Joint Estimation of Multiple CVM Scenarios under a Double Bounded Questioning Format

Contingent valuation surveys frequently ask the same respondent for willingness to pay (WTP) for either different programs or different levels of provision of a single program. When multiple scenarios are considered by the respondent, the errors in the estimates of WTP are likely to be correlated across scenarios. Failing to account for correlation may lead to erroneous inferences concerning differences in WTP. This paper presents a technique that can be used to jointly estimate WTP for multiple scenarios proposed within a survey when the double-bounded questioning format is used. Monte Carlo simulations are employed to show that estimates derived from the joint model provide lower parameter variances as well as tighter confidence intervals surrounding WTP. The model is used to estimate WTP values for data collected in telephone interviews of California residents concerning WTP for fire reduction programs in Oregon and California. Variance properties of these estimates are shown to be similar to those estimated using simulated data.     

ESTIMATING THE WILLINGNESS TO PAY FOR DIGITAL MUSIC

The general consensus among the copyright piracy literature is that economic incentives and enforcement are both effective strategies that complement one another in reducing the occurrence of piracy. Yet, the key factor underlying these strategies is the ability of the media industries to influence an individual's willingness to pay (WTP) for legal purchases when illegal versions exist. This article estimates the effects of factors influencing WTP for digital music downloads. Our results show that while income and risk perceptions play a dominant role in determining WTP, ethics are also important in influencing WTP. Our results are consistent with the growing consumer acceptance of fee-based music services that can exist alongside peer-to-peer file sharing as well as serve as a viable substitute . ( JEL O34, K42, D12)     

The effect of experience and quantity-based pricing on the valuation of a curbside recycling program

Quantity-based pricing for garbage collection services and recycling programs are becoming increasingly popular methods of meeting municipal solid waste diversion objectives. This article investigates household willingness to pay (WTP) for a pilot curbside recycling program (CRP) in the presence of a quantity-based pricing scheme for garbage collection services, which allows a household to alter their garbage container size at a reduced price. Unlike previous studies that have modeled the simultaneity of these household decisions as a two-step process, we jointly estimate the household's intentions using a full-information maximum-likelihood (FIML) approach. Our results show a strong positive correlation between a household's WTP for a CRP and its stated intention to reduce its garbage container size when a CRP is offered. The positive correlation suggests that WTP will be higher for households which are more likely to reduce their garbage container size. Thus, in the presence of quantity-based pricing, a household's WTP for recycling more fully reflects the marginal social costs of garbage disposal.     

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.     

Marine Debris, Beach Quality, and Non-Market Values

This paper reports the first attempt to measure the importance of controlling marine debris as an aesthetic characteristic of beaches and coastal area. The results are based on a contingent valuation survey designed to estimate the economic value people would place on controlling marine debris on recreational beaches in New Jersey and North Carolina. A Weibull survival model was estimated treating for and against votes as defining censoring points for an unknown willingness to pay distribution. The findings suggest: (1) people do distinguish situations with differing amounts of debris when they are described using color photographs; (2) the pilot survey implies measures of people's willingness to pay (WTP) for debris control are consistent with a scope test in that larger WTP is associated with programs intended to address situations for more serious background levels of debris; and (3) local beach conditions seem to influence how people interpreted the plans describing beach conditions without the proposed control programs.     

流域生态补偿支付意愿的影响因素分析——以湘江流域长沙段为例

以湘江流域长沙段为例,运用结构方程模型和CVM调查数据对流域生态补偿支付意愿的影响因素进行分析。研究发现,以＂外部特征＂、＂现状评价＂、＂心理特征＂取代传统研究的＂个人社会经济特征＂作为＂支付意愿＂的主要影响因素更具全面性和解释力;运用结构方程模型比传统回归模型分析更具整体建构性和优越性;居民的支付意愿不仅取决于外部条件和现实能力,也取决于居民的心理特征。     

Discrete Choice Experiments in Developing Countries: Willingness to Pay Versus Willingness to Work

A concern when conducting stated preference valuation studies in rural developing or very low income contexts is the use of monetary willingness to pay (WTP) estimates. In circumstances where cash incomes are extremely low, a significant proportion of the population are not engaged in waged labour and the exchange of goods or services is augmented through barter or work exchange, the role of money is likely to be different from that within an urban developed setting. As such, ability to pay using money may be impaired and downwardly biased when compared with other mediums of exchange. In recognition of this several studies have used hypothetical labour contributions as payment vehicles and a common finding is that households are more often willing to contribute labour than they are money. In this paper we present the results of a split sample DCE using money and labour contributions as payment vehicles for improved drinking water quality in Kandal Province, Cambodia. We find little differences between the payment vehicles in terms of attribute non-attendance, marginal utilities of attributes or derived welfare values. We argue that this provides support for the use of WTP in rural developing areas where there are functioning labour markets.     

