Putting a value on injuries to natural assets: The BP oil spill

Summary:

When large-scale accidents cause catastrophic damage to natural or cultural resources, government and industry are faced with the challenge of assessing the extent of damages and the magnitude of restoration that is warranted. Although market transactions for privately owned assets provide information about how valuable they are to the people involved, the public services of natural assets are not exchanged on markets; thus, efforts to learn about people's values involve either untestable assumptions about how other things people do relate to these services or empirical estimates based on responses to stated-preference surveys. Valuation based on such surveys has been criticized because the respondents are not engaged in real transactions. Our research in the aftermath of the 2010 BP Deepwater Horizon oil spill addresses these criticisms using the first, nationally representative, stated-preference survey that tests whether responses are consistent with rational economic choices that are expected with real transactions. Our results confirm that the survey findings are consistent with economic decisions and would support investing at least $17.2 billion to prevent such injuries in the future to the Gulf of Mexico's natural resources.

...

The federal judge in an initial phase of the lawsuit involving BP determined that the best estimate of the amount of oil released was 134 million gallons, making it the largest maritime oil spill in U.S. history. On behalf of the trustees of the Gulf's natural resources and under the guidance of the lead agency for this process, the U.S. National Oceanic and Atmospheric Administration (NOAA), we estimated the monetary value of the natural resource damage from the spill, as specified by the Oil Pollution Act (OPA) of 1990. Such estimates can inform settlement negotiations between the government and the responsible parties, be entered as evidence at trial, and contribute to choosing projects to restore injured environmental resources (1). Trustees undertook a number of studies to quantify ecological impacts and economic damages caused by the spill, including what we describe here. The natural resource–damage case was settled in April 2016. The Consent Decree called for total payments of $20.8 billion, $8.8 billion of which was for natural resource damages. Decisions related to the settlement details are confidential.

Economic measures of the damages to natural resources consider the effects on use (or active use) and nonuse (or passive use) values (2). “Use values” arise when an individual derives satisfaction from using a resource (e.g., fishing or visiting a beach), either now or in the future. “Nonuse values” arise when an individual derives satisfaction from the existence of a resource, even though that individual would not visit or use it. The OPA regulation specifies that damage measures include both use and nonuse or the total economic value lost. Private claims by those engaged in commercial fishing or in operating hotels are handled separately.

After the 1989 Exxon Valdez oil spill and controversy over assessing monetary damages with stated-preference surveys, an expert panel (3) recommended criteria for conducting these studies. Research has since established ways to ask stated-choice questions that induce truthful responses and meet these proposed criteria. Subsequent criticism of stated-preference research has focused on how large the change in the average person's value should be with changes in the size of injuries to natural resources. The research we discuss here identified what can be expected on the basis of a conventional economic model of an individual's choices, with minimal assumptions. It also offers evidence that the average individual's likelihood to vote for a program to avoid injuries is causally linked to a consistent understanding of the severity of the injuries.

...

The study interviewed a large random sample of American adults who were told about (i) the state of the Gulf before the 2010 accident; (ii) what caused the accident; (iii) injuries to Gulf natural resources due to the spill; (iv) a proposed program for preventing a similar accident in the future; and (v) how much their household would pay in extra taxes if the program were implemented. The program can be seen as insurance, at a specified cost, that is completely effective against a specific set of future, spill-related injuries, with respondents told that another spill will take place in the next 15 years. They were then asked to vote for or against the program, which would impose a one-time tax on their household. Each respondent was randomly assigned to one of five different tax amounts: $15, $65, $135, $265, and $435.

...

https://en.wikipedia.org/wiki/Deepwater_Horizon_oil_spill

The final questionnaire was administered to a random sample of households in the contiguous United States that included at least one English-speaking adult. Face-to-face interviews were completed between October 2013 and July 2014 by nearly 150 trained interviewers. A total of 3,656 people completed the survey for a weighted response rate of 48%. A nonresponse followup (NRFU) survey involved mailing paper questionnaires to households at which no main study interview had been completed. NRFU questionnaires were received from 1492 households, representing a NRFU household response rate of 51% (see SM for details of weighting and nonresponse)....

For each injury description, support for the program declines as the tax increases, consistent with the first test for consistent decisions. For each tax amount, support for the program increases as the set of injuries increases, consistent with the second test.

https://en.wikipedia.org/wiki/Deepwater_Horizon_oil_spill

The estimate for the lower-bound mean WTP for the smaller set of injuries is $136 (standard error $6.34) and for the larger set is $153 (standard error $6.87). The aggregate estimate reported at the outset—$17.2 billion—uses the WTP lower-bound estimate for the larger set of injuries ($153) multiplied by the number of households (112,647,215) represented by the sample.

...

http://science.sciencemag.org/content/356/6335/253

by Richard C. Bishop, Kevin J. Boyle, Richard T. Carson, David Chapman, W. Michael Hanemann, Barbara Kanninen, Raymond J. Kopp, Jon A. Krosnick, John List, Norman Meade, Robert Paterson, Stanley Presser, V. Kerry Smith, Roger Tourangeau, Michael Welsh, Jeffrey M. Wooldridge, Matthew DeBell, Colleen Donovan, Matthew Konopka, Nora Scherer

Science http://science.scienceag.org

Volume 356, Issue 6335;  21 Apr 2017; pages 253-254

Good parks – bad parks: the influence of perceptions of location on WTP and preference motives for urban parks

Abstract:

Urban parks generate substantial public benefits, yet explicit economic assessments of such values remain relatively rare. Surveys of willingness to pay (WTP) were undertaken to assess such values for proposed new parks. The analysis assessed how preference motives and values varied according to the location of parks. Results revealed greater altruistic motivation and higher overall values for the creation of inner city as opposed to suburban parks. Spatial decomposition revealed that, after controlling for other determinants such as incomes, values generally increase for households closer to proposed parks, but that a significant downturn in values is evident for households located very close to a proposed inner city park; a finding which echoes concerns regarding the potential for such sites to provide a focus for antisocial behaviour. While these findings provide strong overall support for provision of public parks they highlight, the importance of perceptions of location and the potential for localised dis-benefits.

