Managing groundwater in a mining region: an opportunity to compare best‐worst and referendum data

In nonmarket valuation, practitioners must choose a format for the valuation questions. A common approach in discrete choice experiments is the ‘pick‐one’ format, often with two alternative policy proposals and a status quo from which the respondent selects. Other proposed formats, include best‐worst elicitation, where respondents are asked to indicate their most and least favoured alternative from a set. Although best‐worst formats can offer efficiency in data collection, they can also lead to responses that are difficult to reconcile with neoclassical welfare estimation. The current article explores methodological issues surrounding the use of pick‐one versus best‐worst data for nonmarket valuation, focusing on framing and status quo effects that may occur within three‐alternative discrete choice experiments. We illustrate these issues using a case study of surplus groundwater use from Western Australian mining. Results identify concerns that may render best‐worst data unsuitable for welfare estimation, including a prevalence of serial choices in which the status quo is universally chosen as the worst alternative, rendering part of the choice process deterministic. Asymmetry of preferences and serial choices can be obscured when models are estimated using ‘naively’ pooled best‐worst data. Results suggest that caution is warranted when using best‐worst data for valuation, even when pooled results appear satisfactory.     

Outdoor recreation in various landscapes: Which site characteristics really matter?

This paper investigates the role played by different site characteristics in influencing people's choice of outdoor recreation destinations. Contrary to prior studies, our experiment accounts for a large diversity of eligible landscapes described using photomontages. We use a discrete choice experiment (DCE) proposing respondents to choose among hypothetical destinations described in terms of eight site characteristics. We study the trade-offs made by various profiles of respondents among those site characteristics, resulting in different destination choices. The DCE attributes are spatially explicit to represent recreational patterns in the form of site quality maps using Geographic Information Systems (GIS). We conclude by stressing implications of this research for tourism and land management policy-making in peri-urban environments. Interestingly, preferences for site characteristics vary significantly with the recreational activities that respondents engage in. Hikers and cyclists preferences should be particularly considered in future planning decisions.     

Linking Consumers’ Food Choice Motives to their Preferences for Insect‐based Food Products: An Application of Integrated Choice and Latent Variable Model in an African Context

Consumers’ attitudes, perceptions, personalities and motives play important roles in shaping their food choices. These factors are not fully observed by analysts, so they should be treated as latent variables. A number of economic studies treat such variables as direct measures of consumers’ food choice behaviour, even though this might introduce measurement error and endogeneity bias. We investigate the latent link between consumers’ preferences and food choice motives (FCMs) in an African context. We use an integrated choice and latent variable (ICLV) model specification for data analysis to recognise the latent nature of the FCMs and address the measurement and bias problems. The data originate from an incentivised discrete choice experiment conducted in Kenya to elicit consumers’ preferences for insect‐based foods. Our findings show that consumers’ preferences and choices are influenced by their latent motivational orientation. The results illustrate the benefit of the ICLV approach in accounting for consumers’ latent preference constructs in food choice and valuation research.     

Eliciting Consumer WTP for Food Characteristics in a Developing Context: Application of Four Valuation Methods in an African Market

We elicit willingness to pay for conventional, organic and/or food‐safety‐inspected tomatoes in a traditional African food market. We identify four elicitation methods that can be conducted with one respondent at a time, and use them in a field setting: the Becker–DeGroot–Marschak mechanism, multiple price lists, multiple price lists with stated quantities, and real‐choice experiments. All four methods give similar results; showing that consumers are willing to pay a premium for organic and food‐safety‐inspected tomatoes. However, the size of the premium is significantly larger when consumers choose between alternatives than when they indicate their reservation price. The new multiple price lists with stated quantities were easy to explain in the busy market setting, gave the respondents the opportunity to determine the amount they wanted to buy, and had valuations in line with the other non‐comparative valuation methods.     

Testing hypothetical bias in a framed field experiment

Hypothetical bias is tested based on inter- and intra-respondent comparisons of choice behavior, applying a hypothetical and real choice experiment. The inter-respondent comparison commonly applied in the environmental and agricultural economics literature consists of a control group of buyers who are asked to hypothetically choose between conventional and organic beans and an experimental group of buyers who are endowed to purchase the same beans using an identical experimental design. Hypothetical bias is tested by comparing inter- and intra-respondents’ (i) hypothetical and real choices, (ii) preference parameters of the estimated choice models related to hypothetical and real choices, and (iii) hypothetical and real willingness to pay (WTP). Choices in the experimental group are highly consistent when switching from hypothetical to real choices for this study's homegrown goods. However, after being endowed, the price sensitivity of lower income households drops, suggesting a house money effect. WTP derived from actual purchases is higher than WTP based on hypothetical choices, indicating a negative hypothetical bias, but differences are only significant in the case of the inter-respondent comparison. Actual prices paid by respondents in the field experiment appear to be considerably lower than the estimated WTP values and yield a mixed picture of hypothetical bias.     

