Ambivalent statements in contingent valuation studies: inclusive response formats and giving respondents time to think

A recent concern in the valuation literature is the uncertainty respondents feel when posed with willingness-to-pay questions for environmental amenities in hypothetical market scenarios. Using a multiple-bounded discrete-choice format, the results indicate that respondents become less ambivalent when allowed considerable time to think about the valuation task before a response is elicited. In particular they tend to reduce the reported willingness to pay associated with low certainty of paying, hence resulting in more conservative welfare estimates. Implications for the application of environmental valuation techniques are discussed.     

Effects of Cheap Talk on Consumer Willingness-to-Pay for Golden Rice

A large body of literature suggests willingness-to-pay is overstated in hypothetical valuation questions as compared to when actual payment is required. Recently, "cheap talk" has been proposed to eliminate the potential bias in hypothetical valuation questions. Cheap talk refers to process of explaining hypothetical bias to individuals prior to asking a valuation question. This study explores the effect of cheap talk in a mass mail survey using a conventional value elicitation technique. Results indicate that cheap talk was effective at reducing willingness-to-pay for most survey participants; however, consistent with previous research, cheap talk did not reduce willingness-to-pay for knowledgeable consumers.     

Contingent valuation of urban public space: A case study of Ljubljanica riverbanks

The article presents an economic valuation of the Ljubljanica riverbanks area, which is an urban cultural landscape with distinct qualities of international importance. For this purpose, we combined a classical contingent valuation with a closed-form version of discrete choice method, where the protest responses have been removed. By using econometric analysis, we obtained the willingness-to-pay (WTP) value and established its determinants. It was ascertained that residents derived more utility from implementation of the targeted development scenario than visitors. Thus, a discriminatory contribution scheme similar to the one with respect to the mean WTP could supply substantial revenue for further targeted development, while still providing ample consumer surplus for both residents and visitors. The present analysis represents one of the method’s very few applications to urban landscape in Central and Eastern European countries.     

Mycogen as a Case Study in Real Options

This article provides a primer on the use of real options valuation in a strategic agribusiness setting. Using the Mycogen case study as an example, the article provides a qualitative approach to strategic risk management. The article introduces a number of real options such as the option to wait and the option to learn and illustrates how prudent use of these options can give rise to firm value in an agribusiness setting.     

Non‐market valuation: usage and impacts in environmental policy and management in Australia

An extensive literature exists on environmental nonmarket valuation research. It appears that results from these studies should be useful inputs to decision‐making about environmental policy or management. Here, we investigate the extent to which this occurs in practice in Australian environmental management bodies. Nonmarket valuation experts were surveyed about their studies that they believed to have influenced policy. Then, decision‐makers in environmental bodies were interviewed about the level of influence nonmarket valuation has had on their decisions. We find that researchers' perceptions of the influence that nonmarket valuation has on decision‐making are overly optimistic. Interviews with decision‐makers suggest that nonmarket valuation is little used in decision‐making. Indeed, the majority of them are unfamiliar with nonmarket valuation techniques. Nevertheless, once the concept was explained to them, many decision‐makers believed it could benefit environmental policy. Researchers' perceptions of the reasons for low usage of nonmarket valuation are largely inaccurate. We suggest a range of strategies that economists can use to promote the use of nonmarket valuation in environmental policy and management decisions, including ways to improve communication and engagement with decision‐makers, and strategies to increase the capacity for decision‐makers to use nonmarket valuation results.     

Estimating Willingness to Pay for Improved Water Quality in the Presence of Item Nonresponse Bias

This article deals with the problem of item nonresponse in contingent valuation surveys using a payment-card method, by applying a grouped-data sample-selection estimation technique that is capable of imputing the missing values conditional upon a respondent's decision to answer a willingness-to-pay question. The advantage of the technique lies in its ability to utilize all of the information in the sample, permitting a more efficient estimation in the presence of item nonresponse bias. The major determinants of willingness to pay appear to be household income, number of children, education, perception of existing water quality, and identification with environmental issues.     