...

Suveys were administered face to face at participant’s homes. This enabled us to remind respondents of their budgetary constraints as well as the existence of potential substitute sites. Participants were informed that “we are researching the value of parks to the people of Norwich” and wished to interview people about their experiences and views.... Participants were shown stock photos of a verdant English park and informed that the park once complete would look like the photograph.... They were asked in an open ended format to explain their choice and to categorise their expected usage of the park into one of four categories.... Interviewers explained that the significant costs of creating the new parks would be met through an increase in their annual council tax bill.

https://en.wikipedia.org/wiki/List_of_parks,_gardens_and_open_spaces_in_Norwich

Key results are in the table below:

 

...

The Tobit models produce very similar aggregate values for park A (Mean based = £1,130,674, Tobit based = £1,297,970) when protestors are ignored.  The inclusion of a lower bound to account for protestors in the Tobit model also resulted in similar values to the equivalent measure based aggregation (mean based = £933,302 Tobit based = 1,140,256). 

...

Results of the CV survey presented in this paper confirm previous findings that parks are highly valued public goods, with the creation of new parks in the city of Norwich having the potential to generate substantial value to residents. The low protest bid rate in the sample suggests that not only do residents have strong preferences towards the creation of new parks but that, at least in principle, they are willing to pay for increased provisioning through a familiar and realistic payment vehicle. Using an ex ante valuation allowed values and preference motives to be compared for two locations revealing significant differences in both mean WTP and its determinants.

Pick a number, but not just any number: valuation uncertainty and maximum willingness to pay

Abstract:

Empirical results suggest that contingent valuation method (CVM) respondents are uncertain of their valuations, which has led critics of the method to raise issues about its validity. Alternative approaches to resolve the problem have been proposed, involving different willingness to pay (WTP) response formats allowing respondents to explicitly express uncertainty. This paper compares differences between certain and uncertain responses for four different response formats. The results suggested that mean and median (WTP) were not significantly different for respondents who were certain about their valuations. This was generally not the case for respondents who were uncertain about their valuations. However, the median WTP was not found to be significantly different for uncertain and certain respondents. A conclusion for a standard CVM application is that the sample median WTP value could serve as a proxy measure of population maximum mean WTP when uncertainty has been removed.

...

The analysis is based on data from a mail survey on outdoor recreation in southern Sweden.... Some previous studies targeted visitors to a specific recreation area with corresponding high familiarity with the good being valued . By contrast, this study targeted ‘an average visit’ to an unspecified forest area the respondent uses based on the Right of Public Access. This customary right allows people to freely roam the countryside and put up camp for one night regardless of land ownership [which] ... is not traded in any market, implying that it has the characteristics of a public good ...

http://wallpaperweb.org/wallpaper/nature/beechwood-forest-skane-sweden_19694.htm

The resulting sample would ... be expected to involve a wide range of familiarity with the good being valued....The hypothetical valuation scenario was the same for all questionnaire versions.... The ... valuation question [was] worded as follows:

Imagine that you would continue to visit and experience the forest as you normally do. You would travel the same distance to the forest and do similar activities. Consider that your expenses to visit the forest would increase, i.e. became larger than what you stated in the previous question. [which referred to the total cost related to an average forest visit, authors’ comment] How large would your total maximum cost for an average forest visit be before you would decide not to visit the forest?

The respondents were thus faced with the task of expressing their valuation as an equivalent variation (ev), i.e. the maximum WTP to avoid losing their current forest recreation.

The four response formats were open-ended (OE), interval open-ended (IOE), multiple-bounded dichotomous choice (MBDC) and what we have here chosen to call line scale (LS).... Three (OE, IOE and MBDC) of the four samples included a follow-up question on valuation certainty. Information was given that 100% probability would mean 100% acceptance of the stated amount and 0% probability would mean 0% acceptance of the stated amount, but the respondent was allowed to state any probability within those values....

...

[Responses are presented in the table below]

The OE survival curve is generally bounded by the IOE lower and upper bounds. The ranges differ substantially, as the highest reported value in the OE format was SEK 5000, whereas it was SEK 10,000 for the upper bound of the IOE format. Consequently, respondents gave considerably higher values than in the OE format when explicitly asked for their upper bound valuations in the IOE format. By weighting the responses with the reported uncertainties, the response distributions became more clustered as seen in Figure 4.

Figure 4. Survival curves for open-ended responses adjusted for valuation uncertainty.

...

Differences in the recreational value of urban parks between weekdays and weekends: A discrete choice analysis

Abstract:

Urban parks offer city residents a broad range of opportunities for recreation. This paper explores whether preferences for urban parks are context-dependent, i.e., whether they differ between recreational occasions on weekdays and weekends. Knowledge about such differences in behaviour and preferences could help decision makers in cities to optimise their portfolio of urban parks. Employing a discrete choice experiment for the case of Berlin, Germany, the analysis finds that preferences significantly differ between weekday and weekend recreation for some park characteristics. For weekdays, respondents prefer urban parks in closer proximity to their homes while the size of the parks is not so important. For the weekend, larger parks with picnic facilities are preferred while distance matters less. Most important are, however, cleanliness and maintenance, regardless of whether a park is visited on weekdays or the weekend. The results underline the importance of considering different temporal contexts when preferences for outdoor recreation are concerned.

Highlights

• Temporal contexts significantly affect recreational preferences of urban residents.

• During the week, distance to parks is of particular importance.

• For the weekend, larger parks are preferred while distance matters less.

