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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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    5. 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.
    6. Klaus Glenk & Robert J. Johnston & Jürgen Meyerhoff & Julian Sagebiel, 2020. "Spatial Dimensions of Stated Preference Valuation in Environmental and Resource Economics: Methods, Trends and Challenges," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 75(2), pages 215-242, February.
    7. Choi, Andy S. & Lee, Choong-Ki & Tanaka, Katsuya & Xu, Honggang, 2018. "Value spillovers from the Korean DMZ areas and social desirability," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 75(C), pages 95-104.
    8. 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, National University of Ireland, Galway, Socio-Economic Marine Research Unit.
    9. Doherty, Edel & Murphy, Geraldine & Hynes, Stephen & Buckley, Cathal, 2014. "Valuing ecosystem services across water bodies: Results from a discrete choice experiment," Ecosystem Services, Elsevier, vol. 7(C), pages 89-97.
    10. Pollesch, N. & Dale, V.H., 2015. "Applications of aggregation theory to sustainability assessment," Ecological Economics, Elsevier, vol. 114(C), pages 117-127.
    11. 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.
    12. 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.
    13. 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.
    14. Holland, Benedict M. & Johnston, Robert J., 2017. "Optimized quantity-within-distance models of spatial welfare heterogeneity," Journal of Environmental Economics and Management, Elsevier, vol. 85(C), pages 110-129.
    15. 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.
    16. 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.
    17. Li, Liqing & Ando, Amy W., 2020. "Early Exposure to Nature and Willingness-To-Pay for Conservation," 2020 Annual Meeting, July 26-28, Kansas City, Missouri 304235, Agricultural and Applied Economics Association.
    18. 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.
    19. 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.
    20. van den Belt, Marjan & Blake, Daniella, 2014. "Ecosystem services in new Zealand agro-ecosystems: A literature review," Ecosystem Services, Elsevier, vol. 9(C), pages 115-132.
    21. Dalziel, Paul & Saunders, Caroline & Tait, Peter & Saunders, John & Miller, Sini & Guenther, Meike & Rutherford, Paul & Driver, Tim, 2018. "Rewarding responsible innovation when consumers are distant from producers: evidence from New Zealand," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 21(4).

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    More about this item

    Keywords

    Water quality; Choice experiment; Geographical information system; Aggregate benefits;
    All these keywords.

    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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