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Stated Preferences for Intermediate versus Final Ecosystem Services: Disentangling Willingness to Pay for Omitted Outcomes

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  • Johnston, Robert J.
  • Schultz, Eric T.
  • Segerson, Kathleen
  • Besedin, Elena Y.
  • Ramachandran, Mahesh

Abstract

Stated preference scenarios often provide information on intermediate biophysical processes but omit information on the resulting final services that provide utility. This may cause respondents to speculate about the effects of intermediate outcomes on their welfare, leading to biased welfare estimates. This work clarifies distinctions between intermediate and final ecosystem services within stated preference valuation and develops a structural model by which to infer respondents’ speculations when a final ecosystem service is omitted. The model also derives implications for welfare estimates. Methods and results are illustrated using an application of choice experiments to fish restoration in Rhode Island’s Pawtuxet watershed.

Suggested Citation

  • Johnston, Robert J. & Schultz, Eric T. & Segerson, Kathleen & Besedin, Elena Y. & Ramachandran, Mahesh, 2013. "Stated Preferences for Intermediate versus Final Ecosystem Services: Disentangling Willingness to Pay for Omitted Outcomes," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 42(1), pages 1-21, April.
  • Handle: RePEc:ags:arerjl:148403
    DOI: 10.22004/ag.econ.148403
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    1. Olander, Lydia & Polasky, Stephen & Kagan, James S. & Johnston, Robert J. & Wainger, Lisa & Saah, David & Maguire, Lynn & Boyd, James & Yoskowitz, David, 2017. "So you want your research to be relevant? Building the bridge between ecosystem services research and practice," Ecosystem Services, Elsevier, vol. 26(PA), pages 170-182.
    2. Bauer, Dana Marie & Johnston, Robert J., 2013. "Foreword: The Economics of Rural and Agricultural Ecosystem Services: Purism versus Practicality," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 42(1), pages 1-13, April.
    3. Mateo Cordier & José Pérez Agúndez & Walter Hecq & Bertrand Hamaide, 2013. "A guiding framework for ecosystem services monetization in ecological-economic modeling," Working Papers CEB 13-018, ULB -- Universite Libre de Bruxelles.
    4. Miller, Sini & Tait, Peter & Saunders, Caroline, 2015. "Estimating indigenous cultural values of freshwater: A choice experiment approach to Māori values in New Zealand," Ecological Economics, Elsevier, vol. 118(C), pages 207-214.
    5. Wainger, Lisa A. & Helcoski, Ryan & Farge, Kevin W. & Espinola, Brandy A. & Green, Gary T., 2018. "Evidence of a Shared Value for Nature," Ecological Economics, Elsevier, vol. 154(C), pages 107-116.
    6. Riccardo Scarpa & Cristiano Franceschinis & Mara Thiene, 2017. "A Monte Carlo Evaluation of the Logit-Mixed Logit under Asymmetry and Multimodality," Working Papers in Economics 17/23, University of Waikato.
    7. Holland, Benedict M. & Johnston, Robert J., 2014. "Spatially-Referenced Choice Experiments: Tests of Individualized Geocoding in Stated Preference Questionnaires," 2014 Annual Meeting, July 27-29, 2014, Minneapolis, Minnesota 170191, Agricultural and Applied Economics Association.
    8. Brown, Christina E. & Bhat, Mahadev, 2018. "A Game-Theoretic Model of Crop Flood Indemnity in South Florida," 2018 Annual Meeting, August 5-7, Washington, D.C. 274470, Agricultural and Applied Economics Association.
    9. Rosenberg, Andrew B. & Newburn, David & Towe, Charles A., 2018. "Household Willingness to Pay for Stream Restoration on Private and Public Lands: Evidence from the Baltimore Metropolitan Region," 2018 Annual Meeting, August 5-7, Washington, D.C. 274031, Agricultural and Applied Economics Association.
    10. Swallow, Stephen K., 2013. "Demand-side Value for Ecosystem Services and Implications for Innovative Markets: Experimental Perspectives on the Possibility of Private Markets for Public Goods," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 42(1), pages 1-24, April.
    11. Chris Moore & Dennis Guignet & Kelly B. Maguire & Chris Dockins & Nathalie B. Simon, 2015. "A Stated Preference Study of the Chesapeake Bay and Watershed Lakes," NCEE Working Paper Series 201506, National Center for Environmental Economics, U.S. Environmental Protection Agency, revised Nov 2015.
    12. Finisdore, John & Rhodes, Charles & Haines-Young, Roy & Maynard, Simone & Wielgus, Jeffrey & Dvarskas, Anthony & Houdet, Joel & Quétier, Fabien & Lamothe, Karl A. & Ding, Helen & Soulard, François &, 2020. "The 18 benefits of using ecosystem services classification systems," Ecosystem Services, Elsevier, vol. 45(C).
    13. Jensen, Anne Kejser, 2019. "A Structured Approach to Attribute Selection in Economic Valuation Studies: Using Q-methodology," Ecological Economics, Elsevier, vol. 166(C), pages 1-1.
    14. Holland, Benedict M. & Johnston, Robert J., 2015. "Capturing More Relevant Measures of Spatial Heterogeneity in Stated Preference Willingness to Pay: Using an Iterative Grid Search Algorithm to Quantify Proximate Environmental Impacts," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 205450, Agricultural and Applied Economics Association.

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