• Cleanliness and maintenance are most important for visits at any time of the week.

http://www.visitberlin.de/en/see/sightseeing/green-berlin

For a medium size park (10-50 hectares) the Marginal Willingness to Pay for park attributes rises from 19.56 euros on weekdays to 53.03 euros on weekends, for picnic facilities it rises from 32.21 euros to 71.45 euros as shown in the table below.

http://www.sciencedirect.com/science/article/pii/S0169204616302298

http://dx.doi.org/10.1016/j.landurbplan.2016.10.006

by Christine Bertram 1, Jürgen Meyerhoff 1 and 2, Katrin Rehdanz 1 and 3, and Henry Wüstemann 2

1. Kiel Institute for the World Economy, Kiellinie 66, D-24105 Kiel, Germany

2. Technische Universität Berlin, Straße des 17. Juni 145, D-10623 Berlin, Germany

3. University of Kiel, Department of Economics, Wilhelm-Seelig-Platz 1, D-24118 Kiel, Germany

Landscape and Urban Planning via Elsevier Science Direct www.ScienceDirect.com

Volume 159; March, 2017; Available online 18 November 2016; Pages 5–14

Keywords: Urban parks; Discrete choice experiment (DCE); Recreational behaviour; Context-dependent preferences; Weekend vs. weekday

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

Highlights

• 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.

Abstract

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:

http://www.wne.uw.edu.pl/files/6614/7630/2783/WNE_WP217.pdf.

...

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

 http://www.latvia.eu/natural-attractions

http://www.sciencedirect.com/science/article/pii/S0048969717301080

http://dx.doi.org/10.1016/j.scitotenv.2017.01.097

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

What are Households Willing to Pay for Improved Water Access? Results from a Meta-Analysis

Abstract:

Although several factors contribute to low rates of access to improved water and sanitation in the developing world, it is especially important to understand and measure household demand for these services. One valuable source of information regarding demand is the growing empirical literature that has applied stated preference methods to estimate households' willingness to pay (WTP). Because it is difficult to generalize and support planning based on this scattered literature, we conduct a meta-analysis to take stock of the worldwide sample of household WTP for improved drinking water services. Using 171 WTP estimates drawn from 60 studies, we first describe this sample and then examine the potential factors that explain variation in WTP estimates. Our results suggest that households are willing to pay between approximately $3 and $30 per month for improvements in water access. Specifically, in line with economic theory and intuition, WTP is sensitive to scope (the magnitude of improvement in drinking water services), as well as household income, and stated-preference elicitation method. We demonstrate how our results can be used to predict household-level WTP for selected improvements in drinking water access in regions with low coverage, and find that private benefits exceed the cost of provision.

http://www.goodnet.org/articles/15-genius-new-inventions-that-make-world-better-place

http://www.sciencedirect.com/science/article/pii/S0921800916308953
by George L. Van Houtven 1, Subhrendu K. Pattanayak 2, Faraz Usmani 3, Jui-Chen Yang 4 formerly 1 

1. RTI International, Research Triangle Park, NC, USA

2. Sanford School of Public Policy, Duke University, Durham, NC, USA

3. Nicholas School of the Environment, Duke University, Durham, NC, USA

4. Pacific Economic Research, LLC, Bellevue, WA, USA

Ecological Economics via Elsevier Science Direct www.ScienceDirect.com

Volume 136; June, 2017; Pages 126–135; Available online 23 February 2017

Keywords: Meta-analysis; Water; Sanitation; Contingent valuation; Willingness to pay

Estimating the value of ecosystem services in a mixed-use watershed: A choice experiment approach

Highlights

• Location and costs are significant explanatory variables of MWTP.

• Annual household income was associated with ecosystem services preferences.

• The average MWTP for ecosystem services was extremely low (<$2/household/year)

• A dissociation between local needs and global issues explains the overall low valuations.

Abstract

The protection of water, land, and air resources has profound implications for the sustainability of ecosystem services provided to societies that are embedded within economies, global systems, and socio-cultural and political contexts. This study assessed preferences for provisioning, regulating, and supporting ecosystem services, specifically, climate regulation (carbon sequestration), nutrient control (water quality), and agricultural and forest productivity, and the willingness to pay for protection of these ecosystem services by residents in the Suwannee River Basin of Florida, as assessed through a household mail survey and choice experiment. A conditional logit model was used to evaluate preferences and marginal willingness to pay (MWTP) under different scenarios. Survey respondents identified nutrient control (water quality) as the most important service, while agricultural and forestry production was somewhat important, and climate regulation/carbon sequestration was the least important. Respondents expressed the highest level of trust in local government agencies to implement ecosystem service protection programs, and welcomed the implementation of such programs anywhere in the basin, but not close to their home. The average MWTP was extremely low (<$2/household/year) when compared to other studies, and suggests that respondents have many competing interests for their discretionary spending in relation to environmental amenities.

http://www.saveoursuwannee.org/suwannee-region/

https://en.wikipedia.org/wiki/Suwannee_River

http://www.sciencedirect.com/science/article/pii/S2212041616301164

Pasicha Chaikaew 1 and 3, Alan W. Hodges 2 and Sabine Grunwald 3 

1. Department of Environmental Science, Chulalongkorn University, Bangkok 10330, Thailand

2. Department of Food and Resource Economics, University of Florida, Gainesville, FL 32611, USA

3. Department of Soil and Water Science, University of Florida, Gainesville, FL 32611, USA

Ecosystem Services via Elsevier Science Direct www.ScienceDirect.com

Volume 23; February, 2017; Pages 228–237

Keywords: Ecosystem services; Choice experiments; Willingness to pay; Preferences

Public Acceptability of Climate Change Mitigation Policies: A Discrete Choice Experiment

