Heterogeneity in the WTP for recreational access: distributional aspects

Abstract

In this study we have addressed appropriate modelling of heterogeneity in willingness to pay (WTP) for environmental goods, and have demonstrated its importance using a case of forest access in Denmark. We compared WTP distributions for four models: (1) a multinomial logit model, (2) a mixed logit model assuming a univariate Normal distribution, (3) or assuming a multivariate Normal distribution allowing for correlation across attributes, and (4) a mixture of two truncated Normal distributions, allowing for correlation among attributes. In the first two models mean WTP for enhanced access was negative. However, models accounting for preference heterogeneity found a positive mean WTP, but a large sub-group with negative WTP. Accounting for preference heterogeneity can alter overall conclusions, which highlights the importance of this for policy recommendations.