Preferences over the timing of forest resource use

The objective of this study is to evaluate preferences for time paths of outputs arising from alternative forest management practices. A discrete choice framework using logit and mixed logit models is used to evaluate stated choices by Public Advisory Committee members over attributes regarding inter-temporal forest management options. Results of the study indicate a relatively strong preference for physical sustainability, or even flow choices. However, respondents appear to be more accepting of uneven flows in recreation services than they are of uneven flows of timber harvests. Results also provide yet another illustration of a difference in implied rates of discount over the goods involved (i. e. timber versus recreation). The paper illustrates a mechanism for use in public involvement exercises that may identify inter-temporal preferences over forest management plans and strategies.     

Public preferences for biodiversity conservation and climate-change mitigation: A choice experiment using ecosystem services indicators

Potential conflicts exist between biodiversity conservation and climate-change mitigation as trade-offs in multiple-use land management. This study aims to evaluate public preferences for biodiversity conservation and climate-change mitigation policy considering respondents’ uncertainty on their choice. We conducted a choice experiment using land-use scenarios in the rural Kushiro watershed in northern Japan. The results showed that the public strongly wish to avoid the extinction of endangered species in preference to climate-change mitigation in the form of carbon sequestration by increasing the area of managed forest. Knowledge of the site and the respondents’ awareness of the personal benefits associated with supporting and regulating services had a positive effect on their preference for conservation plans. Thus, decision-makers should be careful about how they provide ecological information for informed choices concerning ecosystem services tradeoffs. Suggesting targets with explicit indicators will affect public preferences, as well as the willingness of the public to pay for such measures. Furthermore, the elicited-choice probabilities approach is useful for revealing the distribution of relative preferences for incomplete scenarios, thus verifying the effectiveness of indicators introduced in the experiment.     

Mixed integration of individual background,attitudes and tastes for landscape management

This paper discusses the design and analysis of a choice experiment regarding preferences for possible transformations of a mountain landscape traditionally used for grazing. Visual impacts related to changing a mountain landscape associated with a new ski resort development are evaluated versus an option with less environmental impact, such as a health spa or “no development”. A multi-level latent class framework is applied to simultaneously obtain those groups of people who choose similarly and are grouped locally, but are also defined by their location, assuming that their choices are representative of what they like and would choose. Groups from the mountains are classified into one specific grand class. Some individuals who live in urban areas have attitudes and beliefs similar to those who live in the mountains, and they also are classified into that same grand class. The model also identifies seven lower-level groups of individuals, each with their own structure of preferences.     

Stochastic Production and Heterogeneous Risk Preferences: Commercial Fishers' Gear Choices

We present a model of fishers' gear choice, which allows for heterogeneity both in production technology and risk preferences and apply it on a panel of Swedish trawlers. Stochastic revenue functions are estimated and used to predict the mean and standard deviation of revenue for each trip. In a random-parameters logit model, we test if these predicted values explain gear choice. A majority of fishers respond positively to increased mean and negatively to increased variability of expected landing values, indicating risk aversion, but also show a strong tendency to choose the same gear used on the previous trip.     

Modelling Determinants of Participation,Number of Trips and Site Choice for Outdoor Recreation in Protected Areas

This is a study on demand for outdoor recreation in a national system of environmentally protected areas. The exercise is based on a nationwide survey carried out in 1996 from a stratified random sample of 5,574 Italian households. Data on socio‐economic characteristics and recreational choice behaviour of respondents were collected and this information was supplemented by a second data‐base containing information on 193 Italian EPAs in order to characterise the different outdoor destinations on the basis of their recreational attributes. These data sets are used here to model choices of outdoor recreation within environmentally protected areas, using a sequence of three different models: (i) a dichotomous choice logit model for the probability of participation conditional on household covariates; (ii) a count data Poisson model to estimate the household's expected number of trips per year; (iii) a conditional logit model to estimate the probability of site selection conditional on site attributes. We report the estimated per‐trip welfare changes derivable from an actual policy proposal which would extend the area under environmental protection by ten per cent.     