Abstract

Our study examines public acceptability of the EU’s future mitigation targets. Using the discrete choice experiment, we elicit the preferences of about 4,098 respondents from the Czech Republic, Poland, and the United Kingdom for the GHG emission reduction policies that differ in four attributes: emission reduction target, burden sharing across the EU Member States, the distribution of costs within each country, and cost. The three specific reduction targets we analysed correspond to the EU 2050 Roadmap and deep decarbonisation policy (80% target), the climate-energy 2014 targets (40% target), and the status quo policy (20% target); each will result in a specific emission trajectory by 2050. Our results reveal stark differences between the three countries. Czechs would be on average willing to pay around EUR 13 per household and year for the 40% GHG emission reductions by 2030 or EUR 17 for 80% reduction target by 2050, and the citizens of the UK are willing to pay about EUR 40. Conversely, the mean willingness to pay of the Polish household for adopting more stringent targets is not statistically different from zero. The willingness to pay for adopting 40% and 80% targets are not statistically different in any of the examined countries. However, we found that the preferences in all three countries are highly heterogeneous. In addition, we provide an insight into the preferred characteristics of the future GHG emission reduction policies.

http://integrateclimate.org/de/our-focus/long-page/

http://tinyurl.com/j4f54rt

by Milan Ščasný 1, Iva Zverinova 1 and Mikołaj Czajkowski 2 and Katarzyna Zagórska

1. Charles University in Prague

2. University of Warsaw

Climate Policy via Taylor and Francis Online www.tandfonline.com 

Published online: 08 Dec 2016; 20 pages

http://www.tandfonline.com/doi/abs/10.1080/14693062.2016.1248888

via Research Gate https://www.researchgate.net

Policy- v. Individual Heterogeneity in the Benefits of Climate Change Mitigation: Evidence from a Stated-Preference Survey

Abstract:      

The implementation of decarbonization policies depends crucially on the public’s willingness to pay for them. We use stated preference methods to investigate the public’s preferences for such policies. We ask three research questions. First, does the willingness to pay (WTP) for each ton of CO2 emissions reductions depend on the policies and on individual characteristics of the respondents? Second, how extensive is the variation associated with these factors? Third, what factors affect support for or opposition to a carbon tax? Based on the responses to discrete choice experiments from a sample of Italians, we find that the WTP per ton of CO2 ranges between € 6 and 130, depending on whether the public program is based on taxes, incentives, information-based approaches or standards. Further allowing for individual characteristics of the respondents, such as gender or education, and knowledge of climate change, results in a 300% change in WTP, holding the policy instrument the same. We conclude that the variation associated with the policy instrument is approximately of the same order of magnitude as that associated with individual characteristics of the respondents....

http://services.bepress.com/feem/paper1167/

by Anna Alberini 1, Milan Ščasný 2 and Andrea Bigano 3

1. University of Maryland - Department of Agricultural & Resource Economics; Fondazione Eni Enrico Mattei (FEEM)

2. Charles University Prague

3. Fondazione Eni Enrico Mattei (FEEM) & Centro Euro-Mediterraneo per i Cambiamenti Climatici

FEEM Working Paper No. 80.2016; December 20, 2016; 33 pages

Keywords: Climate Change Mitigation, WTP per ton of CO2 Emissions Reduced, Choice Experiments

http://dx.doi.org/10.2139/ssrn.2887920

What Are NYC Residents Willing to Pay for a Flood Protection System? Measuring Flood Risk

This policy brief evaluates how willingness to pay (WTP) for a flood protection system varies with exposure to flood risk, using detailed flood maps and parcel-level data to identify households within and just beyond the 100-year flood plain in New York City. Past research has estimated that a homeowner’s WTP for flood insurance is largely contingent upon their risk level. However, no studies to date have analyzed the WTP for other forms of flood protection. We conducted a survey of single-family homeowners living in the 100- and 500-year flood plains in New York City, and found that WTP for flood control systems varies with the degree of risk that homeowners face. While the majority of residents living in the 100- year flood plain were willing to pay up to $10 a month to contribute to the cost of a seawall, the majority of residents living in the 500-year flood plain, an area that has a 0.2% risk of flooding in any given year, were only willing to pay up to $7 a month. These results are consistent with other studies demonstrating that risk—actual or perceived—plays a large role in individuals’ WTP for protection from floods.

https://en.wikipedia.org/wiki/Hurricane_Sandy

http://policyintegrity.org/publications/detail/measuring-flood-risk

By J. Scott Holladay, Howard Kunreuther, and Valerie Stahl

Institute for Policy Integrity www.PolicyIntegrity.org

October 31, 2016

The value of wetlands in Quebec: a comparison between contingent valuation and choice experiment

Abstract:

This study aims to evaluate the non-market values of ecosystem services generated by wetlands in southern Quebec. To accomplish this, we evaluated the value of wetland services related to (1) habitat for biodiversity, (2) flood control, (3) water quality and (4) climate regulation. Two non-market valuation methods are proposed, contingent valuation and choice experiment. Our study aims to measure both the population's willingness to pay (WTP) for wetland preservation and restoration and to understand which environmental attributes and socioeconomic characteristics motivate people's responses. We also compared the results of the two methods. Our conclusion suggests that the two methods provide statistically convergent WTP values, both in total value and in relative importance for different attributes involved. Our result also confirms the coefficient equivalence between the estimation models using the data from the two methods.

...

Wetlands are among the most important and productive natural systems on the planet. Canada hosts 25% of the planet’s wetlands (127 million hectares; Environnement Canada 2004). In urban areas, however, their extent has been reduced by 80% 98% over the last two centuries because of drainage, filling or direct destruction (Environment Canada 1991).....

...

This study evaluates the value of four services provided by wetlands ... via two non-market valuation methods, CV [Contingent Valuation] and CE [Choice Experiment].

...

