Valuing Local Environmental Amenity with Discrete Choice Experiments: Spatial Scope Sensitivity and Heterogeneous Marginal Utility of Income

Using discrete choice experiments we examine preferences for the spatial provision of local environmental improvements in the context of regeneration policies. Amenities we consider are: improvements to areas of open space, recreation facilities and other public spaces; street cleanliness; restoration of derelict properties; and the provision of paths dedicated to cycling and walking. We include the spatial scope of the policy as an attribute, making the trade-off between environmental amenity and its spatial provision explicit. We employ a novel estimator for average willingness to pay (WTP) for mixed logit models with a random cost coefficient, which is robust to the presence of price insensitive respondents and performs well relative to mixed logit estimation in WTP space. We find that the spatial scope of the policy affects both the intensity and heterogeneity of preferences, and that these effects are of statistical and economic significance.     

Modelling and mapping spatial heterogeneity in forest recreation services

Modelling and spatial mapping of recreation services require attention to both demand and supply factors. This paper combines recreational choice modelling and economic valuation with GIS based techniques to allow an assessment of the spatial diversity of the value of forest recreation services. The data for the analysis is a national study of the car borne recreational use of Danish forest sites. A random utility framework is used and a comparison between the standard fixed coefficient model and a mixed logit model is made. The results show that the different specifications of the random utility models reveal similar preferences for the measured forest attributes in terms of sign and magnitude. The spatial predictions, however, reveal a considerable difference in the spatial pattern of economic benefits from recreation between the two models. These results have implications for current ecosystem service mapping initiatives as they emphasise the need to account for spatial heterogeneity in preferences, and aggregate demand and environmental attributes and infrastructure.     

Using spatial microsimulation to account for demographic and spatial factors in environmental benefit transfer

This paper presents a simulation-based modelling approach for estimating total visitor numbers and amenity values for prospective non-priced open-access outdoor recreation sites. To begin, the geographic extent of the market for recreation at a policy site is estimated using data from a similar study site. The population residing within this geographic area is simulated using a spatial microsimulation model and GIS techniques and an individual-level ‘visitor arrival function’ is then transferred across this simulated population. This allows the latent demand for visits to the policy site by each simulated individual to be predicted and summed, providing an estimate of the total potential demand for recreation at the site. Combining this with an economic value measure of a visit provides an estimate of the potential amenity value of the policy site. The approach is applied to Moyode Wood, a small-scale forest in the West of Ireland, and estimates the potential total economic value of recreation at €0.4 million for the site. The research represents the first time that spatial microsimulation has been used in environmental benefit transfer and shows how it can be used to control for differences in demographic and spatial factors between study and policy sites. It also demonstrates how individual-level single-site travel cost models estimated using on-site survey data can be used to predict demand at alternative policy sites.     

Position-Dependent order effects on the prediction of consumer preferences in repeated choice experiments

Using stated choice data collected by experimental design with repeated choice tasks, this study developed an approach to quantify the position-dependent order effects on the prediction of preferences and marginal willingness to pay for product attributes. Results showed that repeated choice tasks allow learning to occur. Models with order effect adjustments showed significant improvements in goodness of fit. Attribute-specific polynomial trends showed the best fit among all models, which could possibly be explained by respondents’ familiarity and sensitivity to different product attributes. Repeated-choice experiments have a good potential to capture consumer preferences more accurately than the single-choice design. But order effects need to be taken into account for preferences and market prediction.     

Convergent Validity of Revealed and Stated Recreation Behavior with Quality Change: A Comparison of Multiple and Single Site Demands

We consider the convergent validity of several demand models using beach recreation data. Two models employ multiple site data: a count data demand system model and the Kuhn–Tucker demand system model. We explore the role of existing variation in beach width in explaining trip choices, and analyze a hypothetical 100 foot increase in beach width. We compare these models to a single equation model where we jointly estimate revealed and stated preference trip data, and focus on a hypothetical scenario considering a 100 foot increase in beach width. In each case we develop estimates of the change in beach visits and the welfare impacts from the increase in width. The trip change estimates from two of the three models are similar and convergent valid, though the willingness to pay estimates differ in magnitude.     

