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The Importance Of The Market Area Determination For Estimating Aggregate Benefits Of Public Goods: Testing Differences In Resident And Nonresident Willingness To Pay

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  • Loomis, John B.
  • Gonzalez-Caban, Armando

Abstract

A combined telephone contact-mail booklet-telephone interview of California and New England households regarding their willingness to pay for fire management in California and Oregon's old-growth forests was performed to test hypotheses regarding the spatial extent of the public goods market. Using a multiple-bounded contingent valuation question, the study found that New England households' annual willingness to pay for the California and Oregon programs was statistically different from zero. This analysis points out that households receive benefits from fire protection of old-growth forests in states other than their own. In this case study, limiting the survey sample to state residents where the National Forest is located would reflect about 20% of the national benefits. However, using resident values as a proxy for nonresidents would overstate the national benefits by 75%, since the values per household are significantly different. This finding suggests more emphasis in future surveys on selecting an institutionally and economically relevant sample frame rather than an expedient one.

Suggested Citation

  • Loomis, John B. & Gonzalez-Caban, Armando, 1996. "The Importance Of The Market Area Determination For Estimating Aggregate Benefits Of Public Goods: Testing Differences In Resident And Nonresident Willingness To Pay," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 25(2), pages 1-10, October.
    • Handle: RePEc:ags:arerjl:31404
    DOI: 10.22004/ag.econ.31404
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    References listed on IDEAS

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    1. Johnston, Robert J. & Weaver, Thomas F. & Smith, Lynn A. & Swallow, Stephen K., 1995. "Contingent Valuation Focus Groups: Insights from Ethnographic Interview Techniques," Agricultural and Resource Economics Review, Cambridge University Press, vol. 24(1), pages 56-69, April.
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    Cited by:

    1. Kim, Ju-Yeon & Mjelde, James W. & Kim, Tae-Kyun & Lee, Choong-Ki & Ahn, Kyung-Mo, 2012. "Comparing willingness-to-pay between residents and non-residents when correcting hypothetical bias: Case of endangered spotted seal in South Korea," Ecological Economics, Elsevier, vol. 78(C), pages 123-131.
    2. Jason Kinnell & Jeffrey K. Lazo & Donald J. Epp & JaAnn Fisher & James S. Shortle, 2002. "Perceptions and Values for Preventing Ecosystem Change: Pennsylvania Duck Hunters and the Prairie Pothole Region," Land Economics, University of Wisconsin Press, vol. 78(2), pages 228-244.
    3. Mavsar, Robert & Japelj, Anže & Kovač, Marko, 2013. "Trade-offs between fire prevention and provision of ecosystem services in Slovenia," Forest Policy and Economics, Elsevier, vol. 29(C), pages 62-69.

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