In this study, we used two non-market valuation methods (CV and CE) to estimate the social benefit generated from improving wetlands in Quebec through preservation and restoration. Our results show that the WTP per year per household varies from $447 (CE) to $465 (CV), depending on methods. This mean WTP value can also be affected by respondents’ socioeconomic characteristic such as age (¡), income (C), education (C), gender (male > female), etc. Our conclusion suggests that the two methods provide statistically convergent WTP values, both in total value and in relative importance of different attributes involved. Using the method proposed by Swait and Louviere (1993), our result also confirms the coefficient equivalence between the estimation models using the data from the two methods. These conclusions suggest a fairly robust and consistent equivalence between CV and CE and provide an interesting contrast with the study of Christie and Azevedo (2009), which suggested that the WTP reported by repeated CV data to be lower than that reported by full-set CE data, but at the same time, it provided the evidence of coefficient equivalence between the two methods.

https://en.wikipedia.org/wiki/Portal:Wetlands/Selected_picture#/media/File:Laguna01.jpg

We can also compare our WTP value to that reported by previous Canadian studies that evaluated the similar wetland-related ecological services. Pattison, Boxall, and Adamowicz (2011) based on a scenario aiming at restoring the wetlands in Manitoba to 100% of 1968 level, reported a range of $319- $375 for annual per household WTP which englobes five attributes: water quality, flood control, soil erosion, wildlife habitat, carbon capture and storage.13 Lantz et al. (2013), based on a scenario of over 40% increase in wetland area in southern Ontario, reported a WTP per year per household varying from $264 to $273 for the improvement of four attributes: water quality, flood control, wildlife habitat and carbon storage.

Finally, Dias (2011) reported a range of WTP varying between $240 and $375 per annual per household, but their study only considered three attributes, including riparian buffer width, wildlife habitat and water quality. Clearly, the composition of ecological service attributes proposed in our paper is very similar to that of Pattison, Boxall, and Adamowicz (2011), it is therefore logic to see our reported WTP per year per household to be closest to this study, with the WTP values reported by Pattison, Boxall, and Adamowicz (2011) falling well into the 95% confidence interval of our WTP estimate.

Multiplying the per household per year payment with the number of the household in Quebec (i.e. 3,325,584), we can obtain the total yearly value of the ES generated by the restored wetlands in Quebec as being equal to 1.49 1.55 billion dollars for 400,000 hectares or approximately $3,725- $3,866 per hectare per year. This result is comparable with values obtained through benefit transfer approaches for the wetlands in Quebec, such as Dupras, Alam, and Rev eret (2015), $5,284 -$5,463/ha/year for five ES,16 and Dupras and Alam (2015), $4593/ha/year for seven ES, both for the region of Montreal, or He et al. (2015), $4702 and $9080/ha/year for the average value of the wetland located in the drainage basins of Yamaska and Becancour rivers based on a metaanalysis and detailed geographical information.

Willingness to pay for ecosystem conservation in Alaska’s Tongass National Forest: a choice modeling study

Abstract:

Forest ecosystems contribute to human welfare in important ways, but because of the nonmarket nature of many of the goods and services produced, both markets and governments fail to optimize their production commensurate with their economic and ecological significance. Despite the recent proliferation of nonmarket environmental valuation in the literature, the incorporation of nonmarket values into public forest decision making has been limited by institutional and methodological barriers. To address this disconnect, we conducted a case study to quantify conservation values for the Tongass National Forest in a manner conducive for public forest planning. A choice experiment featuring proposed forest management alternatives with changes in critical attributes relative to their levels in the status quo was used to generate the requisite data. Econometric analysis suggests that Alaskans have strong preference for conservation management, including both preservation and ecological restoration, over status quo or exploitation management. However, there is significant heterogeneity among Alaskans in terms of bias toward the status quo depending on their socioeconomic characteristics, e.g., gender, age, place of residence, household income, whether or not they have dependent children. The findings of this study can be helpful to forest managers in the preparation of resource management plans consistent with maximization of total economic value of forest ecosystem services.

...

Discussion and Conclusions

The objective of this study was to use best practices for designing a choice experiment most applicable for forest planning and management to measure WTP for conservation programs on the Tongass. The mean WTP for 50% old-growth preservation (US$147 2012) is consistent with the mean preservation values found in a meta-analysis (Hjerpe et al. 2015) of global ecosystem conservation (US$131 2010). Estimation results based on random parameter logit show that household WTP varies depending on the attribute and specific level. However, there are important differences in how respondents value different levels of each attribute. In particular, the scope effect seems to hold for old-growth preservation and watershed restoration attributes (with the 100% level preferred more than 50% level), but does not for the second-growth forest restoration attribute. For this attribute the coefficient on 100% is much smaller than the corresponding coefficient on 50% level. This valuation pattern suggests that Alaskans hold significant values for nontimber outputs because the background information provided to them on old growth preservation explicitly stated that the benefits would be of nontimber type and would entail the loss of timbering jobs on these acres. Yet, the smaller program WTP for a 100% increase in all noncost attributes compared with a 50% means that Alaskans’ support for conservation has a threshold and is diminished past a certain point....

http://www.fs.usda.gov/land/tongass/landmanagement

http://www.ecologyandsociety.org/vol21/iss2/art8/

by Evan E. Hjerpe 1 and Anwar Hussain 1 and2

1. Conservation Economics Institute

2. Forest Policy Center, Auburn University

Ecology and Society www.ecologyandsociety.org

Volume 21, Number 2; 2016; Article 8

A Benefit-Cost Analysis of the Middle Fork Greenway Trail

Abstract:
The Town of Boone, NC Greenway Trail is a 3.84 mile long paved trail with additional unpaved sections that attract many types of users including walkers, joggers, and cyclists. The proposed Middle Fork New River extension would add 6.5 miles to the total paved mileage. In order to estimate recreation benefits of the extension we use revealed and stated preference data to estimate the change in value of current visits and change in visits with the additional mileage. The total opportunity cost of the project includes land acquisition, construction, operation and maintenance costs. Considering only recreation benefits the Middle Fork Greenway Trail passes a benefit-cost test. The net present value is estimated to be $2.78 million. This conclusion does not change after considering a number of partial sensitivity analyses.

...

The baseline consumer surplus per visit is equal to $11 with a 95% confidence interval of $9 to $12 (Table 3). The consumer surplus per visit with the Middle Fork Greenway is equal to $17 with a 95% confidence interval of $12 to $21. The change in consumer surplus with the Middle Fork Greenway is $6 with a 95% confidence interval of $3 to $9. These consumer surplus estimates are significantly lower than those estimated by Siderelis, Moore and Lee (2000) and similar to those found by Betz, Bergstrom and Bowker (2003).

