Is the Value of Environmental Goods Sensitive to the Source of Public Funding? Evidence from a Marine Restoration Programme in the Black Sea

Is the Value of Environmental Goods Sensitive to the Source of Public Funding? Evidence from a Marine Restoration Programme in the Black Sea Abstract In this paper we employ a choice experiment (conducted in Ukraine and Turkey) on the valuation of a marine restoration programme in the Black Sea, to examine whether the value of environmental goods is sensitive to the source of public financing. We contribute to the debate on the optimal composition of public expenditure, an issue that can be controversial in times of financial crises. We discriminate between two funding regimes through the reallocation of public spending. One proposes the financing of the marine restoration programme by reducing public expenditure for investments in renewable energy, and the second by reducing public expenditure for civil servants’ training. The results reveal that the marginal value of public money depends on the funding source. In the civil servants’ budget reallocation survey, the reallocation coefficient is positive, implying that ceteris paribus directing public resources away from this source is utility-enhancing. Furthermore, the valuation of the attributes of the marine restoration programme is sensitive to the trade-off implied by the funding scheme. The magnitude of the results differs in the two considered countries, mirroring their heterogeneity in political and cultural dimensions.