How the source of the entrant's advantage limits entry‐deterring tying

I revisit a simple model of entry‐deterring tying—example 1 from Whinston's (1990) seminal paper—but allow the potential entrant to have either a cost advantage or a willingness‐to‐pay (WTP) advantage relative to the incumbent. I show that, compared to the usual case in which the potential entrant is cost‐advantaged, tying is less effective against an entrant with a WTP advantage because an entrant with a large WTP advantage may be able to induce the buyer to buy both the tied bundle and the entrant's product. I also show that tying but failing to deter entry can be less costly when facing an entrant with a WTP advantage than when facing an entrant with a cost advantage. For a firm facing uncertainty about, for example, the entrant's entry costs, this makes tying a more attractive entry deterrence strategy against a WTP‐advantaged entrant. These results shed light on the important policy question of which markets are most likely to be susceptible to entry‐deterring tying.     

Endowment effect theory,prediction bias and publicly provided goods: an experimental study

Many studies report on a systematic disparity between the willingness to pay for a certain good (WTP) and the willingness to accept retribution payments in exchange for giving up this good (WTA). Thaler [Thaler RH (1980) J Econ Behav Organ 1:39–60] employs prospect theory to explain this disparity. The literature contains two different interpretations of his endowment effect theory. Accordingly, the disparity is caused either by the disutility from parting with one’s endowment and/or by an extra utility from ownership which is not anticipated by individuals who are not endowed with the good. So far, the empirical evidence on the applicability of endowment effect theory is limited to private goods. This paper reports on an experiment which finds a significant ownership utility effect for a publicly provided good. This result indicates that prospect theory applies to publicly provided goods even though consumers do not have exclusive property rights.      

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.     

The Value of Clean Air in China： Evidence from Beijing and Shanghai

We estimate the willingness to pay （WTP） of Beijing and Shanghai residents for improving the air quality of the two cities from their levels prior to the 2008 Beijing Olympic Games to the level achieved during the Olympics. The data are obtained from a contingent valuation study conducted through face-to-face interviews in June 2008 in Beijing and Shanghai prior to the Beijing Olympics, during which time there was intensive debate about Beijing＇s air quality. Residents in both cities are willing to pay more when they are more exposed to air pollution, when their disposable income increases, and when they have stronger beliefs that public opinion plays an important role in government policy making. Beijing residents are willing to pay more than Shanghai residents, due possibly to Beijing＇s poorer air quality. Overall, aggregate WTP for air quality improvement accounts for about 0.53% of the 2008 GDP in Beijing and 0.22% of the 2008 GDP in Shanghai.     

Mixed logit estimation of willingness to pay distributions: a comparison of models in preference and WTP space using data from a health-related choice experiment

Different approaches to modelling the distribution of WTP are compared using stated preference data on Tanzanian Clinical Officers’ job choices and mixed logit models. The standard approach of specifying the distributions of the coefficients and deriving WTP as the ratio of two coefficients (estimation in preference space) is compared to specifying the distributions for WTP directly at the estimation stage (estimation in WTP space). The models in preference space fit the data better than the corresponding models in WTP space although the difference between the best fitting models in the two estimation regimes is minimal. Moreover, the willingness to pay estimates derived from the preference space models turn out to be very high for many of the job attributes. The results suggest that sensitivity testing using a variety of model specifications, including estimation in WTP space, is recommended when using mixed logit models to estimate willingness to pay distributions.     

Latent preferences and valuation of wetland ecosystem restoration

We employ a latent class choice model to evaluate the effects of alternative ecological characterizations of wetland functions and services on individual preferences, and to determine whether socioeconomic factors and psychometric measures of environmental attitudes can explain differences in individual's preferences and values for wetland restoration. This analysis combines a multiattribute choice model with information on individual's characteristics to evaluate preferences for restoration of the Greater Everglades ecosystem, one of the largest and most comprehensive wetland ecosystem restoration projects. To identify potential endpoints for Everglades restoration, two alternative ecological characterizations of the ecosystem were developed using the familiar distinction between function and structure. Survey data from a representative sample of the general population were used in a split-sample design based on the ecological characterization treatment. Within each subsample, the latent class analysis identified three groups who varied in their preferences for ecosystem restoration and socioeconomic profiles. The ecological characterizations had a significant influence on respondents' preferences and willingness to pay (WTP). The subsample responding to the structural characterization had a significantly larger share of respondents in the group who favored proposed restoration plans than the functional attribute subsample. In both subsamples, the group who favored restoration had a higher WTP for restoration than other groups. The latent class analysis also revealed socioeconomic and attitudinal factors that explain some of the heterogeneity in preferences and WTP within each subsample; this heterogeneity would not be identified with a standard choice model. In the context of Everglades restoration, the results provide a baseline assessment of public support and WTP that suggests an emphasis on structural rather than functional restoration endpoints. The approach described in this article can be used in other policy studies of wetland ecosystems because multiple ecosystem services can be represented within a stated choice survey and differences in preferences and values for these services can be measured.     

