IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Log in (now much improved!) to save this article

Directional heterogeneity in WTP models for environmental valuation

  • Schaafsma, Marije
  • Brouwer, Roy
  • Rose, John

Many studies in the stated preference literature on environmental valuation do not include the effects of substitutes and distance in willingness-to-pay (WTP) models, in spite of the relevance of these effects in aggregation and benefit transfer. Heterogeneity in the availability of substitutes over space may cause multidirectional distance effects in WTP. As a result, disregarding this spatial heterogeneity may lead to biased estimators of the distance effect and associated WTP values (Cameron, 2006). In this paper, we demonstrate that distance decay is subject to significant directional effects which tend to be related to differences in the availability of substitutes across the study area. We apply a straightforward methodology to account for such spatial heterogeneity in choice experiments and assess the effect on WTP for improvements in ecosystem services in a lake district. We model distance-decay effects, whilst controlling for heterogeneity between users and non-users and non-use related WTP reasons. The directional effects result in significantly different WTP estimates, different market sizes reflecting the population with positive WTP, and differences in total WTP up to 32%.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://www.sciencedirect.com/science/article/pii/S0921800912001644
Download Restriction: Full text for ScienceDirect subscribers only

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Article provided by Elsevier in its journal Ecological Economics.

Volume (Year): 79 (2012)
Issue (Month): C ()
Pages: 21-31

as
in new window

Handle: RePEc:eee:ecolec:v:79:y:2012:i:c:p:21-31
Contact details of provider: Web page: http://www.elsevier.com/locate/ecolecon

