Investigating cost non-attendance as a driver of inflated welfare estimates in mixed-logit models

Choice models are used by applied economists for many purposes, such as non-market valuation or estimating willingness to pay for novel food and product attributes. Mixed-logit models allow researchers to account for preference heterogeneity and complex decision-making processes when modelling choices. In mixed-logit models, parameters of monetary attributes such as prices typically are assumed to follow a negative lognormal random distribution to ensure that the marginal utility of a price increase is strictly negative. However, this practice can cause means and standard deviations of welfare estimates to ‘explode’ to unfeasibly large levels, as the model assumes there are some marginal utilities of cost approaching zero. This paper examines whether cost non-attendance, which occurs when respondents ignore costs in stated-preference studies, could be a cause of inflated welfare estimates when a lognormal cost parameter is used. A two-class equality-constrained latent-class model is proposed, in which the cost parameter is fixed at zero for a cost non-attender class and is specified as a random lognormal parameter for cost attenders. This proposed model produces mean welfare estimates that are 17 times lower than a mixed-logit model with a lognormal cost parameter, and 10% lower than a model with a non-random cost parameter. These results suggest that cost non-attendance can result in inflated welfare estimates when employing a lognormal cost parameter, and that accounting for cost non-attendance could be a simple, parsimonious solution to this problem.     

Diversification choices in agriculture: a Choice Modelling case study of sugarcane growers

Growers in the sugarcane industry have been struggling under financial pressure for several years. One option to improve farm viability might be to diversify farm enterprise income. Choice Modelling, an economic valuation technique, was used to explore the trade-offs growers make between different attributes of diversification, and how their choices may be related to certain socio-economic characteristics. Application of the technique involved surveys of cane growers in three regions of Central Queensland. This is a novel approach to assessing grower intentions that has the potential to reveal detailed information about influences on grower choices.     

近年国外农地价值评估方法研究进展述评

研究目的:通过对国外农地价值评估研究现状的考察,探讨实现农地估价的有效方法.研究方法:文献资料法和比较分析法.研究结果:农地价值构成的复杂性决定了评估方法的多样性.针对农地不同价值内涵可以采用不同的评估方法,而每一种评估方法都有其优势和自身难以弥补的缺陷.研究结论:农地价值评估,尤其是农地非市场价值评估是资源环境经济学研究的前沿领域.学习借鉴国外的研究经验,探索适用于中国的农地估价体系是今后国内研究的一个方向.     

耕地资源非市场价值评估研究进展及展望

随着经济的快速发展和城镇化进程的不断加快,我国耕地资源流失现象非常严重。其根本原因在于人们对耕地资源的价值认识不清,往往忽略耕地资源的非市场价值。该文对国内外有关耕地资源的非市场价值及其评估方法的研究进展进行了系统地评述,并在此基础上进一步剖析了国内耕地资源非市场价值研究存在的主要问题,最后对我国耕地资源非市场价值的进一步研究方向进行了展望。     

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.     

居民参与农地保护的认知程度及支付意愿研究——以湖北省为例

作为人类赖以生存和发展的物质基础，农地提供粮食、蔬菜、木材等实物型产品，以及开敞空间、景观、文化服务等非实物型生态服务，为人类带来巨大的社会福利。从社会公众参与农地保护的认知及支付意愿（willingness to pay，WTP）出发，估算农地非市场价值，并将其纳入资源成本核算体系中，不仅能够弥补市场机制作用不足给农地流转决策带来的影响，而且通过提高土地资源农业利用的比较效益，能够缓解我国农地流失形势。文章在调查分析湖北省武汉、宜昌、荆门、仙桃、汉川5市县1255户居民家庭对农地保护认知程度及支付意愿的基础上，运用条件价值评估法对湖北省农地非市场价值进行估算。     

Choice experiment,multiple programmes contingent valuation and landscape preferences: How can we support the land use decision making process?

The promotion of cost–benefit analysis for social and environmental policy choices is much debated. Then, the conception of a valuation method for the non-market benefit of these policies is still of a main research interest. Among direct valuation methods, the choice experiment method (CEM) becomes a highly attractive valuation procedure, in giving at the same time the economic value of the impacts of the different components of the policy as well as the global impact of a policy package. However, the main-effect designed protocol aiming to limit the cognitive burden of scenarios’ evaluation disregards the important question of the existence of substitution or complementary relation between these programmes for their main beneficiaries. Furthermore, the independent valuation and summation strategy developed in CEM opens to overvaluation or under valuation of the willingness to pay values. The aim of this article is to conduct testing of the additivity bias with CEM results. The distribution of the willingness to pay values for possible combinations of landscape programmes aiming to maintain two agricultural landscape attributes as well as one moorland attribute inferred from the earlier CEM survey is compared to results obtained with the sequential contingent valuation procedure for multidimensional policy suggested by Hoehn (1991). Our empirical results suggest that the additivity bias is not statistically significant in our case, even if specific relation between landscape attributes due to what we call the composition effect is of concern for the population we interviewed. Furthermore, landscape preferences derived from our empirical investigation support the need for more integration of agricultural issues with the local land-use issues.     

