Environmental damage evaluation in a willingness-to-accept scenario: A latent-class approach based on familiarity

Abstract

In this paper we report on the results of the application of a latent class model that was designed to identify and characterize unobserved preference heterogeneity in the context of a willingness-to-accept (WTA) framework involving negative environmental externalities stemming from the expansion of the Port of Valencia. We investigated the hypothesis that respondents with greater familiarity with the targeted good and any related environmental damage would demand more compensation; that is, they would have a significantly higher WTA. Based on respondents' familiarity with the Port of Valencia and their pre-existing knowledge about the negative consequences of its potential expansion three clusters based on six indicators are identified. Results show that, contrary to what might be expected, familiarity with a public good does not in all cases have a significant effect on stated WTA.