Spatial discounting of ecosystem services

The impact of conservation efforts targeted at preserving ecosystem services largely depend on the welfare implications associated with spatial variations in the provision of ecosystem services. While there is ample empirical evidence of spatial discounting or decay of the valuation of ecosystem services, there are still few underpinnings based on welfare economic theory. We establish a theory of spatial discounting that closely follows the concept of time discounting pertaining to climate change, and show spatial discount rates in the consumption, ecosystem service, and willingness to pay (WTP) numeraires. We consider the role of key parameters such as pure rate of spatial preference, consumption change, ecosystem services change, population density, and elasticity of marginal utility. We find that the spatial discount rate of WTP for ecosystem services that frequently appears in the empirical literature is the difference between the ecosystem service discount rate and consumption discount rate, where the ecosystem service discount rate includes both physical distance decay and welfare effects. Finally, we use numerical simulations to illustrate how the three different spatial discount rates vary with the spatial distance from the source of ecosystem services and with consumption patterns, implying many more possible spatial variations of WTP.     

A comparison of empirical models used to infer the willingness to pay in contingent valuation

The essence of the contingent valuation method consists of creating a hypothetical market where respondents are asked about their willingness to pay (WTP) for a non-market good. Different empirical models can be formulated to estimate the expected WTP of a sample of respondents and, then, through aggregation, the social valuation of the good is inferred.This paper outlines the relevance of the distributional assumptions when estimating mean WTP. Several parametric and non-parametric methods are discussed and applied to calculate the existence value of a natural space. Results show that WTP is extremely sensitive to the empirical model used.First version received: November 2002 / Final version received: January 2004     

Towards More Efficient Compensation Programmes for Tourists' Benefits From Agriculture in Europe

This paper covers nonmarket services provided by farmers for recreational purposes in several Central European regions. A regionally specified general equilibrium model is used to derive the efficiency conditions for a competitive equilibrium to guarantee a Pareto optimal outcome. Moreover, we present green agricultural compensation programmes in Europe and their assessment from an economic perspective. The empirical analysis focuses on tourists' willingness to pay (WTP) for the provision of agricultural landscape-enhancing services in Austria. A comparison of these measures with current voluntary compensation payments made to farmers for the preservation of an agricultural countryside in several Austrian tourism communities suggests that the hypothetical contingent valuation (CV) results represent a valid order of magnitude for the value of recreation-related agricultural services. As far as agricultural policy is concerned, environmental improvement, the stabilization of agricultural income levels, diminishing intrasectoral income differences, and the development of economically disadvantaged rural regions can be expected from directly subsidizing farmers for the provision of countryside amenities.     

Reference Dependence Effects on WTA and WTP Value Functions and Their Disparity

In this study we investigate two reference dependence effects in a choice experiment. The first is the effect of the well-known distinction between gains and losses, the second is the effect of changing the reference value on willingness to pay (WTP) and willingness to accept (WTA). The latter has to our knowledge not been studied before. We hypothesize that there are differences between WTA and WTP, and that both value functions and their disparity are affected by the absolute value of the reference point. We test our hypotheses using a choice experiment with trade-offs between changes in flood probabilities and costs. The choice experiments elicit WTP and WTA, using two flood probability reference values, yielding four separate value functions. Our findings show that a substantial WTA–WTP disparity exists, and that this disparity increases when moving away from the reference point. Also, both WTA and WTP value functions are affected by the flood probability reference value, and the WTA–WTP disparity increases when the flood probability reference point increases. Both findings suggest that welfare effects caused by changes in public good provision depend not only on the direction of change (loss aversion), but also the reference value. Moreover, our results show that the latter effect is larger for losses than for gains. We introduce the concept of reference point updating as a possible explanation for these findings.     

An Experimental Validation of Hypothetical WTP for a Recyclable Product

Using a within-subject experiment, we compare hypothetical andreal willingness to pay (WTP) for an improvement in therecyclability of a product. Subjects are faced with a real paymentscenario after they have responded to a hypothetical question.Contrary to most of the results obtained in similar studies, at apopulation level, there are no significant median differencesbetween actual and hypothetical stated values of WTP. However,within-subject comparisons between hypothetical and actual valuesindicate that subjects stating a low (high) hypothetical WTP tendto underestimate (overestimate) the value of their actualcontributions.