Effect of Experimental Design on Choice-Based Conjoint Valuation Estimates

In this article, we investigate the effect of several commonly used experimental designs on willingness-to-pay in a Monte Carlo environment where true utility parameters are known. All experimental designs considered in this study generated unbiased valuation estimates. However, random designs or designs that explicitly incorporated attribute interactions generated more precise valuation estimates than main effects only designs. A key result of our analysis is that a large sample size can substitute for a poor experimental design. Overall, our results indicate that certain steps can be taken to achieve a manageably sized experimental design without sacrificing the credibility of welfare estimates.     

Australasian environmental economics: contributions,conflicts and ‘cop‐outs’*

Australian and New Zealand environmental economists have played a significant role in the development of concepts and their application across three fields within their subdiscipline: non‐market valuation, institutional economics and bioeconomic modelling. These contributions have been spurred on by debates within and outside the discipline. Much of the controversy has centred on the validity of valuations generated through the application of stated preference methods such as contingent valuation. Suggestions to overcome some shortcomings in the work of environmental economists include the commissioning of a sequence of non‐market valuation studies to fill existing gaps to improve the potential for benefit transfer.     

A Bug Is a Bug Is a Bug: Symbolic Responses to Contingent Valuation Questions about Forest Pest control programs?

Symbolic responses are one of many issues attending contingent valuation studies. The problem is that many objects that are the subject of contingent valuation surveys can act as symbols for larger issues. In this paper, we want to compare the attitudes of residents of five communities with two different forest pests, jack pine budworm and gypsy moth. Jack pine budworm affects commercially important forests in Canada, while gypsy moth generally affects recreational areas and has less commercial significance. All of the respondents were asked about both insects; however, not all of the communities had direct experience with both insects. The purpose is to examine whether respondents would differentiate their willingness to pay for control mechanisms between these different defoliators. The implication is that all bugs are alike and generally noxious, a notion that would not necessarily sit well with resource managers who have to deal with insect outbreaks. Respondents did not differentiate strongly between insect control programs that would impact their community and those that would not. While not conclusive, the results do suggest symbolic responses to this particular issue. This is further evidence that willingness-to-pay results from contingent valuation studies need to be cautiously interpreted as pseudo market values.     

Valuation on the Frontier: Calibrating Actual and Hypothetical Statements of Value

The lack of robust evidence showing that hypothetical behavior directly maps into real actions remains a major concern for proponents of stated preference nonmarket valuation techniques. This article explores a new statistical approach to link actual and hypothetical statements. Using willingness-to-pay field data on individual bids from sealed-bid auctions for a $350 baseball card, our results are quite promising. Estimating a stochastic frontier regression model that makes use of data that any contingent valuation survey would obtain, we derive a bid function that is not statistically different from the bid function obtained from subjects in an actual auction. If other data can be calibrated similarly, this method holds significant promise since an appropriate calibration scheme, ex ante or ex post , can be invaluable to the policy maker that desires more accurate estimates of use and nonuse values for nonmarket goods and services.     

What drives stock market integration? An analysis using agribusiness stocks

This article explores the drivers of regional stock market integration with a focus on the agribusiness sector across relevant regional trade blocs around the world. We implement panel cointegration models to analyze the stock indices of agribusiness firms in the Southern Common Market (MERCOSUR), European Union (EU), Asia‐Pacific Economic Cooperation (APEC), and North American Free Trade Agreement (NAFTA). Based on the literature on market integration and stock return pricing, we identify nine possible determinants of stock market integration, which we separate into three categories: individual market performance, macroeconomic conditions, and agricultural trade. In our analysis, we account for agriculture‐specific factors to control for possible structural shifts in financial markets regimes by including the two main commodity price bubbles during last 20 years. Our results show that most of the variables included in our categories have been important factors in promoting regional stock market integration. Moreover, integration among regional stock markets was strengthened by the implementation of trade agreements. This effect is stronger in trade blocs with fewer members, such as NAFTA and MERCOSUR, compared with larger and more heterogeneous blocs, such as the EU and APEC.     