Choice experiments,site similarity and benefits transfer

Choice experiments are designed to account for variations in environmental resources and site characteristics, as well as potential implications of these variations for willingness to pay. As a result, choice experiment results may be well suited for benefits transfer. It is unclear, however, whether the flexibility of choice experiments renders the similarity of study and transfer sites less critical for transfer validity. Drawing from identical choice experiments conducted in different Rhode Island communities, this model assesses the extent to which error in function-based benefits transfer is related to the similarity of communities across a variety of observable dimensions. Results suggest that site similarity, at least across some dimensions, influences the validity of choice experiment benefits transfers. However, the use of some measures of similarity as indicators of transfer error may provide misleading results.     

Estimating non-market environmental benefits of the Conversion of Cropland to Forest and Grassland Program: A choice modeling approach

The non-market values of the environmental benefits derived from the Conversion of Cropland to Forest and Grassland Program (also known as the Grain for Green Program and the Sloped Land Conversion Program) in the Loess Plateau region of North West China were estimated using choice modeling both on-site in Xi'an and Ansai and off-site in Beijing. Separate choice models were estimated for the three sites and the results compared. Significant differences were found between the implicit price estimates derived from the multinomial logit (MNL) model and the random parameter logit (RPL) model for some environmental attributes. Based on the results from the RPL models, the average willingness to pay per respondent household in Beijing was CNY882.56 (USD109.44) each year for the environmental improvements on the Loess Plateau provided by the Program, a payment level significantly higher than the comparable estimates of CNY342.56 (USD42.48) in Xi'an and CNY388.08 (USD48.12) in Ansai.     

Enhanced Geospatial Validity for Meta-analysis and Environmental Benefit Transfer: An Application to Water Quality Improvements

Meta-regression models are commonly used within benefit transfer to estimate willingness to pay (WTP) for environmental quality improvements. Theory suggests that these estimates should be sensitive to geospatial factors including resource scale, market extent, and the availability of substitutes and complements. Valuation meta-regression models addressing the quantity of non-market commodities sometimes incorporate spatial variables that proxy for a subset of these effects. However, meta-analyses of WTP for environmental quality generally omit geospatial factors such as these, leading to benefit transfers that are invariant to these factors. This paper reports on a meta-regression model for water quality benefit transfer that incorporates spatially explicit factors predicted by theory to influence WTP. The metadata are drawn from stated preference studies that estimate per household WTP for water quality changes in United States water bodies, and combine primary study information with extensive geospatial data from external sources. Results find that geospatial variables are associated with significant WTP variations as predicted by theory, and that inclusion of these variables reduces transfer errors.     

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.     

Deriving and Testing Efficient Estimates of WTP Distributions in Destination Choice Models

Estimation of welfare measures is often a dominant driver in the empirical literature on nonmarket valuation. To this end, qualitative choice models based on random utility theory have been widely employed in outdoor recreation studies. A frequent goal of applied studies has been the estimation of welfare changes associated with site attribute changes at recreation sites in order to inform regulatory policy and resource management. We review the evolution of the methodology of random utility theory in this field with a focus on taste heterogeneity models and then focus on the recent proposal of specifying utility in the WTP-space (Train K, Weeks M (2005) Discrete choice models in preference space and willing-to-pay space. In: Scarpa R, Alberini A (eds) Applications of simulation methods in environmental and resource economics, chapter 1. Springer, Dordrecht, pp 1–16). Our empirical application is on outdoor alpine recreation data. We emphasize the efficiency and direct testing that using the maximum simulated likelihood estimator affords to practitioners using the WTP-space approach, and illustrate these with examples.     

