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Joint estimation of discount rates and willingness to pay for public goods

  • Bond, Craig A.
  • Cullen, Kelly Giraud
  • Larson, Douglas M.
Registered author(s):

    We analyze willingness to pay (WTP) for environmental programs whose time periods of benefit and repayment differ, using a net present value framework that identifies parameters of both WTP and personal discount rates. Respondents to a contingent valuation survey focusing on protection of critical habitat buffer zones for the endangered Steller Sea Lion in Alaska were asked their willingness to pay for 1-, 5-, and 15-year repayment periods. We jointly estimate the personal discount rates and WTP via maximum likelihood, and compare with a model assuming a fixed, market discount rate.

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    Article provided by Elsevier in its journal Ecological Economics.

    Volume (Year): 68 (2009)
    Issue (Month): 11 (September)
    Pages: 2751-2759

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    Handle: RePEc:eee:ecolec:v:68:y:2009:i:11:p:2751-2759
    Contact details of provider: Web page: http://www.elsevier.com/locate/ecolecon

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    1. Kovacs, Kent F. & Larson, Douglas M., 2007. "Identifying Individual Discount Rates and Valuing Public Open Space with Stated Preference Models," 2007 Annual Meeting, July 29-August 1, 2007, Portland, Oregon TN 9743, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    2. Jerry A. Hausman, 1979. "Individual Discount Rates and the Purchase and Utilization of Energy-Using Durables," Bell Journal of Economics, The RAND Corporation, vol. 10(1), pages 33-54, Spring.
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    4. Hensel, Nayantara & Deichert, Martin, 2008. "An empirical analysis of the factors impacting discount rates: Evidence from the U.S. Marine Corps," Review of Financial Economics, Elsevier, vol. 17(1), pages 62-78.
    5. Thomas H. Stevens & Nichole E. DeCoteau & Cleve E. Willis, 1997. "Sensitivity of Contingent Valuation to Alternative Payment Schedules," Land Economics, University of Wisconsin Press, vol. 73(1), pages 140-148.
    6. Horowitz, John K & Carson, Richard T, 1990. " Discounting Statistical Lives," Journal of Risk and Uncertainty, Springer, vol. 3(4), pages 403-13, December.
    7. Saul Pleeter & John T. Warner, 2001. "The Personal Discount Rate: Evidence from Military Downsizing Programs," American Economic Review, American Economic Association, vol. 91(1), pages 33-53, March.
    8. Giraud, Kelly & Turcin, Branka & Loomis, John & Cooper, Joseph, 2002. "Economic benefit of the protection program for the Steller sea lion," Marine Policy, Elsevier, vol. 26(6), pages 451-458, November.
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    11. Cameron, Trudy Ann, 1988. "A new paradigm for valuing non-market goods using referendum data: Maximum likelihood estimation by censored logistic regression," Journal of Environmental Economics and Management, Elsevier, vol. 15(3), pages 355-379, September.
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    14. Elisabet Rutstrom & Glenn Harrison & Melonie Williams & Morten Lau, 2002. "Estimating individual discount rates in denmark: A field experiment," Artefactual Field Experiments 00062, The Field Experiments Website.
    15. Cropper, Maureen L & Aydede, Sema K & Portney, Paul R, 1992. "Rates of Time Preference for Saving Lives," American Economic Review, American Economic Association, vol. 82(2), pages 469-72, May.
    16. John Curtis, 2002. "Estimates of fishermen's personal discount rate," Applied Economics Letters, Taylor & Francis Journals, vol. 9(12), pages 775-778.
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