VALUING RURAL RECREATION BENEFITS: AN EMPIRICAL COMPARISON OF TWO APPROACHES

Two methodologies for valuing non-market benefits (contingent valuation and the travel cost method) are briefly described. Both are then applied to the problem of valuing non-market recreation benefits derived by visitors to a part of the Queen Elizabeth Forest Park in Central Scotland. Results, in terms of consumer surplus estimates, are presented for each method, and problem areas found in applying the two methodologies are pointed out.     

Preference Uncertainty in Non-Market Valuation: A Fuzzy Approach

In this article, we consider uncertain preferences for non-market goods, but we move away from a probabilistic representation of uncertainty and propose the use of fuzzy contingent valuation. We assume that a decision maker never fully knows her own utility function and we treat utility as a fuzzy number. The methodology is illustrated using data on forest valuation in Sweden. Fuzzy contingent valuation provides estimates of resource value in the form of a fuzzy number and includes estimates obtained using a standard probabilistic approach.     

经济发达地区耕地非市场价值及居民支付意愿研究——以南京市为例

研究目的：以南京市为例,研究耕地的非市场价值及城乡居民支付意愿的影响因素。研究方法：条件价值法,计量模型。研究结果：（1）南京市耕地的非市场价值为504087.92万元,单价为20760.59元/hm2;（2）57.76%市民和60.32%的农民家庭愿意为耕地非市场价值付费,支付意愿分别为208.33元/户•a和120.26元/户•a;（3）家庭收支水平、年龄、性别、受教育状况、对耕地非市场价值的认知等是影响城乡居民支付意愿的重要因素。研究结论：受家庭支付能力及其在耕地非市场价值方面受到教育的影响,城乡居民对耕地非市场价值的支付意愿并不高。     

湖北省城乡生态经济交错区农地价值测算

研究目的：在区域问卷调查的基础上,测算湖北省城乡生态经济交错区主要类型农地资源的价值。研究方法：收益还原法和条件价值评估法。研究结果：湖北省城乡生态经济交错区各类型农地资源单位面积总价值为：水田25.04万元/hm2,旱地29.48万元/hm2,菜地83.99万元/hm2,水域养殖地79.23万元/hm2;其中非市场价值为：水田10.90万元/hm2,旱地14.38万元/hm2,菜地24.93万元/hm2,水域养殖地37.19万元/hm2。研究结论：农地非市场价值是农地总价值测算中不可忽视的部分。农地价值的测算对制定农地保护、征地补偿政策具有重要的指导意义。     

Non-market economic valuation in developing countries: Role of participant observation method in CVM analysis

Developing countries have high proportion of black money and related corruption in the society in comparison to the developed ones. This aspect has to be kept in mind while conducting contingent valuation method (CVM) questionnaire survey (in-person) at the site whose economic valuation is being done. Participant observation method (POM) and unstructured interview schedule (UIS) are the two means, which must be used in addition to structured interview schedule during CVM studies in developing countries to arrive at a reasonable non-market economic valuation figure of an environmental amenity. It has been observed that researchers generally ignore this fact during survey for primary data collection among respondents who are quite well off, educated and belong to countries of huge parallel economy. However in the present study, we have utilized these two means during primary data collection for a CVM study and reached the conclusion that CVM has to be used with caution even among educated masses in the developing countries.     

A choice modelling case study on climate change involving two-way interactions

Choice Modelling applications can be designed to estimate main effects only or multiple-way interactions between attributes. It has been reported that higher order effects generally account for less than 10% of the choice explanation. Nevertheless, the amount of applications testing for interactions among attributes in environmental valuation is very limited. This paper reports a Choice Modelling exercise valuing climate change impacts on plant cover, land erosion and fire risk in Spanish shrublands. Two out of three two-way interactions were found significant and to account for more than 20% of the choice model explanation. Their contribution to the log-likelihood value was comparable to the one of the main effects variables. Moreover, accounting for second order interactions significantly altered the estimates of the implicit prices of attributes compared to the main effects specifications.     

