Willingness to Pay for Ancillary Benefits of Climate Change Mitigation

Assessing the Willingness to Pay (WTP) of the general public for climate change mitigation programmes enables governments to understand how much taxpayers are willing to support the implementation of such programs. This paper contributes to the literature on the WTP for climate change mitigation programmes by investigating, in addition to global benefits, the ancillary benefits of climate change mitigation. It does so by considering local and personal benefits arising from climate change policies. The Contingent Valuation Method is used to elicit the WTP for ancillary and global benefits of climate mitigation policies in the Basque Country, Spain. Results show that WTP estimates are 53–73% higher when ancillary benefits are considered.     

Spatial Heterogeneity of Willingness to Pay for Forest Management

The paper investigates the spatial heterogeneity of public’s preferences for the implementation of a new country-wide forest management and protection program in Poland. Spatial econometric methods and high resolution geographical information system data related to forest characteristics are used to explain the variation in individual-specific willingness to pay (WTP) values, derived from a discrete choice experiment study. We find that respondents’ WTP is higher the closer they live to their nearest forest, and the scarcer forests are in the area where they live. Interestingly, the higher the ecological value of forests in respondents’ area, the more people prefer extending areas of national forest protection. We also investigate spatial patterns in individual-specific WTP scores and in latent class membership probabilities, finding that preferences are indeed spatially clustered. We argue that this clustering should be taken into account in forest management and policy-making.     

The Role of Cultural Worldviews in Willingness to Pay for Environmental Policy

Environmental and Resource Economics - Recent research in the social psychology literature suggests that personally held beliefs may play a pivotal role in individuals’ acceptance of...     

Despairing Over Disparities: Explaining the Difference Between Willingness to Pay and Willingness to Accept

This paper examines the three major explanations for the disparity between willingness-to-pay (WTP) and willingness-to-accept (WTA) observed in contingent value surveys and laboratory experiments: a belief that the results must be biased in some fashion, Hanemann's (1991) substitutes hypothesis, and the loss aversion model proposed by Tversky and Kahneman (1991). Starting from the assumption that individuals make utility maximizing choices, we develop structural equations that yield parametric tests of the hypotheses within a single, non-experimental framework. The approach is flexible enough to incorporate a variety of functional form and distributional assumptions and can be applied to either data from either open-ended bids or dichotomous choice questions. The usefulness of the approach is demonstrated using data from a survey that asked both WTP and WTA questions. The results provide weak support for loss aversion.     

Bayesian Conjoint Choice Designs for Measuring Willingness to Pay

In this paper, we propose a new criterion for selecting efficient conjoint choice designs when the interest is in quantifying willingness to pay (WTP). The new criterion, which we call the WTP-optimality criterion, is based on the c-optimality criterion which is often used in the optimal experimental design literature. We use a simulation study to evaluate the designs generated using the WTP-optimality criterion and discuss the design of a real-life conjoint experiment from the literature. The results show that the new criterion leads to designs that yield more precise estimates of the WTP than Bayesian D-optimal conjoint choice designs, which are increasingly being seen as the state-of-the-art designs for conjoint choice studies, and to a substantial reduction in the occurrence of unrealistically high WTP estimates.     

The Willingness to Accept Value of Statistical Life Relative to the Willingness to Pay Value: Evidence and Policy Implications

Large disparities between willingness to accept (WTA) and willingness to pay (WTP) based values of statistical life are commonly encountered in empirical studies. Standard economic theory suggests that if a public good is easily substitutable there should be no marked disparity between WTA and WTP values for the good, though the disparity increases with reduced substitutability. However, psychologists have shown that people often treat gains and losses asymmetrically and tend to require a substantially larger increase in wealth to compensate for a loss than the amount they would be willing to pay for an equivalent gain. Although most transport projects may aim to improve safety, situations arise when a relaxation of an existing regulation saves resources but increases the risk of death and injuries. A survey was recently carried out in New Zealand to determine people’s willingness to pay to reduce road risks and their willingness to accept compensation for an increase in risk. This paper reports the disparity observed between the two measures and considers some of the problems posed for policymakers.     

Willingness to Pay for Car Safety: Evidence from Sweden

This study estimates a marginal willingness to pay (WTP) function for a road-mortality risk reduction. Observed marginal WTP from the Swedish car market is used and found to be positively correlated with the baseline risk of the cars. No statistically significant relationships between examined owner attributes, e.g. wealth and background risk, and marginal WTP are found. When comparing the estimated monetary value of a non-marginal risk reduction derived from the integral of the marginal WTP-function with an estimate based on marginal WTP we find, in line with expectations, that the difference between the estimates is negligible for smaller risk reductions and small, 4–10%, also for relatively large risk reductions.      

