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Nonmarket valuation of water quality: Addressing spatially heterogeneous preferences using GIS and a random parameter logit model

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  • Tait, Peter
  • Baskaran, Ramesh
  • Cullen, Ross
  • Bicknell, Kathryn

Abstract

The spatial distribution of agri-environmental policy benefits has important implications for the efficient allocation of management effort. The practical convenience of relying on sample mean values of individual benefits for aggregation can come at the cost of biased aggregate estimates. The main objective of this paper is to test spatial hypotheses regarding respondents' local water quality and quantity, and their willingness-to-pay for improvements in water quality attributes. This paper combines choice experiment and spatially related water quality data via a Geographical Information System (GIS) to develop a method that evaluates the influence of respondents' local water quality on willingness-to-pay for river and stream conservation programmes in Canterbury, New Zealand. Results showed that those respondents who live in the vicinity of low quality waterways are willing to pay more for improvements relative to those who live near to high quality waterways. The study also found that disregarding the influence of respondents' local water quality data has a significant impact on the magnitude of welfare estimates and causes substantial underestimation of aggregated benefits.

Suggested Citation

  • Tait, Peter & Baskaran, Ramesh & Cullen, Ross & Bicknell, Kathryn, 2012. "Nonmarket valuation of water quality: Addressing spatially heterogeneous preferences using GIS and a random parameter logit model," Ecological Economics, Elsevier, vol. 75(C), pages 15-21.
  • Handle: RePEc:eee:ecolec:v:75:y:2012:i:c:p:15-21
    DOI: 10.1016/j.ecolecon.2011.12.009
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    References listed on IDEAS

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    Cited by:

    1. Jae Kim & Seung-Nam Kim & Soogwan Doh, 2015. "The distance decay of willingness to pay and the spatial distribution of benefits and costs for the ecological restoration of an urban branch stream in Ulsan, South Korea," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 54(3), pages 835-853, May.
    2. Choi, Andy S., 2013. "Nonmarket values of major resources in the Korean DMZ areas: A test of distance decay," Ecological Economics, Elsevier, vol. 88(C), pages 97-107.
    3. Doherty, Edel & Murphy, Geraldine & Hynes, Stephen & Buckley, Cathal, 2013. "Are similar ecosystem services valued differently across different water body types: A discrete choice analysis of rivers, lakes and sea attributes?," Working Papers 160055, Socio-Economic Marine Research Unit, National University of Ireland, Galway.
    4. Jie He & Anping Huang & Luodan Xu, 2015. "Spatial heterogeneity and transboundary pollution: a contingent valuation study on the Xijiang River drainage basin in south China," Cahiers de recherche 15-04, Departement d'Economique de l'École de gestion à l'Université de Sherbrooke.
    5. Veronesi, Marcella & Chawla, Fabienne & Maurer, Max & Lienert, Judit, 2014. "Climate change and the willingness to pay to reduce ecological and health risks from wastewater flooding in urban centers and the environment," Ecological Economics, Elsevier, vol. 98(C), pages 1-10.
    6. repec:eee:ecoser:v:7:y:2014:i:c:p:89-97 is not listed on IDEAS
    7. Pollesch, N. & Dale, V.H., 2015. "Applications of aggregation theory to sustainability assessment," Ecological Economics, Elsevier, vol. 114(C), pages 117-127.
    8. He, Jie & Huang, Anping & Xu, Luodan, 2015. "Spatial heterogeneity and transboundary pollution: A contingent valuation (CV) study on the Xijiang River drainage basin in south China," China Economic Review, Elsevier, vol. 36(C), pages 101-130.
    9. repec:eee:jeeman:v:85:y:2017:i:c:p:110-129 is not listed on IDEAS
    10. Daniel A. Brent & Katie Lorah, 2017. "The Geography of Civic Crowdfunding: Implications for Social Inequality and Donor-Project Dynamics," Departmental Working Papers 2017-09, Department of Economics, Louisiana State University.
    11. Wolf, David & Klaiber, H. Allen, 2017. "Bloom and bust: Toxic algae's impact on nearby property values," Ecological Economics, Elsevier, vol. 135(C), pages 209-221.
    12. Tagliafierro, C. & Boeri, M. & Longo, A. & Hutchinson, W.G., 2016. "Stated preference methods and landscape ecology indicators: An example of transdisciplinarity in landscape economic valuation," Ecological Economics, Elsevier, vol. 127(C), pages 11-22.
    13. Meyerhoff, Jürgen, 2013. "Do turbines in the vicinity of respondents' residences influence choices among programmes for future wind power generation?," Journal of choice modelling, Elsevier, vol. 7(C), pages 58-71.
    14. repec:eee:ecoser:v:9:y:2014:i:c:p:115-132 is not listed on IDEAS
    15. 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.
    16. Yao, Richard T. & Scarpa, Riccardo & Turner, James A. & Barnard, Tim D. & Rose, John M. & Palma, João H.N. & Harrison, Duncan R., 2014. "Valuing biodiversity enhancement in New Zealand's planted forests: Socioeconomic and spatial determinants of willingness-to-pay," Ecological Economics, Elsevier, vol. 98(C), pages 90-101.

    More about this item

    Keywords

    Water quality; Choice experiment; Geographical information system; Aggregate benefits;

    JEL classification:

    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
    • Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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