...

Based on the car counts we estimate a range of 9 to 11 cars in Greenway parking lots, on average, each hour. We assume that this visitation rate exists between 8 and 12 hours per day and for between 2 and 4 parking lots.... The average party size is assumed to range from one to three (2.78 is the survey average). The product of cars per hour, hours per day, parking lots and party size generates a wide range of 144 to 1584 trail users per day. Assuming a range of days visited during the year of 90 to 180, our estimate of the range of annual user days 12,960 to 285,120. Assuming a normal distribution with the range covering 97% of the distribution, the midpoint of 149,040 visits, is our best estimate of the annual average number of visits.1 The standard deviation of the distribution is 44,820 (this is equal to the range divided by 6). These visits are valued by the change in consumer surplus of $6 per visit.

http://www.middleforkgreenway.org/

Stigma mitigation and the importance of redundant treatments

Highlights

• Spring water is contaminated with a dead sterilized cockroach.

• Experimental results provide measurements of the stigma of disgust.

• Results reveal large differences between stated and revealed preferences.

• Disgust is significantly reduced through simple mitigation steps.

• Multiple mitigation steps are more effective than single steps.

Abstract

Disgust can evoke strong behavioral responses. Sometimes these extreme visceral responses can lead to stigmatization—an overreaction to a risk. In fact, disgust may be so inhibiting that it leads people to refuse to consume completely safe items, such as treated drinking water, leading to important economic and policy implications. Using economic experiments, we provide a measure of the behavioral response to disgust. Our findings suggest that when monetary incentives are provided, the behavioral response may have been exaggerated by previous studies that have relied on survey methods. Furthermore, mitigation steps successfully reduce the stigma behavior. In fact, the results suggest that stigma is primarily reduced not by a specific mitigation step taken but by how many steps are taken consecutively. These results have important implications for policies addressing issues such as the global shortage of drinking water. Some efforts to resolve the shortage have involved recycled water that is completely safe to drink but is often rejected because of reactions of disgust.

We find that participants require $0.38⁵ on average to drink a three-ounce cup of spring water. Most participants (89%), however, required no compensation to drink spring water. The average WTA (Willingness to Accept) for spring water that had been in contact with the cockroach was much higher, $3.70, but interestingly, the majority of participants (68%) still required no compensation to drink it. This result indicates that cockroach-contaminated water does evoke stigma for some people, as indicated by their overreaction to the participatory risk associated with drinking this water. However, the stigma response is far less extreme than indicated in previous studies that relied on hypothetical questioning. In fact, we find that only 13 participants (14%) refuse the cockroach-contaminated water as indicated by their WTA of $30.00. All other participants are willing to drink it, albeit at a price. When we compare cockroach-contaminated water after a single mitigation step to cockroach-contaminated water, we find that overall WTA drops well below $3, with diluting being the lowest at $2.39. We conclude, that a single mitigation step may alleviate some but not all of the consumers’ concerns about the contamination. Looking at two mitigation steps, three of the six mean WTAs are below $2 dollars and two mean WTAs are below offers made for one mitigation step, suggesting that, overall, two mitigation steps may be more effective than one. All mean WTAs were below $2 for three and four mitigation steps.

 

http://www.nationofchange.org/2015/06/04/long-awaited-epa-study-says-fracking-pollutes-drinking-water/

...
http://www.sciencedirect.com/science/article/pii/S0167487016000167

by Maik Kecinski 1, Deborah Kerley Keisner 2, Kent D. Messer 1, William D. Schulze 2

1. Department of Applied Economics and Statistics, University of Delaware, Newark, DE 19716, United States

2. Dyson School for Applied Economics and Management, Cornell University, Ithaca, NY 14850, United States

Journal of Economic Psychology via Elsevier Science Direct www.ScienceDirect.com

Volume 54; June, 2016; Pages 44–52
Keywords: Disgust; Stigma mitigation; Risk; Experimental economics

Psychographic profile affects willingness to pay for ecosystem services provided by Mediterranean high nature value farmland

Highlights

• We combined multifunctional agriculture and ecosystem service concepts.
• We performed psychographic analysis and economic valuation of ES in Mediterranean HNVF.
• Conservationist profiles state higher WTP than productivists profiles.
• Changes from liberalization to targeted support agricultural policies increase the WTP.
• Preferences for individual ecosystem service are multi-dependent.

AbstractOur aim was to examine how psychographic profiles affect willingness to pay for ecosystem services in Mediterranean high nature value farmland. We combined psychographic analysis and economic valuation to: i) identify different psychographic profiles based on attitudes towards the economy and environment, rural development and agricultural intensification, food quality and consumption, and agri-environmental policy; and ii) measure the economic value that the psychographic profiles assign to key ecosystem services in different agricultural policy scenarios. We analysed two populations in Spain (the general population and the local residents of the study area). We identified two psychographic profiles in each population focusing on productivist and conservationist attitudes. Respondents in all profiles were highly concerned about forest wildfires, followed by the availability of quality products for those with productivist profiles, the biodiversity maintenance for the general conservationists and a more human-intervened landscape for the local conservationists. The willingness to pay for ecosystem services altogether differed between the psychographic profiles, from 88€ of general productivists to 334€ [per year] of local conservationists. We demonstrated that attitudes concerning ecosystem services have a strong influence on their willingness to pay. We argued that psychographic differences should be considered when designing and legitimising EU agri-environmental and conservation policies.

http://see.efncp.org/countries/macedonia/hnv-farming/

http://www.sciencedirect.com/science/article/pii/S0921800915301269

by Tamara Rodríguez-Ortega 1, Alberto Bernués 1 and 2, Frode Alfnes 3
1. Centro de Investigación y Tecnología Agroalimentaria, Avda. Montañana 930, 50059 Zaragoza, Spain
2. Dept. of Animal and Aquacultural Sciences, Norwegian University or Life Sciences, N-1432 Ås, Norway
3. School of Economics and Business, Norwegian University or Life Sciences, N-1432 Ås, Norway

Ecological Economics via Elsevier Science Direct www.ScienceDirect.com

Volume 128; August, 2016; Pages 232–245

Keywords: Willingness to pay for ecosystem services in Mediterranean high nature value farmland.