Firm behaviour under uncertainty: a simple parametric model

In this paper, we model production technology in a state‐contingent framework. We assume that all the firms use the same stochastic technology, but they may have different risk attitudes and information sets, and ex post they may operate in different production environments. Firms maximise ex ante their preference function subject to a stochastic technology constraint; in other words, they are assumed to act rationally, thereby leaving no room for either technical or allocative inefficiency. We provide a simple parametric functional form to represent the state‐contingent technology. Using simple numerical examples, we illustrate how optimal input–output choices are dramatically affected when firms have different preferences and information sets. Thus, we show that the observed disparateness of production choices among different firms can actually be attributed to the stochastic nature of the decision environment.     

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.     

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.     

Food Preferences and Ethnicity

Policies to curb food imports in food deficit Sahelian countries have been unsuccessful. Sahelian countries are ethnically diverse and each group has demonstrated strong preferences for cereals and other foods. Yet, research on the consequences of expressed food preferences on food production, consumption, and importation is limited. In this paper, the effects of ethnic identity and income class on food consumption choices were investigated. The results showed that all consumers, use the same criteria in evaluating a given set of foods irrespective of ethnic group, or income class. Ethnic groups and income classes choose a given food basket, which maximizes their welfare, if the same criteria are used in making their food choices.     

Public Preferences and Willingness to Pay for Forest Disease Control in the UK

Invasive pests and diseases in trees impose a range of costs on society related to reductions in timber values, impacts on recreational opportunities and effects on forest biodiversity. These costs need to be considered when assessing control options and developing public policy. We investigate the preferences and willingness to pay of the UK general public for a range of forest disease control measures using a choice experiment with a sample of 605 people. Respondents were relatively well informed about general tree disease‐related issues, such as causes and general measures to minimise the risk of disease spread. They were less knowledgeable about specific tree diseases, with Dutch elm disease and chalara ash dieback being the most well known. We find that disease control programmes in publicly‐owned forests and forests owned by charitable trusts are more likely to be supported by the public than equivalent control programmes in privately‐owned and/or commercial forests. The nature of scientific uncertainty about diseases does not affect peoples’ preferences for disease control measures significantly. Higher respondent income, greater ex‐ante knowledge about tree diseases, and more frequent visits to forests are correlated with greater willingness to support publicly‐funded tree disease control programmes in forests. Better knowledge about tree diseases also improves the clarity of respondents’ choices. We find a negative sentiment against some disease control measures, such as clear felling of a forest, and chemical or biocide spraying. We conclude that there is significant public support for part‐financing forest disease control policies in the UK, but that this is conditional on forest ownership and the type of control measures used.     

Myopia and saliency in renewable resource management

An important challenge in managing renewable resources is to understand why owners and managers sometimes make decisions that deplete resources and future earnings, such as when graziers allow pastures and land condition to be degraded. In this paper, we test two potential reasons for unsustainable management practices, myopia and salience, with each explaining why resource managers may exhibit impatience in harvest decisions. Myopia is associated with decision makers placing lower weight on future outcomes than would be implied by their pure time preference. Salience is associated with overweighting of consumption ‘now’, implying inconsistency in time preferences. To test for these effects on renewable resource management, an incentivised, dynamic field experiment was carried out with rangeland grazing enterprise owners in north‐eastern Australia that related management choices with uncertain rainfall events to both profits and land condition over time. Results demonstrate that respondents exhibiting myopia/salience in their choices tended to achieve lower cumulative scores in the experiment, as well as lower land conditions on their properties as measured with remote sensing data. Our results explain why there may be persistent optimisation failures by resource owners that reduce both profits and environmental outcomes.     

A Belief-Preference Model of Choice for Experience and Credence Goods

We develop a methodology addressing the issue of confounded beliefs and preferences in models of discrete choice. First, we formalise the theoretical framework and logical underpinnings of a belief-preference model of choice for experience and credence goods, where subjective beliefs relate to uncertain product quality. We then present the experimental procedure within the context of an online choice experiment studying consumer food preferences. The empirical strategy leverages information from a quality sorting task to identify and estimate beliefs, while choice data are used to recover preferences. By conditioning product choices on predicted quality perceptions, the issue of endogenous beliefs is resolved.     

Using Attribute Importance Rankings Within Discrete Choice Experiments: An Application to Valuing Bread Attributes

We present a new Bayesian econometric specification for a hypothetical Discrete Choice Experiment (DCE) incorporating respondent ranking information about attribute importance. Our results indicate that a DCE debriefing question that asks respondents to rank the importance of attributes helps to explain the resulting choices. We also examine how mode of survey delivery (online and mail) impacts model performance, finding that results are not substantively affected by the mode of survey delivery. We conclude that the ranking data are a complementary source of information about respondent utility functions within hypothetical DCEs.