Nonparticipation or Misspecification? The Impacts of Nonparticipation on Dichotomous Choice Contingent Valuation

Dichotomous choice (or Referendum) contingent valuation surveys have become the predominate choice for valuing goods and services otherwise not valued in a standard market (nonmarket goods and services). A number of researchers have recently recommended that dichotomous choice contingent valuation studies include a follow-up question to all no responses to determine whether the no response is a result of unwillingness to pay, or nonparticipation. If the goal of the study is to investigate the impact of covariates on either mean willingness to pay or the probability of nonparticipation, simple identification of indifferent individuals will not suffice. A simulation study shows that existing econometric models designed to account for nonparticipation are extremely sensitive to misspecification bias. Accurate identification of the probability of nonparticipation is hampered by potential misspecification of the distribution of willingness to pay.     

Elasticities of Demand and Willingness to Pay for Environmental Services in Sweden

Are environmental services luxuriesor necessities? Are low-income groupsrelatively more willing to pay forenvironmental improvements than high-incomegroups? The discussion on the shape of theenvironmental Kuznets curve and environmentaljustice call for analyses that approach thesequestions. Following a survey-based approachfor modelling the demand for public goods, thispaper provides estimates of income and priceelasticities of demand for reduced marineeutrophication effects in the case of theBaltic Sea, using data from five Swedishcontingent valuation studies. Point estimatesindicate that reduced marine eutrophicationeffects can be classified as a necessity and anordinary and price elastic service. Confidenceintervals show however that the classificationas a necessity is not statisticallysignificant. Income elasticities of willingnessto pay, not to be confused with incomeelasticities of demand, are estimated for abroad range of environmental services inSweden. A basic finding is that income tends toinfluence willingness to pay positively andsignificantly. The elasticity estimates are inmost cases greater than zero, but less thanunity, indicating that the benefits ofenvironmental improvements tend to beregressively distributed. In a cost-benefitanalysis of a project suggesting environmentalimprovements, distributional concerns thereforecall for an introduction of weights or at leasta sensitivity analysis of how weighting wouldchange decisions about the project's socialprofitability.     

CAN RECREATION VALUES FOR A LAKE CONSTITUTE A MARKET FOR BANKED AGRICULTURAL WATER?

This paper presents estimates of the recreational use value to prevent the loss of a western lake threatened by diversions of upstream waters that supply it. The recreation demand model used to estimate recreation-related values is the popular repeated nested multinomial logit model. The model is specified to allow an individual to choose when to visit various sites during the season, because site choice is likely to be influenced by water levels that change over the course of the season. The values are compared to agricultural values in order to assess whether the potential recreation demand side of a market for a water bank exists.     

Incorporating Discontinuous Preferences into the Analysis of Discrete Choice Experiments

Data from a discrete choice experiment on improvements of rural landscape attributes are used to investigate the implications of discontinuous preferences on willingness to pay estimates. Using a multinomial error component logit model, we explore differences in scale and unexplained variance between respondents with discontinuous and continuous preferences and condition taste intensities on whether or not each attribute was considered by the respondent during the evaluation of alternatives. Results suggest that significant improvements in model performance can be achieved when discontinuous preferences are accommodated in the econometric specification, and that the magnitude and robustness of the willingness to pay estimates are sensitive to discontinuous preferences.     

Modelling the Effect of Chronic Wasting Disease on Recreational Hunting Site Choice Preferences and Choice Set Formation over Time

Chronic wasting disease (CWD) is a prion disease that affects deer, elk and other cervid wildlife species. Although there is no known link between the consumption of CWD affected meat and human health, hunters are advised to have animals from CWD affected areas tested and are advised against consuming meat from CWD infected animals (Government of Alberta 2010). We model hunter response to the knowledge that deer in a wildlife management unit have been found to have CWD in Alberta, Canada. We examine hunter site choice over two hunting seasons using revealed and stated preference data in models that incorporate preferences, choice set formation, and scale. We compare a fully endogenous choice set model using the independent availability logit model (Swait in Probabilistic choice set formation in transportation demand models. Dissertation, MIT, 1984) with the availability function approach (Cascetta and Papola in Transp Res C 9(4):249–263, 2001) that approximates choice set formation. We find that CWD incidence affects choice set formation and preferences and that ignoring choice set formation would result in biased estimates of impact and welfare measures. This study contributes to the broader recreation demand literature by incorporating choice set formation, scale and temporal impacts into a random utility model of recreation demand.     

