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Does respondent’s perceived knowledge of the status quo affect attribute attendance and WTP in choice experiments? Evidence from the Karapiro Catchment Freshwater streams

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  • Marsh, Dan
  • Mkwara, Lena Asimenye
  • Scarpa, Riccardo

Abstract

In environmental valuation studies with stated preference methods researchers often provide descriptions of status quo conditions which may differ from those perceived by respondents. Ignoring this difference in utility baselines may affect the way attributes are attended to in choice tasks and further affect the magnitude of utility changes and hence bias the implied estimates of benefits from the proposed environmental policies. We investigate this issue using data from a choice experiment on a community’s willingness to pay for water quality improvements in streams. About 60% of respondents perceived the description of the quality of water in streams to be better than the one we provided in our scenario. Our results show some differences in serial attribute non-attendance between respondents who were provided with our baseline description of the status quo and those who used their own perceived baselines. The results further reveal some differences in attribute non-attendance in the two split samples within respondents who used their own descriptions of the status quo conditions. Generally we note that non-attendance to cost was higher in respondents who reported lower levels of water quality than those who perceived water quality to be higher. However, we find mixed results in terms of the willingness to pay for water quality improvements.

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Bibliographic Info

Paper provided by New Zealand Agricultural and Resource Economics Society in its series 2010 Conference, August 26-27, 2010, Nelson, New Zealand with number 96809.

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Date of creation: Aug 2010
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Handle: RePEc:ags:nzar10:96809

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Web page: http://www.nzares.org.nz/
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Related research

Keywords: Choice experiments; Fixed status quo; People’s perceived status quo; Willingness to pay.; Community/Rural/Urban Development; Environmental Economics and Policy; Health Economics and Policy; Land Economics/Use;

References

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  1. Amos Tversky & Daniel Kahneman, 1979. "Prospect Theory: An Analysis of Decision under Risk," Levine's Working Paper Archive 7656, David K. Levine.
  2. Fredrik Carlsson & Mitesh Kataria & Elina Lampi, 2010. "Dealing with Ignored Attributes in Choice Experiments on Valuation of Sweden’s Environmental Quality Objectives," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 47(1), pages 65-89, September.
  3. Stephane Hess & John Rose, 2009. "Should Reference Alternatives in Pivot Design SC Surveys be Treated Differently?," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 42(3), pages 297-317, March.
  4. Hensher, David A. & Rose, John M., 2009. "Simplifying choice through attribute preservation or non-attendance: Implications for willingness to pay," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 45(4), pages 583-590, July.
  5. Trudy Ann Cameron & J.R. DeShazo & Erica H. Johnson, 2009. "Scenario Adjustment in Stated Preference Research," University of Oregon Economics Department Working Papers 2010-9, University of Oregon Economics Department.
  6. Hess, Stephane & Hensher, David A., 2010. "Using conditioning on observed choices to retrieve individual-specific attribute processing strategies," Transportation Research Part B: Methodological, Elsevier, vol. 44(6), pages 781-790, July.
  7. Riccardo Scarpa & Timothy J. Gilbride & Danny Campbell & David A. Hensher, 2009. "Modelling attribute non-attendance in choice experiments for rural landscape valuation," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 36(2), pages 151-174, June.
  8. Manishi Prasad & Peter Wahlqvist & Rich Shikiar & Ya-Chen Tina Shih, 2004. "A," PharmacoEconomics, Springer Healthcare | Adis, vol. 22(4), pages 225-244.
  9. Riccardo Scarpa & Kenneth G. Willis & Melinda Acutt, 2007. "Valuing externalities from water supply: Status quo, choice complexity and individual random effects in panel kernel logit analysis of choice experiments," Journal of Environmental Planning and Management, Taylor & Francis Journals, vol. 50(4), pages 449-466.
  10. Daniel Burghart & Trudy Cameron & Geoffrey Gerdes, 2007. "Valuing publicly sponsored research projects: Risks, scenario adjustments, and inattention," Journal of Risk and Uncertainty, Springer, vol. 35(1), pages 77-105, August.
  11. Mandy Ryan & Verity Watson & Vikki Entwistle, 2009. "Rationalising the 'irrational': a think aloud study of discrete choice experiment responses," Health Economics, John Wiley & Sons, Ltd., vol. 18(3), pages 321-336.
  12. Kenneth E. Train, 1998. "Recreation Demand Models with Taste Differences over People," Land Economics, University of Wisconsin Press, vol. 74(2), pages 230-239.
  13. Marsh, Dan & Baskaran, Ramesh, 2009. "Valuation of Water Quality Improvements in the Karapiro Catchment: A Choice Modelling Approach," 2009 Conference (53rd), February 11-13, 2009, Cairns, Australia 47951, Australian Agricultural and Resource Economics Society.
  14. Campbell, Danny & Lorimer, Victoria & Aravena, Claudia & Hutchinson, W. George, 2010. "Attribute processing in environmental choice analysis: implications for willingness to pay," 84th Annual Conference, March 29-31, 2010, Edinburgh, Scotland 91718, Agricultural Economics Society.
  15. Dan Marsh & Lena Mkwara & Riccardo Scarpa, 2010. "Does Respondent Perception of the Status Quo Matter in Non-Market Valuation with Choice Experiments? An Application to New Zealand Freshwater Streams," Working Papers in Economics 10/04, University of Waikato, Department of Economics.
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