Comparing Open-Ended Choice Experiments and Experimental Auctions: An Application to Golden Rice

We use two experimental valuation methods to estimate consumer demand for genetically modified golden rice. The first is an open-ended choice experiment (OECE) where participants name the quantities of golden rice and conventional rice demanded at each of several price combinations, one of which will be randomly chosen as binding. This allows us to estimate market demand by aggregating demand across participants. This estimate of market demand also allows us to estimate own-price elasticity and consumer surplus for golden rice. Comparing willingness-to-pay (WTP) estimates from the OECE with those from a uniform-price auction, we find that OECE WTP estimates exhibit less affiliation across rounds, and the effects of positive and negative information under the OECE are more consistent with prior expectations and existing studies. We also find that, while auction WTP estimates more than double across five rounds, OECE WTP estimates are stable across rounds and are always roughly equal to those from the final auction round.     

A meta-analysis of the willingness to pay for reductions in pesticide risk exposure

We review the empirical valuation literature on pesticide riskexposure and develop a taxonomy of environmental and human healthrisks associated with pesticide usage. Meta-analysis is thenused to investigate the variation in willingness to pay (WTP)estimates for reduced pesticide risk exposure. Our findingsshow that the WTP for reduced risk exposure is 15 per cent greaterfor medium, and 80 per cent greater for high risk levels, ascompared with low risk levels. The income elasticity of reducedpesticide risk exposure is generally not significantly differentfrom zero. Stated preference approaches based on choice experimentsand revealed preference provide lower WTP estimates than contingentvaluation techniques. Survey design, type of safety device (eco-labelling,integrated pest management, or bans) and chosen payment vehicleare important drivers of the valuation results.     

On dichotomous choice contingent valuation data analysis: Semiparametric methods and Genetic Programming

The aim of this paper is twofold. Firstly, we introduce a novel semiparametric technique called Genetic Programming to estimate and explain the willingness to pay to maintain environmental conditions of a specific natural park in Spain. To the authors’ knowledge, this is the first time in which Genetic Programming is employed in contingent valuation. Secondly, we investigate the existence of bias due to the functional rigidity of the traditional parametric techniques commonly employed in a contingent valuation problem. We applied standard parametric methods (logit and probit) and compared with results obtained using semiparametric methods (a proportional hazard model and a genetic program). The parametric and semiparametric methods give similar results in terms of the variables finally chosen in the model. Therefore, the results confirm the internal validity of our contingent valuation exercise.     

3 Dimensional data research for property valuation in the context of the LADM Valuation Information Model

Property valuation is a process that promotes sustainable development as it supports and forms several land management activities. Access to information on the legal, geometric, physical, locational and environmental characteristics of property units together with the economic indicators are required for an effective property valuation system. Traditional cadastral systems generally provide only two-dimensional (2D) legal and geometric information about property units, however, today’s valuation practices would benefit significantly from three-dimensional (3D) information in order better to estimate and explain values of property units. The purpose of this paper is to examine how 3D spatial datasets and spatial analyses have been used in property valuation, and to develop 3D valuation unit profile(s) in line with the examination results for the recently proposed Valuation Information Model that extends the ISO 19152:2012 Land Administration Domain Model (LADM) from the valuation point of view. The study focuses more on 3D locational and environmental characteristics of property units; particularly visibility and especially viewshed analysis in terms of property valuation. By using open topography, building and height datasets of the Netherlands, a number of viewshed analyses are conducted to show how it can be utilized using different 3D data sources. The main contribution of the article is to present how 3D datasets and spatial analyses could be used to support property valuation activities and to investigate to what extent it is possible and meaningful to include derived 3D characteristics of property units in valuation registries.     