公众对森林碳汇服务的认知与支付意愿的调查研究——以哈尔滨为例

公众对森林碳汇服务的认知与支付意愿是了解森林碳汇需求的基础。在对国内外森林碳汇研究现状进行总结的基础上,以黑龙江省哈尔滨市地区为范围,随机抽取320位公众进行调查,获有效问卷319份,调查结果显示:公众对森林生态功能有一定认知水平,但不够深入和成熟。公众对购买森林碳汇服务的意识基础较好,但缺乏有效引导。主观因素、外界条件与购买渠道三方面都使公众在支付行动上面临障碍。同时,Logistic分析结果表明,影响公众购买森林碳汇服务意愿的主要因素有"森林固碳是否应得到补偿"、"个人是否有必要减排"和"年龄"等因素。最后提出了提高公民对森林碳汇服务的认知和支付意愿的建议。     

On the Asymmetry of the Vagueness Band in Willingness to Pay Answers

The NOAA panel for Contingent Valuation opened up the question of the possibility of using trichotomous choice discrete formats in CV studies. In this paper we show how the trichotomous choice format can be used for testing the successfulness of the project definition in the questionnaire. We shall define the vagueness band around the true outcome of the project to be valued and we allow it to be asymmetric. It is shown how this asymmetry can be modelled and estimated. We also show how these new models are generalisations of ordinary ordered probit/logit models.     

游客对旅游地教育服务的支付意愿研究

为有计划性、引导性的倡导使用者付费的理念,建立公开透明、科学合理的定价机制,运用条件价值评估法(CVM)对全国12个省12个旅游景区的中国游客进行了实地抽样调查,分析游客对教育服务项目的支付意愿。基于2 800份有效问卷数据,获得了受访者支付意愿的分布形态和规律,构建了游客支付意愿与其影响因素之间关系的模型。结果显示:49.40%的游客愿意支付教育服务费用,平均支付额度为28.6元;游客的年龄、婚姻状态、学历、职业、收入与其教育服务支付意愿之间存在显著性关系,旅游地游客教育水平也直接影响游客的支付意愿,而性别与其支付意愿没有显著的差异。同时,游客的年龄、学历、职业、收入对支付方式的影响较大,64.1%的游客想通过门票支付,27.5%的游客想通过小费支付。     

Distance Decay in the Willingness to Pay for Wine: Disentangling Local and Organic Attributes

This paper investigates how the residents of a French wine-producing region value the attributes of wine. We elicit the willingness-to-pay (WTP) for organic/non-organic and local/non-local wines with increasing levels of information on the impact of agricultural practices at both global and local scales. The analysis shows that there is a significant organic premium associated with both local and non-local wines. This organic premium significantly increases with information and significantly decreases with the distance between the consumer’s home and the vineyard. Based on the econometric predictions of the WTP, we show that a per-unit tax on non-organic wines or a standard imposing organic practices increases welfare through the internalization of the attributes revealed by the experiment.     

The Marginal Costs of Electricity Supply in Victoria*

This paper discusses some of the determinants of the costs of supplying electricity by season, by time of day and by location. A model is constructed of the State Electricity Commission of Victoria grid to illustrate the propositions. It is found that current tariffs bear little relationship to the opportunity costs of supplying electricity.     

The Marginal Cost of Australian Income Taxation*

When the financing of expenditure programmes involves a welfare cost, that cost should be considered part of the opportunity cost of the expenditure programme. In this paper, we explore some concepts of the welfare loss of taxing labour income. We correct some measures previously applied and estimate the marginal cost of Australian public funds. Using our measure of the cost of public funds, we explore the costs of policy options in the motor vehicle industry.     

The Effect of Risk Characteristics on the Willingness to Pay for Mortality Risk Reductions from Electric Power Generation

The objective of this study is to estimate willingness to pay (WTP) for the reduction of mortality risks caused by fossil fuel (natural gas, coal and oil) versus nuclear electric power generation systems and to examine the influence of risk characteristics involved with electric power generation on WTP. A choice experiment was conducted to achieve these objectives. The attributes for nuclear risks in the experiment included the probability of disasters and the expected losses if a disaster occurs. We find evidence of (i) a baseline effect (where WTP is sensitive to hypothetical versus actual baseline expected mortality); (ii) a ‘labeling effect,’ where, surprisingly, the term ‘nuclear’ has no effect on WTP, but the term ‘fossil-fueled power generation’ results in lower WTP; and (iii) disaster aversion, meaning that people focus on the conditional loss from a nuclear disaster, not the probability. We also find that the WTP for reducing deaths from a nuclear disaster is about 60 times the WTP for routine reducing fossil-fuel generation-related deaths.     

