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Modeling Spatial Patchiness and Hot Spots in Stated Preference Willingness to Pay

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  • Robert Johnston
  • Mahesh Ramachandran

Abstract

Stated preference analyses often impose strong assumptions regarding spatial welfare distributions that can influence the validity of welfare analysis and aggregation. These include spatial homogeneity and continuous distance decay. Global assumptions such as these are increasingly questioned by non-economics disciplines in favor of approaches that allow for local patchiness. Drawing from this literature, this article proposes methods to identify and evaluate hot spots in stated preference welfare estimates using local indicators of spatial association. Methods are illustrated using geocoded choice experiment data addressing river restoration. Results suggest the presence of statistically significant, non-continuous patterns overlooked by current approaches. Copyright Springer Science+Business Media Dordrecht 2014

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  • Robert Johnston & Mahesh Ramachandran, 2014. "Modeling Spatial Patchiness and Hot Spots in Stated Preference Willingness to Pay," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 59(3), pages 363-387, November.
  • Handle: RePEc:kap:enreec:v:59:y:2014:i:3:p:363-387
    DOI: 10.1007/s10640-013-9731-2
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    More about this item

    Keywords

    Choice modeling; Ecosystem service; Valuation; Cost benefit analysis; Local indicators of spatial association ; Distance decay; Spatial autocorrelation; Q51; D61;
    All these keywords.

    JEL classification:

    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis

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