐to‐pay (WTP) for a non‐market good, the Becker‐DeGroot‐Marschak (BDM) mechanism and the non‐hypothetical choice experiment (nHCE) often lead to significantly different WTP estimates, complicating the choice between the methods. In Zambia the same group of researchers used both techniques to evaluate WTP for orange maize, which provides more vitamin A than other varieties. This provided an opportunity to analyse the sources of the difference. In the BDM experiment, one group of respondents was provided with more training opportunities than the other, and made higher bids. Accounting for lexicographic behaviour in the nHCE reduced the estimated WTP. These two design factors together resulted in a decrease in the WTP difference for orange maize (1,279–632 ZMK) although the difference remains statistically significant. More training was also shown to eliminate the effects of different orders in which maize varieties were presented.     

Designing Policy for Reducing the Off‐farm Effects of Soil Erosion Using Choice Experiments

Soil erosion produces both on‐site private costs and off‐site social costs, such as desertification, rural depopulation, siltation of waterways and reductions in biodiversity. To design efficient policies, land use planners and decision makers need information on the relative weights of changes in these consequences, since policy alternatives, such as different management restrictions, will have varying impacts on these consequences of erosion. The research presented here uses the choice experiment method to evaluate these relative weights, using a case study in the Alto Genil and Guadajoz watersheds in southern Spain. We find that reductions in desertification, protection of water quality, protection of biodiversity, the area covered by the scheme, and the number of rural jobs safeguarded are all significant determinants of preferences over alternative policy designs.     

Examining demand for urban river rehabilitation in Indonesia: Insights from a spatially explicit discrete choice experiment

The demand for urban river rehabilitation can be measured through stated preference surveys such as choice experiments, providing information on the welfare estimates of a particular approach. We deploy such a technique in the context of plans to rehabilitate a major river in Jakarta, Indonesia. The current plan focuses on widening and canalizing the downstream segment of the river within Jakarta’s administrative boundary. We hypothesize that residents would demand (and thus be willing to pay for) additional components of an ecological rehabilitation program in the form of riverside park space and upstream forest conservation outside of Jakarta’s jurisdiction. We develop a spatially-explicit discrete choice experiment in which households register their preferences for channel widening, park space, forest conservation, and a monthly fee to fund the rehabilitation. Using mixed logit models we find significant and substantial demand for both park space and forest conservation, with a lower bound on the total willingness to pay (WTP) of greater than US $4 million per year for park space and nearly US $6 million per year to support reforestation in the upper catchment. These estimates are based on households within the catchment, but we find that demand did not seem to decay with distance so the upper bound on total WTP could be substantially higher. We also find that household income level has a strong effect on marginal WTP for forest conservation, minimal effect on marginal WTP for park space, and that location along the river influenced WTP for park space and channel widening. This provides further evidence that there is substantial demand for river rehabilitation in developing world cities, and that choice experiments can provide information relevant to land use planning.     

Comparing results of ranking conjoint analyses,best–worst scaling and discrete choice experiments in a nonhypothetical context

This study assesses the comparability of discrete choice experiment (DCE), ranking conjoint analysis (RCA) and multiprofile best–worst scaling (BWS) in a nonhypothetical context in terms of estimated partworths, willingness to pay (WTP), response consistency and external validity. Overall, the results suggest that: (i) the conjoint analysis formats that were used in this study provide similar estimated WTP, but different estimated partworths and computed external validity; (ii) the inclusion of the full ranking information in the estimation of the parameters of interest affects the estimated partworths, but not the estimated WTP; and (iii) it is more appropriate to use multiprofile BWS over DCE and RCA because it has better predictive power of consumers’ preferences and provides estimated WTP comparable to those obtained in the others conjoint analysis formats. The BWS’ cognitive process could be considered clearness for participants implying significant increment of its predictive power.     

Predicting versus testing: a conditional cross‐forecasting accuracy measure for hypothetical bias*

A measure of hypothetical bias, or the divergence between stated and revealed preferences, based on conditional cross‐forecasting accuracy is suggested, based on out‐of‐sample prediction accuracy when estimates from stated preference data are used in place of those from actual choices, and vice versa. We describe an application of this measure to assess hypothetical bias in the context of an inquiry into people’s willingness to pay to avoid canola oil produced from genetically modified plants. The analysis suggests the presence of groupwise hypothetical bias in these choice data.     

Modelling outcome‐related risk in choice experiments

In this study, we introduce information on outcome‐related risk as an additional attribute in a choice model of preferences for a land‐based climate change mitigation project. We provide a comprehensive comparison of different model specifications arising from different behavioural assumptions about the way that respondents process information on outcome‐related risk within the choice task. We find significant differences between several specifications in terms of both model fit and WTP estimates. The behavioural assumptions made when choosing a particular model specification, and reasons that motivate them should be made explicit, and consequences of using different specifications should not be ignored.     