Spatial allocation of forest recreation value

Non-market valuation methods and geographic information systems are useful planning and management tools for public land managers. Recent attention has been given to investigation and demonstration of methods for combining these tools to provide spatially-explicit representations of non-market value. Most of these efforts have focused on spatial allocation of ecosystem service values based on land cover types, but recreation value has yet to be considered. This article presents an objective method for spatially allocating forest recreation value that is based on readily available data, demonstrates the method for a Southern California study site, and discusses the policy relevance of the method and how it might be extended to other applications and tested with additional primary survey data.     

Estimating the benefits of recreation-oriented management in state-owned commercial forests in Finland: A choice experiment

As forestlands provide a variety of environmental services, the management of forest resources is a matter of public concern. In the present case of state-owned commercial forests in Finland, legislation requires specific management practices to enhance recreational benefits free of charge to the public. This choice experiment considers Finnish people's valuation of the recreation-oriented management of state-owned commercial forests to evaluate whether the recreational benefits produced justify the related loss of profits from timber sales. We focus on three management attributes: scenic buffer zones along lakes and rivers, habitats for game birds, and the quality of scenery as reflected by the frequency of clear-cut areas along hiking trails. Marginal willingness-to-pay (WTP) effects for the attributes are estimated with random parameters logit models specified in the WTP space, while preference-space models are used to estimate in physical terms the attribute levels that maximize the benefits to the public. Despite regional differences in preferences, people in all parts of Finland valued the current recreation-oriented management of state-owned commercial forests considerably. Nationwide, the aggregate benefits of recreation-enhancing management clearly exceeded the estimated opportunity costs. The most preferred levels of management attributes were slightly above the current levels, suggesting an increase in the provision of recreational services when not considering the associated costs.     

A Holistic vs. an Attribute‐based Approach to Agri‐Environmental Policy Valuation: Do Welfare Estimates Differ?

Different economic valuation methodologies can be used to value the non‐market benefits of an agri‐environmental scheme. In particular, the non‐market value can be examined by assessing the public’s willingness to pay for the policy outputs as a whole or by modelling the preferences of society for the component attributes of the rural landscape that result from the implementation of the policy. In this article we examine whether the welfare values estimated for an agri‐environmental policy are significantly different between an holistic valuation methodology (using contingent valuation) and an attribute‐based valuation methodology (choice experiment). It is argued that the valuation methodology chosen should be based on whether or not the overall objective is the valuation of the agri‐environment policy package in its entirety or the valuation of each of the policy’s distinct environmental outputs.     

Research bias in judgement bias studies – a systematic review of valuation judgement literature

Valuation judgement bias has been a research topic for several years due to its proclaimed effect on valuation accuracy. However, little is known on the emphasis of literature on judgement bias, with regard to, for instance, research methodologies, research context and robustness of research evidence. A synthesis of available research will establish consistency in the current knowledge base on valuer judgement, identify future research opportunities and support decision-making policy by educational and regulatory stakeholders how to cope with judgement bias. This article therefore, provides a systematic review of empirical research on real estate valuer judgement over the last 30 years. Based on a number of inclusion and exclusion criteria, we have systematically analysed 32 relevant papers on valuation judgement bias. Although we find some consistency in evidence, we also find the underlying research to be biased; the methodology adopted is dominated by a quantitative approach; research context is skewed by timing and origination; and research evidence seems fragmented and needs replication. In order to obtain a deeper understanding of valuation judgement processes and thus extend the current knowledge base, we advocate more use of qualitative research methods and scholars to adopt an interpretative paradigm when studying judgement behaviour.     

Manure Applications and Nutrient Standards

Because of environmental concerns, many states are regulating animal manure applications to crops. A conceptual model is presented to describe manure demand for crop nutrient application under alternative regulatory standards. Demand relationships are incorporated into a spatial equilibrium model to estimate welfare costs of phosphorus and nitrogen regulatory standards for manure applications. Model estimates for Virginia indicate that regulatory standards for manure application achieve large reductions in excess nitrogen and phosphorus and result in 5–15% welfare losses excluding nonmarket environmental valuation.