Are There Income Effects on Global Willingness to Pay for Biodiversity Conservation?

This paper is concerned with the empirical relationship between biodiversity conservation values and income. We use random effects panel models to examine the effects of income, and then GDP per capita, on willingness to pay for habitat and biodiversity conservation. In a meta-analysis, 145 Willingness To Pay estimates for biodiversity conservation where existence value plays a major role were collected from 46 contingent valuation studies across six continents. Other effects included in the meta-analysis were the study year; habitat type; continent; scope as presented to respondents; whether WTP bids were for preventing a deterioration or gaining an improvement in conservation, whether a specific species or specific habitat was protected; whether the questionnaire used a dichotomous choice or an open-ended format; distribution format; and the choice of payment vehicle. GDP per capita seemed to perform as well as an explanatory variable as respondent’s mean stated income, indicating that it is wealth in society as a whole which determines variations in WTP. Even if large variation, our main conclusion is, that the demand for biodiversity conservation rises with a nation’s wealth, but the income elasticity of willingness to pay is less than one.     

Measuring recreation benefits of quality improvements with revealed and stated behavior data

We propose a combined revealed and stated behavior estimation method to measure recreation benefits of a fixed quality improvement that directly addresses the issues of variation in environmental quality beyond the observed range and new participation induced by higher quality. We survey a sample of the general population, including non-participants, to obtain stated preference data for trips based on a policy-relevant estuarine quality improvement. Panel recreation demand models that take into account new participants induced by the higher quality are estimated and used to derive total consumer surplus.     

Eco-labels, Trade and Protectionism

Eco-labels are suspected to serve protectionist purposes. We analyze the choice between an environmental standard and a voluntary eco-label scheme in a partial trade model with one domestic firm and one foreign firm. The environmental standard will only apply to the domestic firm, while both firms can adopt the eco-label. Pollution is production related, and domestic consumers demand products that are produced in an “environmentally friendly” way. Our results show that it may be optimal for the domestic government to introduce an eco-label and get both firms to adopt the label, instead of setting an environmental standard. However, to what extent this policy serves protectionist purposes is ambiguous. In particular, if the willingness to pay for green products is sufficient to cover the pollution abatement costs of the foreign firm, foreign firm profit will increase while domestic firm profit will decrease compared to the outcome with a domestic environmental standard. On the other hand, if the willingness to pay for green products is insufficient, the foreign firm would be better off with a domestic environmental standard.     

Modelling preference heterogeneity for theatre tickets: a discrete choice modelling approach on Royal Danish Theatre booking data

This article analyses the behavioural choice for theatre tickets using a rich data set for 2010–2013 from the sale system of the Royal Danish National Theatre. A consumer who decides to attend a theatre production faces multiple sources of price variation that involves a choice by the consumer among different ticket alternatives. Three modelling approaches are proposed in order to model ticket purchases: conditional logit with socio-demographic characteristics, nested logit and latent class. These models allow us explicitly to take into account consumers’ preference heterogeneity with respect to the attributes associated with each ticket alternative (quality of the seat and day of the performance). In addition, the willingness to pay of choice attributes is estimated. Final results suggest that customers’ characteristics in terms of age and frequency of theatre attendance characterize different patterns of behaviour in the choice of theatre ticket.     

Biased valuations,damage assessments,and policy choices: The choice of measure matters

Damages from, for example, an oil spill can be measured by how much people are willing to pay to avoid them, or by the minimum compensation they demand to accept them; and decisions to clean up can be justified by the willingness to pay to do it or by the compensation necessary to forgo it. Contrary to the usual official and unofficial conventions that the choice of measure is of no matter, the empirical evidence and intuitions of most people strongly suggest otherwise. The appropriate choice of measure appears to turn, not on legal entitlements, but on the reference state people use to judge negative and positive changes — a criteria that is likely to call into question most estimates of the damages of increased health risks and the value of environmental mitigation efforts.