Public demand for remediating a local ecosystem: comparing WTP and WTA at Hongze Lake, China

Abstract

The contingent valuation method was applied to examine public demand for ecosystem improvement at Hongze Lake by asking 520 respondents living around the lake about their willingness to pay (WTP) for a hypothetical improvement in the water quality of Hongze Lake and their willingness to accept (WTA) certain compensation if the hypothetical improvements were not carried out. The mean values of WTP and WTA were ¥283.08 ($1981.56) and ¥1385.28 ($9696.96), respectively, for the same ecological restoration program, which suggests that WTA was almost 5 times greater than WTP. We found this great disparity between WTP and WTA largely driven by 2 factors: income and education. These factors could be explained by the “income effect” on WTP and the negative influence of education on WTA, respectively. Econometric results indicate that WTP increased along with increased income (Coefficient, 19.09; p < 0.001), while WTA was inversely related to education level (Coefficient, −18.30; p < 0.001). Meanwhile, the ratio of WTA and WTP increased as income (Coefficient, −0.78; p < 0.001) and education level (Coefficient, −0.28; p < 0.001) decreased. These results suggest important potential discrepancies between the valuation estimates of WTA and WTP. Because we found the discrepancies to be driven by education and income, there are important equity concerns that the government should consider when relying on WTP versus WTA estimates to inform policy. An effective measurement mechanism should also engage differences in the environmental protection sensitivities that various groups possess. The Chinese government should play an important role in improvement of public environmental awareness and environmental protection policy. [Supplementary materials are available for this article. Go to the publisher's online edition of Lake and Reservoir Management for the following free supplemental resource: full version of contingent valuation questionnaire.]