Lexicographic preference in biodiversity valuation: Tests of inconsistencies and willingness to pay

Abstract

Previous contingent valuation (CV) studies on biodiversity have indicated that as much as one-quarter of the respondents show lexicographic preferences when facing biodiversity-money trade-offs. This behaviour is incompatible with welfare theory underlying CV, and thus questions the validity and reliability of the outcome of CV of changes in biodiversity. However, it is difficult from CV responses to distinguish between strict and modified lexicographic preferences, and those attaching a high value to biodiversity. This paper adds to the empirical evidence showing that what at first hand seems to represent strict lexicographic preferences is at most representing modified lexicographic preferences, and probably rather represent just high valuation of biodiversity. Data on both hypothetical and actual willingness to pay (WTP) from a CV study on biodiversity were used to perform tests of inconsistent attitudes to estimate the maximum share of non-compensatory preferences for biodiversity. The results show that there are very few respondents in the group that consistently state high preference for biodiversity preservation and show clear reluctance to trade-off biodiversity with other goods. However, this group also had higher WTP, both hypothetical and actual, than the reference group. This is consistent with exchange preferences and steep indifference curves. Thus, people with lexicographic preferences for biodiversity are probably less numerous than previously indicated.