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Estimating willingness-to-pay with random valuation models : an application to Lake Sevan, Armenia

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  • Wang,Hua
  • Laplante, Benoit
  • Xun Wu
  • Meisner, Craig

Abstract

This paper presents a case study of willingness-to-pay (WTP) estimation using random valuation models. A contingent valuation survey was conducted in Yerevan, Armenia to estimate people's WTP for the protection of Lake Sevan. Three elicitation formats-open-ended, closed-ended, and the stochastic payment card (SPC) approach-were used with split random samples. WTP models with heterogeneous errors were constructed and estimated with the survey data. The SPC approach produces a higher estimation of the mean WTPthan both the open-ended and closed-ended approaches, while results from the open-ended and closed-ended elicitation formats are similar. Furthermore, contrary to research findings obtained in the United States, this study finds higher WTP estimations with mail surveys than with personal interviews.

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Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 3367.

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Date of creation: 01 Aug 2004
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Handle: RePEc:wbk:wbrwps:3367

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Keywords: Payment Systems&Infrastructure; Economic Theory&Research; Social Analysis; Environmental Economics&Policies; Scientific Research&Science Parks; Environmental Economics&Policies; Social Analysis; Economic Theory&Research; Scientific Research&Science Parks; Science Education;

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References

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  1. Alberini, Anna & Boyle, Kevin & Welsh, Michael, 2003. "Analysis of contingent valuation data with multiple bids and response options allowing respondents to express uncertainty," Journal of Environmental Economics and Management, Elsevier, vol. 45(1), pages 40-62, January.
  2. Dubourg, W R & Jones-Lee, M W & Loomes, Graham, 1994. "Imprecise Preferences and the WTP-WTA Disparity," Journal of Risk and Uncertainty, Springer, Springer, vol. 9(2), pages 115-33, October.
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  6. Richard T. Carson & W. Michael Hanemann & Raymond J. Kopp & Jon A. Krosnick & Robert Cameron Mitchell & Stanley Presser, 1998. "Referendum Design And Contingent Valuation: The Noaa Panel'S No-Vote Recommendation," The Review of Economics and Statistics, MIT Press, vol. 80(3), pages 484-487, August.
  7. Wang, Hua, 1997. "Treatment of "Don't-Know" Responses in Contingent Valuation Surveys: A Random Valuation Model," Journal of Environmental Economics and Management, Elsevier, vol. 32(2), pages 219-232, February.
  8. Desvousges, William H. & Smith, V. Kerry & Fisher, Ann, 1987. "Option price estimates for water quality improvements: A contingent valuation study for the monongahela river," Journal of Environmental Economics and Management, Elsevier, vol. 14(3), pages 248-267, September.
  9. Graham, Daniel A, 1981. "Cost-Benefit Analysis under Uncertainty," American Economic Review, American Economic Association, American Economic Association, vol. 71(4), pages 715-25, September.
  10. Nunes, Paulo A. L. D. & Schokkaert, Erik, 2003. "Identifying the warm glow effect in contingent valuation," Journal of Environmental Economics and Management, Elsevier, vol. 45(2), pages 231-245, March.
  11. Cameron Trudy Ann & Quiggin John, 1994. "Estimation Using Contingent Valuation Data from a Dichotomous Choice with Follow-Up Questionnaire," Journal of Environmental Economics and Management, Elsevier, vol. 27(3), pages 218-234, November.
  12. Li Chuan-Zhong & Mattsson Leif, 1995. "Discrete Choice under Preference Uncertainty: An Improved Structural Model for Contingent Valuation," Journal of Environmental Economics and Management, Elsevier, vol. 28(2), pages 256-269, March.
  13. Fischhoff, Baruch & Furby, Lita, 1988. " Measuring Values: A Conceptual Framework for Interpreting Transactions with Special Reference to Contingent Valuation of Visibility," Journal of Risk and Uncertainty, Springer, Springer, vol. 1(2), pages 147-84, June.
  14. Berrens, Robert P. & Jenkins-Smith, Hank & Bohara, Alok K. & Silva, Carol L., 2002. "Further Investigation of Voluntary Contribution Contingent Valuation: Fair Share, Time of Contribution, and Respondent Uncertainty," Journal of Environmental Economics and Management, Elsevier, vol. 44(1), pages 144-168, July.
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Cited by:
  1. William Fonta & Hyacinth Ichoku & Kanayo Ogujiuba, 2010. "Estimating willingness to pay with the stochastic payment card design: further evidence from rural Cameroon," Environment, Development and Sustainability, Springer, Springer, vol. 12(2), pages 179-193, April.
  2. Hyacinth Ichoku & William Fonta & Abbi Kedir, 2009. "Measuring individuals’ valuation distributions using a stochastic payment card approach: application to solid waste management in Nigeria," Environment, Development and Sustainability, Springer, Springer, vol. 11(3), pages 509-521, June.
  3. Halkos, George, 2012. "The use of contingent valuation in assessing marine and coastal ecosystems’ water quality: A review," MPRA Paper 42183, University Library of Munich, Germany.
  4. John E. Ataguba & Hyacinth E. Ichoku & William M. Fonta, 2008. "Estimating the willingness to pay for community healthcare insurance in rural Nigeria," Working Papers PMMA, PEP-PMMA 2008-10, PEP-PMMA.

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