Effects of media headlines on consumer preferences for food safety,quality and environmental attributes

In recent years, Asia has emerged as an important supplier of food to Western countries. In this study, we focus on shrimp, a major aquaculture commodity, to evaluate consumer willingness‐to‐pay (WTP) for enhanced food safety, use of antibiotics and eco‐friendly practices used in producing shrimp in the presence of country‐of‐origin labelling. Specifically, this research assesses the effects of news headlines regarding product safety, as information shocks on U.S. consumer demand. Consumers were found to have a mean willingness‐to‐pay of $7.81 per pound of shrimp with an enhanced safety characteristic from the United States, $0.94 for the same type of shrimp from China and $2.43 for similar shrimp from Thailand. Consumers had a WTP for the absence of antibiotics in the production of U.S. shrimp of $7.31 and were only willing to pay for an eco‐friendly attribute on domestically produced shrimp. Media headlines were found to have a statistically significant effect on consumer preferences and WTP for product characteristics. Food policy and international agribusiness implications of our findings are discussed.     

A meta-regression analysis on the willingness-to-pay for country-of-origin labelling

Food quality and food safety issues arouse increasing interest and concern among consumers and policy-makers. Consequently, the importance of country-of-origin labelling (COOL) is increasing in business, policy and research. Numerous studies have reported a wide range of estimates for consumers' willingness-to-pay (WTP) for COOL using stated preference methods and, in particular, discrete choice experiments. We apply meta-regression analyses to synthesise the heterogeneous results of 204 WTP for COOL estimates extracted from 59 studies which used discrete choice experiments and were published between 2009 and 2020. Meta-regression analysis allows an adjusted summary proxy to be derived for the WTP for COOL and the determinants of heterogeneity in reported WTP estimates are also investigated. Our results suggest that there is a significant positive WTP for COOL, and also reveal that the reported WTP estimates are unaffected by publication bias. In addition, they show systematic variation in WTP estimates across the context and methodological characteristics of the studies. More precisely, we find that the region and the product (animal- vs. plant-based) analysed, as well as certain characteristics of the choice design (e.g., the number of attributes used, or the inclusion of an opt-out option) can have a significant impact on the estimated WTP for COOL. Finally, our results reveal significant differences in price premiums between various types of COOL (e.g., domestic vs. foreign). This highlights that results from individual primary studies should not be generalised without further consideration of the underlying study design.     

Systematic Variation in Willingness to Pay for Aquatic Resource Improvements and Implications for Benefit Transfer: A Meta-Analysis

Researchers are increasingly considering benefit transfer approaches that allow welfare measures to be adjusted for characteristics of the policy context. The validity and reliability of such adjustments, however, depends on the presence of systematic variation in underlying WTP. This paper describes a meta-analysis conducted to identify systematic components of WTP for aquatic resource improvements. Model results reveal systematic patterns in WTP unapparent from stated preference models considered in isolation, and suggest that observable attributes account for a substantial proportion of the variance in WTP estimates across studies. The analysis also exposes challenges faced in development, estimation, and interpretation of meta-models for benefit transfer and welfare guidance. These challenges remain salient even in cases where the statistical performance of meta-models is satisfactory.     

Comparing Serial,and Choice Task Stated and Inferred Attribute Non‐Attendance Methods in Food Choice Experiments

A number of choice experiment (CE) studies have shown that survey respondents employ heuristics such as attribute non‐attendance (ANA) while evaluating food products. This paper addresses a set of related methodological questions using empirical consumer data from a CE on poultry meat with sustainability labels. First, it assesses whether there are differences in terms of marginal willingness to pay estimates between the two most common ways of collecting stated ANA (serial and choice task level). Second, it validates the self‐reported ANA behaviour across both approaches. Third, it explores the concordance of stated methods with that of the inferred method. Results show that WTP estimates from serial‐level data differ from those from choice task‐level data. Also, self‐reported measures on choice task ANA are found to be more congruent with model estimates than those for serial ANA, as well as with inferred ANA.     

Managing the energy trilemma of reliability,affordability and renewables: Assessing consumer demands with discrete choice experiments

In response to the looming climate crisis, many countries are adopting technologies to reduce the accumulation of greenhouse gases. However, national energy policies are often multiobjective and resolution deeply divisive. The result is a policy trilemma between the energy mix and the trade-offs with other policy objectives, including cost and reliability. Utilising a discrete choice experiment (DCE), the objective of this study is to explore Australian household preferences for alternative electricity contracts containing features reflecting changes in future energy policy. The first set of features include investments in renewable generation and community-based energy storage. The second set of features reflect demand-side management policies, including installing smart meters and consumption limits being imposed on households during peak demand. Two versions of the DCE were developed to obtain both willingness to pay and willingness to accept estimates for the same features. In line with the literature, differences in the two sets of estimates were observed, with the willingness to accept estimates being statistically larger for some features. These dollar value measures can be used to support public policy decision-making – the choice of which depending on the context of the policy problem being considered.