CHOICE EXPERIMENT METHOD IN FOREST ECOSYSTEM SERVICES VALUATION

Abstract

The need to integrate value of forest ecosystem services (FES) into decision-making process is widely acknowledged. Nowadays economists propose two ways of uncovering the economic value attached to non-market goods and services: Revealed Preference methods and Stated Preference methods. One of the methods which allow determining the value of FES based on the Stated Preferences is the choice experiment method. This method was initially developed in marketing research and now is widely applied in the valuation of non-market goods and services. The choice experiment method relies on the Lancaster's theory that the utility of a good is derived from its attributes, and as a result of this, the value of the good is the sum of the values of all its attributes. The method combines this line of thinking with random utility theory which states that people choose the alternative with the highest expected utility. The aim of a choice experiment application in the field of FES valuation is to understand preferences and trade-offs within a particular population for a particular good or service. According to the logic of this method, a respondent is invited to choose the best of the list of alternatives, which differ in attributes and their levels. One of the alternatives is always status quo, or "I do not choose any one". This alternative is included in each set of choices, since one of the alternatives should be acceptable to the respondent. The advantages and disadvantages of the method are determined in this study, which must be taken into account in the process of study planning and interpretation of the valuation results. This method is useful from a policy and management perspective because the information it provides can be used in the design of multidimensional forest police, in cost-benefit analysis, and in litigation processes. Based on the study of this method application in FES valuation, the need of its application in Ukrainian forest decision-making is substantiated to enable holistic view on economic activity and adaptive forest management in the Anthropocene era.