Preferences for urban green spaces and peri-urban forests: An analysis of stated residential choices

Highlights:

•  Applying a choice experiment, we assess the preferences for living close to urban parks and forests.
•  This study applies a pivot-based experimental design that frames respondents’ choices in terms of their current residence.
•  The preference heterogeneity in the population can be partially explained by differences in household characteristics.
•  The results indicate substitution between having access to a private garden and to urban green spaces.

Abstract:

This paper assesses the value of urban green spaces, specifically peri-urban forests and their potential substitutes, for the local population on the basis of their residential choice. We applied a choice experiment that focuses on the trade-offs between private housing characteristics and the environmental aspects of neighborhoods. Individual willingness-to-pay is estimated from a latent class model and a mixed logit model along with a Willingness-To-Pay (WTP) space approach. Our results show that green spaces provide both direct use value (recreation) and indirect use value (scenic view). The respondent's value of distance to peri-urban forests depends on recreational use. The ownership of a private garden reduces the WTP for living closer to an urban park.

...

We calculated the changes in willingness-to-pay (MWTP) of marginal changes in distance to forest and parks using the estimates of DISF and NBVF*DISF. The MWTP to avoid living farther away from a forest or a park is presented in Table 7 where we have measured the MWTP (in €) of housing price per square meter for homeowners and rents per month per square meter for tenants. For example, according to the base-line information of the housing market, an average-size home is 123 m² for house owners and 64  for renters. The average price for a house of 123 m² is €158,250. The average rent for a house of 64 m² is €544. The MWTP of living close to forests for a house owner is equal to “[0.018 * Number of visits to forest * housing price]/size”. People who visit forests less than once a month are not willing to pay more for living close to a forest. If people visit forests more than once a month, the MWTP of homeowners and tenants is €33.56/m² and €0.23/month/m², respectively. If their visit frequency is at least once a week, the MWTP of homeowners and tenants is €56.27/m² and €0.37/month/m², respectively.

...

The parameter of SURF is significantly different from zero at the 1% level and has a positive sign. In general, the WTP for one additional square meter of living space for an average-size home is €815.24 for homeowners and €2.80/month for tenants. The non-significant standard deviation parameter shows that the preference concerning living space is homogeneous.
...

We estimated the MWTP for living 100 meters closer to a park for middle-income homeowners and middle-income tenants in our sample. For homeowners who do not have a private garden, their MWTP is 2.7% of their current house's price (€34.84/m²) on average. However, for homeowners who have a private garden, their MWTP is reduced to 1.2% of their current house's price (€16.42/m²) on average. Tenants do not behave the same way. For tenants who do not have a private garden, their WTP is 1.4% of their actual rent (€0.12/month/m²) on average. If tenants have their own private garden, their MWTP for the “distance to park” attribute is not significant. Therefore, our results show that homeowners’ preferences in relation to parks are different from those of tenants, and private garden owners’ preferences in relation to parks are different from those of people who do not have private gardens.

https://en.wikipedia.org/wiki/File:F_Foire-de-Nancy_Cours-L%C3%A9opold.JPG

The role of public information in increasing homebuyers' willingness-to-pay for green housing: Evidence from Beijing

Abstract:

To explain the weak demand for green housing in Chinese cities, researchers point to the lack of reliable and accurate information to convince owners to invest, yet there is little concrete evidence that such information would in fact promote homebuyers' investment in green housing. We implement an information experiment in Beijing. We select two pairs of residential complexes – each pair has two complexes located in the same housing submarket, and one is green while the other is not. We ask the respondents' willingness to buy a new green housing unit, and, if yes, the price premium they are willing to pay. Then we show them an information card that documents that green apartments outperform their non-green counterparts in terms of several indoor environmental indicators, and then ask them the same two questions. We find that dwellers living in green complexes present a significantly higher initial willingness-to-pay for greenness, but this difference narrows significantly after our information treatment, as the non-green-complex dwellers' willingness-to-pay for greenness increases dramatically. This inspiring result suggests that Chinese urban households will be encouraged to purchase green housing if they are provided more reliable and concrete information.

...

The results from our experiment show that those who live in green complexes either have a higher preference for green buildings, or have more pre-experiment knowledge about green buildings (the official green certification system), or both. We do find that those green housing dwellers have a higher initial WTP for greenness (329 RMB/m², compared to 225 RMB/m² for non-green housing dwellers), even after controlling for household attributes. But their incremental WTP compared with non-green housing dwellers becomes much smaller after our information treatment since the net gain from such information is marginal for them (the after-information treatment WTP is 317 RMB/m² and 285 RMB/m² for green and non-green housing dwellers, respectively). Furthermore, the comparison of the certified and non-certified green complexes (both developed by MOMΛ) reveals that there is little difference in these dwellers' WTP for greenness, either before or after our information treatment. Therefore the developer's “spillover” strategy is effective: it builds its “green” image by certifying some of its projects, and then enjoys the spillover effect to other projects under the brand name. Altogether, our experiment results highlight the important role of public information in promoting green housing development, and suggest that in addition to the green building certification, more concrete information is needed to improve dwellers' preference for green housing.

..

http://weburbanist.com/2013/02/11/car-free-city-china-builds-dense-metropolis-from-scratch/

by  Li Zhang 1, Cong Sun 2, Hongyu Liu 1 and Siqi Zheng 1

http://www.sciencedirect.com/science/article/pii/S0921800915303608

Ecological Economics via Elsevier Science Direct www.ScienceDirect.com

Volume 129, September 2016, Pages 40–49
by  Li Zhang 1, Cong Sun 2, Hongyu Liu 1 and Siqi Zheng 1

1. Hang Lung Center for Real Estate and Department of Construction Management, Tsinghua University, PR China

2.  School of Urban and Regional Science, Shanghai University of Finance and Economics, Shanghai 200433, PR China

How Much Are Floridians Willing to Pay for Protecting Sea Turtles from Sea Level Rise?