Can environmental attributes influence protected area designation? A case study valuing preferences for springs in Grand Canyon National Park

Springs in Grand Canyon National Park (GRCA) provide water to over 6 million visitors per year. In addition to use value for visitors, springs have cultural value to indigenous peoples and provide critical habitat for plants and animals. Finally, base flow to the Colorado River is dependent upon springs and they also provide an important water source for backcountry recreation. Climate change, uranium mining, and increased groundwater pumping threaten the continued viability of Grand Canyon springs. Springs protection is at the forefront of proposed national policy to protect the area of the aquifers contributing to springs of the Grand Canyon outside of the designated boundaries of the national park. To date very little research on the non-market values of springs has been conducted, and no research has estimated non-market values of springs within Grand Canyon National Park using a Choice Experiment (CE). We conduct a nationwide online Choice Experiment to determine willingness to pay (WTP) to protect backcountry springs and attributes including; accessibility, suitability as a back country water source, suitability as habitat for species of concern, aesthetics, and significance to Indigenous Nations. We estimate a Bayesian mixed logit, and find an average willingness to pay of $32.60 per household for a spring with the presence of all five attributes. The habitat attribute produces the highest WTP of $14.80. We find WTP of $4.50 for springs with cultural significance. Results from our study could be instrumental in designation of the Grand Canyon National Heritage Monument. In addition, our results indicate that careful consideration of watershed services on public lands is essential for efficient decision-making regarding protection of public lands.     

丘陵地区农地非市场价值磁——以湖北省荆门市为例

农地非市场价值是农地价值的重要组成部分，也是土地价值研究中的薄弱点。选择典型丘陵地区荆门市，采用条件价值评估法（CVM）进行支付意愿的问卷调查，了解了民众对农地非市场价值的认识，并对该价值进行了定量的评估。研究结果表明：荆门地区农地非市场价值总量为86．77亿元，其中耕地为29．01亿元，园地为9．27亿元，林地为23．38亿元，水域为25．11亿元。支付意愿与受访者特征有显著相关关系：市民支付意愿与家庭人口和支付方式显著相关，农民支付意愿与年龄、土地面积、收入和开支显著相关。     

NON-COMPENSATORY PREFERENCE STRUCTURES IN NON-MARKET VALUATION OF NATURAL AREA POLICY

Non-compensatory preferences may form a significant component of individuals' values for non-market goods such as natural areas, especially in the context of a reduction in environmental quality. The widespread neglect of such preferences can result in erroneous estimates of changes in economic welfare. Non-market valuation using techniques such as contingent valuation therefore need to take into account the possibility that some individuals hold noncompensatory preferences. The formal structure of the lexicographic noncompensatory ordering is described, and the theoretical implications of an individual holding such preferences over some region of goods space is examined. A method for the empirical identification of non-compensatory preference orderings is outlined.     

A generalized method for valuing agricultural farms under uncertainty

The opacity of the farm market means that valuations are based primarily on expert estimates rather than on actual transaction prices. The valuation method based on the two cumulative distribution functions (VMTCDF), created by Ballestero (1971), improves the synthetic method based on estimating the market value of an asset by establishing a proportional relation between the asset and one external variable. However, in most cases the expert must consider multiple external variables. This paper proposes a definitive extension to k indexes with a methodology particularly applicable to the field of valuation of non-market goods or markets where little information is available as may be the case with the valuation of agricultural land. The contribution is illustrated with an empirical example.     

Non-market valuation of forest goods and services: Good practice guidelines

The European COST Action E45 on European Forest Externalities (EUROFOREX) participants developed a set of good practice guidelines for the non-market valuation of forests, elaborating on stated and revealed preference methodologies, as well as benefit transfer and meta-analytical procedures. This article presents a summary of the guidelines.     

Consumer versus citizen preferences in contingent valuation: evidence on the role of question framing*

Rather than individual consumer preferences, responses to referendum‐style contingent valuation surveys on environmental goods may express citizen assessments that take into account benefits to others. We reconsider the consumer versus citizen hypothesis with a focus on the role of framing information. Survey data on conservation areas in Ilomantsi, Finland, are used. Different versions of the valuation question were used to encourage the respondents to take the consumer or the citizen role. The citizen version expectedly resulted in substantially fewer zero‐WTP responses and protests and higher mean and median WTP, suggesting that the framing information has a major effect on the preferences expressed. The findings support the idea of multiple preferences. For a more confident interpretation of contingent valuation responses, future studies should recognise their intended use in survey design and gain information about respondents' motives to determine the presence and type of altruistic motives.