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

as in new window
  1. Payne, John W, et al, 2000. "Valuation of Multiple Environmental Programs," Journal of Risk and Uncertainty, Springer, vol. 21(1), pages 95-115, July.
  2. Johnston, Robert J. & Ramachandran, Mahesh & Schultz, Eric T. & Segerson, Kathleen & Besedin, Elena Y., 2011. "Characterizing Spatial Pattern in Ecosystem Service Values when Distance Decay Doesn’t Apply: Choice Experiments and Local Indicators of Spatial Association," 2011 Annual Meeting, July 24-26, 2011, Pittsburgh, Pennsylvania 103374, Agricultural and Applied Economics Association.
  3. Ian J. Bateman & Richard T. Carson & Brett Day & Michael Hanemann & Nick Hanley & Tannis Hett & Michael Jones-Lee & Graham Loomes, 2002. "Economic Valuation with Stated Preference Techniques," Books, Edward Elgar Publishing, number 2639.
  4. Carson, Richard & Flores, Nicholas E. & Hanemann, W. Michael, 1998. "Sequencing and Valuing Public Goods," Journal of Environmental Economics and Management, Elsevier, vol. 36(3), pages 314-323, November.
  5. Anselin, Luc & Getis, Arthur, 1992. "Spatial Statistical Analysis and Geographic Information Systems," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 26(1), pages 19-33, April.
  6. Joseph A. Herriges & Silvia Secchik & JBruce A. Babcock, 2005. "Living with Hogs in Iowa: The Impact of Livestock Facilities on Rural Residential Property Values," Land Economics, University of Wisconsin Press, vol. 81(4).
  7. Bulte, Erwin & Gerking, Shelby & List, John A. & de Zeeuw, Aart, 2005. "The effect of varying the causes of environmental problems on stated WTP values: evidence from a field study," Journal of Environmental Economics and Management, Elsevier, vol. 49(2), pages 330-342, March.
  8. Morrison, Mark & Bennett, Jeffrey W., 2004. "Valuing New South Wales rivers for use in benefit transfer," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 48(4), December.
  9. Giovanni B. Concu, 2007. "Investigating distance effects on environmental values: a choice modelling approach ," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 51(2), pages 175-194, 06.
  10. Adamowicz, Wiktor L. & Louviere, J. & Willians, M., 1992. "Combining Revealed and Stated Preference Methods for Valuing Environmental Amenities," Staff Paper Series 232531, University of Alberta, Department of Resource Economics and Environmental Sociology.
  11. Trudy Ann Cameron, 2003. "Directional Heterogeneity in Distance Profiles in Hedonic Property Value Models," University of Oregon Economics Department Working Papers 2003-17, University of Oregon Economics Department, revised 01 Jul 2003.
  12. Ronald G. Cummings & Philip T. Ganderton & Thomas McGuckin, 1994. "Substitution Effects in CVM Values," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 76(2), pages 205-214.
  13. Pate, Jennifer & Loomis, John, 1997. "The effect of distance on willingness to pay values: a case study of wetlands and salmon in California," Ecological Economics, Elsevier, vol. 20(3), pages 199-207, March.
  14. Ronald J. Sutherland & Richard G. Walsh, 1985. "Effect of Distance on the Preservation Value of Water Quality," Land Economics, University of Wisconsin Press, vol. 64(3), pages 281-291.
  15. Mazur, Kasia & Bennett, Jeffrey W., 2009. "Location differences in communities’ preferences for environmental improvements in selected NSW catchments: A Choice Modelling approach," Research Reports 94821, Australian National University, Environmental Economics Research Hub.
  16. van Bueren, Martin & Bennett, Jeffrey W., 2001. "Towards the development of a transferable set of value estimates for environmental attributes," 2001 Conference (45th), January 23-25, 2001, Adelaide 125993, Australian Agricultural and Resource Economics Society.
  17. Bateman, Ian J. & Day, Brett H. & Georgiou, Stavros & Lake, Iain, 2006. "The aggregation of environmental benefit values: Welfare measures, distance decay and total WTP," Ecological Economics, Elsevier, vol. 60(2), pages 450-460, December.
  18. Boxall, Peter C. & Adamowicz, Wiktor L. & Swait, Joffre & Williams, Michael & Louviere, Jordan, 1996. "A comparison of stated preference methods for environmental valuation," Ecological Economics, Elsevier, vol. 18(3), pages 243-253, September.
  19. Brownstone, David & Train, Kenneth, 1998. "Forecasting new product penetration with flexible substitution patterns," Journal of Econometrics, Elsevier, vol. 89(1-2), pages 109-129, November.
  20. Brouwer, Roy & Slangen, Louis H G, 1998. "Contingent Valuation of the Public Benefits of Agricultural Wildlife Management: The Case of Dutch Peat Meadow Land," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 25(1), pages 53-72.
  21. Roy Brouwer & Julia Martin-Ortega & RJulio Berbel, 2010. "Spatial Preference Heterogeneity: A Choice Experiment," Land Economics, University of Wisconsin Press, vol. 86(3).
  22. Carson Richard T. & Mitchell Robert Cameron, 1995. "Sequencing and Nesting in Contingent Valuation Surveys," Journal of Environmental Economics and Management, Elsevier, vol. 28(2), pages 155-173, March.
  23. Martin van Bueren & Jeff Bennett, 2004. "Towards the development of a transferable set of value estimates for environmental attributes -super-," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 48(1), pages 1-32, 03.
  24. Hoehn John P. & Loomis John B., 1993. "Substitution Effects in the Valuation of Multiple Environmental Programs," Journal of Environmental Economics and Management, Elsevier, vol. 25(1), pages 56-75, July.
  25. Krinsky, Itzhak & Robb, A Leslie, 1986. "On Approximating the Statistical Properties of Elasticities," The Review of Economics and Statistics, MIT Press, vol. 68(4), pages 715-19, November.
  26. Rolfe, John & Bennett, Jeffrey W. & Louviere, Jordan, 2002. "Stated values and reminders of substitute goods: Testing for framing effects with choice modelling," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 46(1), March.
  27. Roy Brouwer, 2008. "The potential role of stated preference methods in the Water Framework Directive to assess disproportionate costs," Journal of Environmental Planning and Management, Taylor & Francis Journals, vol. 51(5), pages 597-614.
  28. A. Stewart Fotheringham, 1988. "Note—Consumer Store Choice and Choice Set Definition," Marketing Science, INFORMS, vol. 7(3), pages 299-310.
  29. Randall, Alan & Hoehn, John P., 1996. "Embedding in Market Demand Systems," Journal of Environmental Economics and Management, Elsevier, vol. 30(3), pages 369-380, May.
  30. Ian Bateman & Ian Langford, 1997. "Non-users' Willingness to Pay for a National Park: An Application and Critique of the Contingent Valuation Method," Regional Studies, Taylor & Francis Journals, vol. 31(6), pages 571-582.
  31. John B. Loomis, 2000. "Vertically Summing Public Good Demand Curves: An Empirical Comparison of Economic versus Political Jurisdictions," Land Economics, University of Wisconsin Press, vol. 76(2), pages 312-321.
  32. George R. Parsons & A. Brett Hauber, 1998. "Spatial Boundaries and Choice Set Definition in a Random Utility Model of Recreation Demand," Land Economics, University of Wisconsin Press, vol. 74(1), pages 32-48.
  33. Lockwood, Michael, 1996. "Non-Compensatory Preference Structures In Non-Market Valuation Of Natural Area Policy," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 40(02), August.
  34. Andy Jones & Jan Wright & Ian Bateman & Marije Schaafsma, 2010. "Estimating Arrival Numbers for Informal Recreation: A Geographical Approach and Case Study of British Woodlands," Sustainability, MDPI, Open Access Journal, vol. 2(2), pages 684, February.
  35. Tiziana Luisetti & Ian J. Bateman & R. Kerry Turner, 2011. "Testing the Fundamental Assumption of Choice Experiments: Are Values Absolute or Relative?," Land Economics, University of Wisconsin Press, vol. 87(2), pages 284-296.
  36. Robert J. Johnston & RStephen K. Swallow & Dana Marie Bauer, 2002. "Spatial Factors and Stated Preference Values for Public Goods: Considerations for Rural Land Use," Land Economics, University of Wisconsin Press, vol. 78(4), pages 481-500.
  37. Rose, John M. & Bliemer, Michiel C.J. & Hensher, David A. & Collins, Andrew T., 2008. "Designing efficient stated choice experiments in the presence of reference alternatives," Transportation Research Part B: Methodological, Elsevier, vol. 42(4), pages 395-406, May.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:eee:ecolec:v:79:y:2012:i:c:p:21-31. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Shamier, Wendy)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.