Abstract:

Sea level rise (SLR) is posing a great inundation risk to coastal areas. Some coastal nesting species, including sea turtle species, have experienced diminished habitat from SLR. Contingent valuation method (CVM) was used in an effort to assess the economic loss impacts of SLR on sea turtle nesting habitats for Florida coasts; and to elicit values of willingness to pay (WTP) of Central Florida residents to implement certain mitigation strategies, which would protect Florida’s east coast sea turtle nesting areas. Using the open-ended and dichotomous choice CVM, we sampled residents of two Florida communities: Cocoa Beach and Oviedo. We estimated the WTP of households from these two cities to protect sea turtle habitat to be between $42 and $57 per year for 5 years. Additionally, we attempted to assess the impact of the both the respondents’ demographics and their perception toward various situations on their WTP value. Findings include a negative correlation between the age of a respondent and the probability of an individual willing to pay the hypothetical WTP amount. We found that WTP of an individual was not dependent on prior knowledge of the effects of SLR on sea turtle habitat. The greatest indicators of whether or not an individual was willing to pay to protect sea turtle habitat were the respondents’ perception regarding the trustworthiness and efficiency of the party which will implement the conservation measures and their confidence in the conservation methods used. Respondents who perceive sea turtles having an effect on their life were also more likely to pay.

http://www.an1mal.org/2013/05/25/in-the-us-52-sea-turtles-converge-on-florida-sand-and-swim-free/

http://link.springer.com/article/10.1007/s00267-015-0590-1

by Ahmed Hamed, Kaveh Madani , Betsy Von Holle, James Wright, J. Walter Milon and Matthew Bossick
Environmental Management via Springer www.Springer.com
Volume 57, Issue 1; January 2016; pages 176-188; First online: 30 August 2015

Keywords: Sea level rise Sea turtle Ecosystem service valuation Contingent valuation Florida

Paying for Forest Ecosystem Services: Voluntary Versus Mandatory Payments

Abstract:

The emergence of new markets for forest ecosystem services can be a compelling opportunity for market diversification for private forest landowners, while increasing the provision of public goods from private lands. However, there is limited information available on the willingness-to-pay (WTP) for specific forest ecosystem services, particularly across different ecosystem market mechanisms. We utilize survey data from Oregon and Washington households to compare marginal WTP for forest ecosystem services and the total WTP for cost-effective bundles of forest ecosystem services obtained from a typical Pacific Northwest forest across two value elicitation formats representing two different ecosystem market mechanisms: an incentive-compatible choice experiment involving mandatory tax payments and a hypothetical private provision scenario modeled as eliciting contributions to the preferred forest management alternative via a provision point mechanism with a refund. A representative household’s total WTP for the average forest management program was estimated at $217.59 per household/year under a mandatory tax mechanism and $160.44 per household/per year under a voluntary, crowdfunding-style, contribution mechanism; however, these estimates are not statistically different. Marginal WTP estimates were assessed for particular forest ecosystem service attributes including water quality, carbon storage, mature forest habitat, and public recreational access. This study finds that survey respondents place significant economic value on forest ecosystem services in both elicitation formats and that the distributions of the marginal WTP are not statistically significantly different.

http://oregonforests.org/content/ofri-resources?t=76

http://link.springer.com/article/10.1007/s00267-015-0641-7

by Gabrielle E. Roesch-McNally and Sergey S. Rabotyagov

Environmental Management via Springer www.Springer.com
Volume 57, Issue 3; March 2016 pages 585-600; First online: 11 December 2015
Keywords: Forest ecosystem service Provision point mechanism Preference elicitation Stated choice Payment mechanism Crowdfunding

Economic Valuation of the Philippine’s Caramoan Beachscape

Abstract:
This study determined the tourists’ willingness to pay (WTP) for the conservation of Caramoan beachscape in Camarines Sur, Philippines, as inputs in establishing the appropriate payment for environmental services for the sustainable development of ecotourism and coastal resource management of the area. The study employed the contingent valuation method (CVM) using four analytical models.

https://www.rare.org/campaign/siruma-camarines-sur-philippines-sustainable-fisheries 

Based on the results, majority of the Caramoan tourists are younger, adventurous, without familial obligations, and highly educated and earn a relatively high income. One half of the visitors are willing to pay to promote the sustainability of the beachscapes. The visitors’ WTP in the general model was estimated to be PHP 897. The average monthly visitors were estimated to be 1,000 tourists per month. Using these data, the total economic value of conserving the beachscapes in Caramoan was estimated to be PHP 10.76 million annually. Bid amount, age, and income were the only factors that consistently correlated with WTP in all of the analytical models. This indicates that younger visitors and those who have higher income are more likely to be willing to pay for conservation.

The estimated economic value of conserving the Caramoan beachscape justifies the relevance of investing public funds to pursue sustainable beachscape ecotourism development in Caramoan. This study is an attempt to contextualize PES for beachscape. It highlighted the priority concerns for sustainable source of fund for conservation and harmonized institutional arrangements for beachscape tourism and coastal resource management. It supported the potential of implementing PES within a community-based coastal resource management framework under a marine fishery reserve-sanctuary setting comanaged by the community and the Caramoan LGU or within a natural protected area framework managed by the Caramoan Natural Park Protected Area Management Board.

http://link.springer.com/chapter/10.1007/978-981-10-0141-3_2

by Raul G. Bradecina
Chapter in book Marine and Coastal Ecosystem Valuation, Institutions, and Policy in Southeast Asia
February 4, 2016 pages 17-30

Keywords: Beachscape valuation Coastal resource management Payment for environmental services Caramoan