Tuesday, March 7, 2017

Understanding the distribution of economic benefits from improving coastal and marine ecosystems

• Estimates of welfare benefits from better environmental quality of the coastal and marine waters of Latvia are provided.
• Variation in the benefits related to differences in their socio-demographics is identified.
• A novel approach to account for differences in individuals' preferences using their characteristics is proposed.
• Latvians are willing to pay for protecting biodiversity, and reducing eutrophication, and occurrences of invasive species.
• We observe substantial heterogeneity in values placed on water quality improvements.

The ecological status of coastal and marine waterbodies world-wide is threatened by multiple stressors, including nutrient inputs from various sources and increasing occurrences of invasive alien species. These stressors impact the environmental quality of the Baltic Sea. Each Baltic Sea country contributes to the stressors and, at the same time, is affected by their negative impacts on water quality. Knowledge about benefits from improvements in coastal and marine waters is key to assessing public support for policies aimed at achieving such changes. We propose a new approach to account for variability in benefits related to differences in socio-demographics of respondents, by using a structural model of discrete choice. Our method allows to incorporate a wide range of socio-demographics as explanatory variables in conditional multinomial logit models without the risk of collinearity; the model is estimated jointly and hence more statistically efficient than the alternative, typically used approaches. We apply this new technique to a study of the preferences of Latvian citizens towards improvements of the coastal and marine environment quality. We find that overall, Latvians are willing to pay for reducing losses of biodiversity, for improving water quality for recreation by reduced eutrophication, and for reducing new occurrences of invasive alien species. However a significant group within the sample seems not to value environmental improvements in the Baltic Sea, and, thus, is unwilling to support costly measures for achieving such improvements. The structural model of discrete choice reveals substantial heterogeneity among Latvians towards changes in the quality of coastal and marine waters of Latvia.

The full paper is currently available free of charge at:
When marginal WTPs for the attributes are compared across the individuals, we find that the means of WTP for avoiding reductions of native species range from LVL [Latvian Lats currently 1 = 1.61 dollars] 0.73 to LVL 2.43, and the values do not differ significantly as indicated by the overlapping confidence intervals (we do not distinguish between the levels of the attribute because the means do not differ significantly). Better water quality for recreation is the improvement which everyone, except for the pensioner, wants to see implemented. We observe some differences across the positive WTPs for this improvement between the individuals. For example, the single mother is willing to pay statistically significantly more than the family head for having water quality for recreation improved to a moderate state; the student is willing to pay statistically significantly more than the businessman for having water quality for recreation improved to a good state. The student, the family head, and the businessman are the only who would pay for limiting new occurrences of invasive alien species. Regardless of the attribute level, the mean WTPs range from LVL 1.15 to LVL 3.23, and they do not differ significantly from each other as shown by the confidence intervals
by Kristine Pakalniete 1, Juris Aigars 2, Mikołaj Czajkowski 3, Solvita Strake 4, Ewa Zawojska 3, Nick Hanley 5
1. AKTiiVS Ltd., Latvia
2. Latvian Institute of Aquatic Ecology, Latvia
3. University of Warsaw, Department of Economics, Poland
4. Latvian Institute of Aquatic Ecology, Latvia
5. University of St Andrews, Department of Geography and Sustainable Development, UK
Science of The Total Environment via Elsevier Science Direct www.ScienceDirect.com
Volumes 584–585; 15 April 2017; Available online 27 January 2017; Pages 29–40
Keywords: Coastal and marine water quality; Biodiversity; Invasive alien species; Eutrophication; Discrete choice experiment; Observed preference heterogeneity; Socio-demographic characteristics; Hybrid choice model

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