How to 'Sell' an Environmental Good: Using Labels to Investigate Scope Effects
AbstractInsufficient sensitivity to scope remains one of the pivots of criticism addressed at validity of stated preference methods. Many studies demonstrate failure of a scope test of some sort, while many others show that WTP responses are sensitive to the scope of environmental change. Despite some existing explanations and reasons for insensitivity to scope (embedding, warm glow, uncertainty over supply of a public good, awareness of all options) there seems to exist no clear conclusion on how to deal with it. The paper provides an alternative explanation for insufficient sensitivity to scope, based on redefinition of value drivers of environmental goods. In the proposed framework respondents' WTP need not depend only on physical characteristics of a valued good but may also partly be a function of a ‘label' under which the environmental good is ‘sold'. To investigate this problem and empirically test the hypothesis and its implications a CE study in a biodiversity valuation setting is designed and conducted. The conceptual framework and empirical evidence provide an alternative explanation for problems with the insufficient sensitivity to scope observed in many studies. Finally, we set out some implications of the nature of labels as value drivers for the design of future valuation studies.
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Bibliographic InfoPaper provided by University of Stirling, Division of Economics in its series Stirling Economics Discussion Papers with number 2008-16.
Date of creation: Aug 2008
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Postal: Division of Economics, University of Stirling, Stirling, Scotland FK9 4LA
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Biodiversity; CVM; CE; Label effect; Warm glow; Embedding; Scope test;
Other versions of this item:
- Mikołaj Czajkowski & Nick Hanley, 2008. "How to ‘Sell’ an Environmental Good: Using Labels to Investigate Scope Effects," Working Papers 2008-03, Faculty of Economic Sciences, University of Warsaw.
- Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
- Q57 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Ecological Economics
- Q23 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Forestry
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