Abstract
Nature-based solutions (NBS) provide a promising means to a climate resilient future. To guide investments in NBS, stated preference studies have become a common tool to evaluate the benefits of NBS in developing countries. Due to subsistence lifestyles and generally lower incomes, SP studies in developing countries increasingly use time payments as an alternative to the traditionally implemented money payments. It remains unclear, however, how time values should be converted into money values, how the payment affects willingness to pay (WTP) estimates, and how this influence varies across settings with different levels of market integration. We compare the results of choice experiments that use either time or money payments and that are implemented in urban and rural Ghana. The choice experiments target to value different NBS aimed at erosion prevention and other ecosystem service benefits along the highly erosion prone Ghanaian coastline. Time payments are converted into monetary units using two generic wage-based conversion rates and one novel individual-specific non-wage-based conversion rate. We find higher WTP estimates for the time payments. Moreover, we find that the underlying implicit assumptions related to the currently commonly applied generic wage-based conversion rates do not hold. Finally, we find higher levels of market integration and smaller WTP disparities in the urban site, providing evidence that market integration allows for convergence of WTP estimates. These results provide guidance on the accurate estimation of NBS benefits through the implementation of stated preference studies with time payments.
Highlights
Over the years, nature-based solutions (NBS) have increasingly gained interest from both scholars and decision-makers due to the role that these measures can play in the transition to a sustainable and climate resilient future
The four research questions that we address in this study are as follows: 1) Research question 1: How do willingness to pay (WTP) estimates from an experiment with a time payment vehicle differ from WTP estimates from an experiment with a monetary payment vehicle?
We use triangular distributions instead of normal distributions to allow for clearer visualization of the WTP distributions and to ensure finite coefficient bounds for all attributes and the payments, which is of relevance for the analysis described in Statistical Approach to Compare WTP Disparities Across the Study Sites as well as for obtaining finite moments for the WTP estimates (Rai et al, 2015)
Summary
Nature-based solutions (NBS) have increasingly gained interest from both scholars and decision-makers due to the role that these measures can play in the transition to a sustainable and climate resilient future. The damage cost avoided approach is another method that is commonly applied to estimate benefits related to ecosystem services as erosion prevention. Non-marketed goods are commonly neglected in applying this approach and one needs ample existing data to be able to apply the approach. The latter is especially challenging in developing countries, where data availability is generally lower. An IMDC (2017) study that adopted the damage cost avoided approach in Ghana identified 11 benefits and describes that reliable data is available for only two of those benefits.
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