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Marginal WTP and Distance Decay: The Role of ‘Protest’ and ‘True Zero’ Responses in the Economic Valuation of Recreational Water Quality

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  • Magnus Söderberg
  • David Barton

Abstract

We evaluate the sensitivity of distance decay in individuals’ stated willingness to pay (WTP) for water quality improvements in eutrophied lakes. We extend the standard model of contingent valuation (CV) by allowing individuals to adopt a sequential evaluation process consisting of two decision stages. In the first stage respondents decide whether they are ‘protesters’, have a WTP $$=$$ = ‘true zero’ or a $$\hbox {WTP}>0$$ WTP > 0 . Conditioned on a strictly positive WTP, we use Lee’s selectivity-corrected model to determine the magnitude of their WTP in the second stage. Using CV survey data from Norway we find significant distance decay in the first stage classification of respondents as ‘protesters’, ‘true zero’ WTP, or positive WTP. In the second stage model for positive WTP responses, we find little or no significant relationships when correcting for selection. Results suggest that previous findings of significant distance decay in contingent valuation of lake and river water in Europe may be driven by the definition of ‘protest’ and ‘true zero’ respondents. We find that WTP for water quality may be more useful as a qualitative indicator of political support for user financed water quality measures, than as a cardinal measure of marginal utility of water quality improvements. Copyright Springer Science+Business Media Dordrecht 2014

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  • Magnus Söderberg & David Barton, 2014. "Marginal WTP and Distance Decay: The Role of ‘Protest’ and ‘True Zero’ Responses in the Economic Valuation of Recreational Water Quality," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 59(3), pages 389-405, November.
  • Handle: RePEc:kap:enreec:v:59:y:2014:i:3:p:389-405
    DOI: 10.1007/s10640-013-9735-y
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    1. Day, Brett & Bateman, Ian & Binner, Amy & Ferrini, Silvia & Fezzi, Carlo, 2019. "Structurally-consistent estimation of use and nonuse values for landscape-wide environmental change," Journal of Environmental Economics and Management, Elsevier, vol. 98(C).
    2. Villanueva, Anastasio J. & Glenk, Klaus & Rodriguez-Entrena, M., 2016. "Serial non-participation and ecosystem services providers’ preferences towards incentive-based schemes," 90th Annual Conference, April 4-6, 2016, Warwick University, Coventry, UK 236348, Agricultural Economics Society.
    3. Laure Kuhfuss & Raphaële Préget & Sophie Thoyer & Nick Hanley, 2015. "Nudging farmers to sign agri-environmental contracts: the effects of a collective bonus," Discussion Papers in Environment and Development Economics 2015-06, University of St. Andrews, School of Geography and Sustainable Development.
    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. Salvador Saz-Salazar & Miguel A. García-Rubio & Francisco González-Gómez & Andrés J. Picazo-Tadeo, 2016. "Managing Water Resources Under Conditions of Scarcity: On Consumers’ Willingness to Pay for Improving Water Supply Infrastructure," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 30(5), pages 1723-1738, March.
    6. Perni, Ángel & Barreiro-Hurlé, Jesús & Martínez-Paz, José Miguel, 2020. "When policy implementation failures affect public preferences for environmental goods: Implications for economic analysis in the European water policy," Ecological Economics, Elsevier, vol. 169(C).
    7. Albaladejo-García, José A. & Alcon, Francisco & Martínez-Carrasco, Federico & Martínez-Paz, José M., 2023. "Understanding socio-spatial perceptions and Badlands ecosystem services valuation. Is there any welfare in soil erosion?," Land Use Policy, Elsevier, vol. 128(C).

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    More about this item

    Keywords

    Non-market valuation; Stated preference; ‘Protest’ ‘true zero’ responses; Methodology; Water quality; Disproportionate cost; EU Water Framework Directive; Q51; Q15; Q26; Q24; Q28;
    All these keywords.

    JEL classification:

    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
    • Q15 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Land Ownership and Tenure; Land Reform; Land Use; Irrigation; Agriculture and Environment
    • Q26 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Recreational Aspects of Natural Resources
    • Q24 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Land
    • Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy

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