Internal and external scope in willingness-to-pay estimates for threatened and endangered wildlife

Abstract

Economic theory suggests willingness-to-pay (WTP) should be significantly higher for a comprehensive good than for a subset of that good. We tested this using both a split sample design (external scope test) and paired responses (internal scope test) for WTP for several endangered fish and wildlife species in the US. In the paired response case we corrected for correlation of willingness-to-pay responses using a bivariate probit model. Surprisingly, the independent split samples passed the scope test but the paired samples did not. As the results contradict each other, questions of validity for policy implications are raised. However, using either approach, the benefit of maintaining critical habitat for these species exceeds the costs.