Willingness to Pay and the Cost of Commitment: An Empirical Specification and Test

In a static setting, willingness to pay for an environmental improvement is equal to compensating variation. In a dynamic setting, however, willingness to pay may also contain a commitment cost. In this paper we incorporate the dynamic nature of the value formation process into a stated preference study designed to test whether there is an important dynamic component (commitment cost) in stated preference values. The results clearly indicate that stated preference values can contain commitment costs and that these can be quite large: respondents offered the opportunity to delay their purchasing decisions until more information became available were willing to pay significantly less for improved water quality than those facing a now-or-never decision. These results have important consequences for the design and interpretation of stated preference data.     

The Potential Compensation Principle and Constant Marginal Utility of Income

In policy applications, industrial economists are wont to invoke the Kaldor–Hicks potential compensation principle to justify the use of deadweight loss as a measure of the welfare cost of market power. This usage rests on two assumptions. One of these assumptions, that changes in consumer and producer surplus are weighted equally, is well understood. The other assumption, that the marginal utility of income is constant, receives less attention. In a simple model, I show that if there is decreasing marginal utility of income, the use of deadweight loss as an index of market performance rests on shaky ground.     

Sensitivity of Willingness to Pay Estimates to the Level of Attributes in Discrete Choice Experiments

This paper considers issues raised in the application of discrete choice experiments (DCEs) to estimating willingness to pay (WTP). The main issue addressed is the sensitivity of WTP estimates to the level of attributes. A DCE, concerned with preferences for alternative cervical screening programmes, was carried out with women in the Tayside area of Scotland. A split sample design was employed in which respondents were divided into two groups. Each group received a discrete choice questionnaire that varied with respect to the levels of three of the six attributes. The price attribute was one of the attributes that varied across questionnaires. Whilst estimated coefficients were not significantly different across five of the six attributes included in the experiment, mean WTP estimates were significantly different for four of the five welfare estimates. However, from a policy point of view, such a difference may not be important. Consideration is also given to other general methodological and policy issues that are raised when using DCEs to estimate WTP. The findings suggest the need for further research into the design and application of DCEs as a method for estimating WTP.     

Repeated Dichotomous Choice Formats for Elicitation of Willingness to Pay: Simultaneous Estimation and Anchoring Effect

Repeated dichotomous choice contingent valuation data are generated from responses to a succession of binary questions regarding alternative prices for an environmental good. In this paper we propose a simultaneous equation model that allows for endogeneity and error correlation across the responses at each stage of the bidding process. The model allows us to study the evolution of anchoring effects after the second dichotomous choice question. Estimation involves the Bayesian techniques of Gibbs sampling and data augmentation, and the application focuses on the preservation value of a natural area. The results for a data set involving up to four successive dichotomous choice questions show that restricted multiple-bounded models are rejected by the data with the general model. In addition, willingness to pay tends to stabilize after the second stage in the elicitation process for the general unrestricted model. When taking anchoring effects into consideration, it is revealed that individuals’ responses in the latter stages are influenced by the sequence of bid prices offered in earlier questions. Nevertheless, they do not have a significant effect on welfare estimates.      

南京市公众对长江水质改善的支付意愿及支付方式的调查

本文以南京市为例．利用支付卡式的条件价值评估（OVM）技术．通过发放调查问卷及访谈的形式对公众改善长江水质的支付意愿进行了深入研究。结果表明：（1）南京市居民对长江水质恢复的户均年支付意愿为100．66元．76．5％的受访者的支付意愿大于零，8．4％的受访问者虽有支付意愿但限于低经济收入原因支付意愿为零．15.1％的受访者拒绝支付；（2）影响居民支付意愿的主要因素包括家庭收入、环境意识及文化程度；（3）南京市居民偏爱的支付方式依次为捐款、交税、存取基金方式及提高水价．水价上涨并不是面向公众筹集长江水质改善资金的唯一有效方式。根据调查结果，本文认为增加收入，提高水环境保护意识．引入“谁收益、谁支付”观点是提高居民支付意愿的有效途径。     

Estimating Willingness to Pay for the Development of a Peace Park Using CVM: The Case of the Korean Demilitarized Zone

Conflicts remain an integral part in shaping the world. Tensions on the Korean Peninsula are no exceptions. The Korean DMZ (Demilitarized Zone) World Peace Park has been proposed to help obtain peace by erasing the memories of war and creating new beginnings of trust, cooperation, and unity on the Korean Peninsula. With their ties to geographical space and conflict, peace park research provides an excellent platform for both activism and research in positive peace. Little, however, is known about peoples’ willingness to pay (WTP) for the creation of peace parks, in general, and specifically for the development of the Korean DMZ World Peace Park. Using contingent valuation methods, the weighted average WTP for development of the Peace Park is $49.03 per household per year. It appears South Koreans are willing to pay not only for the conservation of the DMZ, but also for the peace and unification of the Korean Peninsula the Peace Park may bring to the area.