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Optimized quantity-within-distance models of spatial welfare heterogeneity

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  • Holland, Benedict M.
  • Johnston, Robert J.

Abstract

Spatial welfare heterogeneity is frequently modeled within stated preference analysis as a function of discrete or continuous distance between households and affected resources. A common example is distance-decay analysis. Although distance-based models such as these are easily estimated, the ubiquity of this paradigm can lead to analyses that overlook other forms of analysis with equal or greater relevance. This paper develops an alternative approach to spatial heterogeneity in stated preference willingness to pay (WTP) based on the quantity or area of an affected resource surrounding each respondent at an optimized distance band or radius, with distance bands optimized using a grid-search algorithm that maximizes model likelihood. Methods and results are illustrated using a choice experiment on riparian land restoration in Maine, USA. The resulting quantity-within-distance model identifies systematic spatial patterns that are undetectable using distance-based analysis and directly relevant for welfare analysis.

Suggested Citation

  • 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.
  • Handle: RePEc:eee:jeeman:v:85:y:2017:i:c:p:110-129
    DOI: 10.1016/j.jeem.2017.04.006
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    Cited by:

    1. Robert J. Johnston & Elena Y. Besedin & Benedict M. Holland, 2019. "Modeling Distance Decay Within Valuation Meta-Analysis," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 72(3), pages 657-690, March.
    2. Faccioli, Michela & Czajkowski, Mikołaj & Glenk, Klaus & Martin-Ortega, Julia, 2020. "Environmental attitudes and place identity as determinants of preferences for ecosystem services," Ecological Economics, Elsevier, vol. 174(C).
    3. Michela Faccioli & Mikołaj Czajkowski & Klaus Glenk & Julia Martin-Ortega, 2018. "Environmental attitudes and place identity as simultaneous determinants of preferences for environmental goods," Working Papers 2018-08, Faculty of Economic Sciences, University of Warsaw.
    4. 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.
    5. Masiero, Mauro & Franceschinis, Cristiano & Mattea, Stefania & Thiene, Mara & Pettenella, Davide & Scarpa, Riccardo, 2018. "Ecosystem services’ values and improved revenue collection for regional protected areas," Ecosystem Services, Elsevier, vol. 34(PA), pages 136-153.
    6. Søren B. Olsen & Cathrine U. Jensen & Toke E. Panduro, 2020. "Modelling Strategies for Discontinuous Distance Decay in Willingness to Pay for Ecosystem Services," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 75(2), pages 351-386, February.
    7. Tomas Badura & Silvia Ferrini & Michael Burton & Amy Binner & Ian J. Bateman, 2020. "Using Individualised Choice Maps to Capture the Spatial Dimensions of Value Within Choice Experiments," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 75(2), pages 297-322, February.
    8. Artell, Janne & Ahtiainen, Heini & Pouta, Eija, 2019. "Distance decay and regional statistics in international benefit transfer," Ecological Economics, Elsevier, vol. 164(C), pages 1-1.
    9. Gregory Howard & John C. Whitehead & Jacob Hochard, 2020. "Estimating Discount Rates Using Referendum-style Choice Experiments: An Analysis of Multiple Methods," Working Papers 20-01, Department of Economics, Appalachian State University.

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    Keywords

    Q51; Q57; Choice modeling; Discrete choice experiment; Distance decay; Geographic information system; Nonuse value; Riparian; Spatial; Stated preference; Willingness to pay;

    JEL classification:

    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
    • Q57 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Ecological Economics

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