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When a Good Is a Bad (or a Bad Is a Good)—Analysis of Data from an Ambiguous Nonmarket Valuation Setting

Author

Listed:
  • Petter Gudding

    () (Norwegian Environment Agency, 7010 Trondheim, Norway)

  • Gorm Kipperberg

    () (UiS Business School, University of Stavanger, 4036 Stavanger, Norway)

  • Craig Bond

    () (UiS Business School, University of Stavanger, 4036 Stavanger, Norway
    RAND Corporation, Arlington, VA 22202-5050, USA)

  • Kelly Cullen

    () (Department of Natural Resources and the Environment, University of New Hampshire, Durham, NH 03824, USA)

  • Eric Steltzer

    () (Department of Energy Resources, Commonwealth of Massachusetts, Boston, MA 02114, USA)

Abstract

This paper analyses data from a contingent valuation experiment carried out in a context with large degree of preference heterogeneity and valuation ambiguity. Despite this challenge, by implementing estimation of an unrestricted valuation function on pooled data from two elicitation formats, utilizing all preference information available from the survey, we are able to estimate welfare measures with an acceptable degree of statistical confidence. It turns out that an offshore wind farm, a priori believed to constitute a bad that people would be willing to pay to avoid, instead was a good that people would be willing to forego under compensation. This was true on average but not for all study participants. Two key determinants of preferences were spatial proximity to the proposed wind farm and perceptions of the visual impacts of wind turbines. Individuals who would be near and thought wind turbines are “ugly” had a mean willingness to pay to avoid the wind farm of about $508 per household per year. In contrast, those who would be far away and perceived wind turbines to be “beautiful” had a negative mean willingness to pay to avoid the wind farm of about −$595 per household per year.

Suggested Citation

  • Petter Gudding & Gorm Kipperberg & Craig Bond & Kelly Cullen & Eric Steltzer, 2018. "When a Good Is a Bad (or a Bad Is a Good)—Analysis of Data from an Ambiguous Nonmarket Valuation Setting," Sustainability, MDPI, Open Access Journal, vol. 10(1), pages 1-16, January.
  • Handle: RePEc:gam:jsusta:v:10:y:2018:i:1:p:208-:d:127158
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    References listed on IDEAS

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    More about this item

    Keywords

    contingent valuation; willingness to pay; renewable energy; wind power; households; preference heterogeneity;
    All these keywords.

    JEL classification:

    • Q - Agricultural and Natural Resource Economics; Environmental and Ecological Economics
    • Q0 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General
    • Q2 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation
    • Q3 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation
    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products

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