Application Of Contingent Valuation Research Articles

Embedding Effects in Contingent Valuation Applications to Cultural Capital: Does the Nature of the Goods Matter?

The paper’s argument is that the specific characteristics of cultural heritage goods help minimise insensitivity to the scope, also known as the embedding effect, of contingent valuation (CV) estimates. This bias happens when estimates of willingness to pay (WTP) do not increase with the quantity of the goods presented, as expected from economic theory. The presence of such effect has been actively debated in the literature since it raises major concerns about the validity of the method itself and its uses within a social cost benefit analysis framework. The research presented in this paper discusses one of the few methodological studies testing the embedding effect within and across samples for cultural heritage goods. The research uses empirical data gathered from three independent and comparable samples focusing on the archaeological park of Campi Flegrei in Italy and two of its components: the Castle of Baia and the archaeological park of Cuma. Findings successfully prove that CV estimates relate to the quantity being valued and could be used with confidence by policy makers concerned with an inclusive, sustainable approach to cultural capital management.

Impact of environmental and social attitudes, and family concerns on willingness to pay for improved air quality: a contingent valuation application in Mexico City

By means of a single-bounded, referendum format contingent valuation, this paper estimates willingness to pay (WTP) for improved air quality among residents of Mexico City Metropolitan Area (MCMA). Findings from this paper illustrate heterogeneity in WTP associated with environmental and social attitudes, and family concerns. For instance, WTP is higher than average if respondents state a very high priority to air pollution but smaller than average if respondent’s household contains more adults than the sample median. This contingent valuation exercise provides elements to carry out cost–benefit analysis of environmental policies both recently implemented and currently under discussion in the MCMA context. For instance, a cost–benefit analysis using estimates from this paper suggests benefits from improved air quality surpass the costs of investing in hybrid buses. Usefulness of this study is underscored by pointing out recent evidence suggesting that (1) air pollution in MCMA has larger health impacts than in similar cities located in developed countries, and (2) policies tackling air pollution in MCMA have had no impact on pollution levels.

Exploring Residents’ Willingness to Pay for Renewable Energy Supply: Evidences from an Italian Case Study

The present study offers a contingent valuation application to explore residents ´ willingness to pay for renewable energy, in a case study in the Italian Alps. Data originated from onsite personal interviews and were analyzed with a Tobit model. Results show that respondents are willing to pay, on average, 5.1€ per month for a 100% of renewable energy supply, corresponding approximately to a 13% increase in the energy bill. Among the factors positively affecting the answers, the personal knowledge about renewable energy plays a key role in predicting WTP, as well as income and the personal perception of future possible development of hydropower plants. On the other hand, age and number of household components negatively affect WTP.

A comparison of mode effects between face-to-face and drop-off contingent valuation surveys

Purpose – The purpose of this paper is to examine the practice potential of self-administered drop-off as a survey mode for contingent valuation (CV) studies. Design/methodology/approach – This paper conducts an empirical comparison of mode effects of two survey methods for improved ecological services in Beijing. Data were collected from a CV survey, which has two subsamples, one using face-to-face interviews and the other employing self-administered drop-off surveys. Findings – There is some evidence of social desirability bias in the face-to-face interviews for the participation question; however, such effects do not carry over to subjects’ responses to the contribution decision. No difference is observed in sample demographics between modes. And satisficing effect is not observed in the drop-off survey in this study. Research limitations/implications – More well-controlled mode comparisons are warranted to test the robustness of the results; and collection time effects as well as the use of drop-off surveys for environmental valuation with different levels of complexity and familiarity are worthy of further study. Practical implications – The authors find more similarities between drop-off and face-to-face surveys than differences therefore support the practice of self-administered drop-off surveys in CVM for environmental valuation. Originality/value – This paper adds to the limited number of well-controlled mode comparisons in the CV surveys, and contributes to a better understanding of self-administered drop-off surveys, a potential low-cost alternative to face-to-face interviews in future CV applications.

Who pays more to preserve a natural reserve, visitors or locals? A confidence analysis of a contingent valuation application

Because of the current trend in nature degradation, protected areas are gaining importance. Ehden reserve in Lebanon is one such example, a reserve providing shelter to a substantial number of endangered species. This paper was designed to have three main objectives which are firstly to measure respondents’ willingness to pay (WTP) to preserve the protected area, drawing a distinction between visitors and residents to ascertain whether there are any appreciable differences and why these might arise; Secondly, to identify the best ways to collect local funds; Thirdly, to investigate further studies and to inform decision makers about the importance of a long-term conservation and sustainable program. Using an open ended questionnaire, contingent valuation method is applied to obtain the WTP. The WTP is then tested by using a stepwise multiple regression model relating WTP to all socio demographic variables. Finally the problems of hypothetical bias are explored.

Inclusiveness in the health economic evaluation space

This paper presents an overview of Gavin Mooney's contributions to broadening the evaluative space in health economics. It outlines how Mooney's ideas have encouraged many, including ourselves, to expand the conventional QALYs/health gain approach and look more broadly at what it is that is of value from health services. We reflect on Mooney's contributions to debates around cost-effectiveness analysis, Quality Adjusted Life Years (QALYs) and cost-utility analysis as well as his contribution to the development and application of contingent valuation and discrete choice experiments in health economics. We conclude by suggesting important avenues for future research to take forward Mooney's work.

Social acceptance of renewable energy sources: A review of contingent valuation applications

This paper presents a literature review addressing the public acceptance of renewable energy as a replacement for fossil fuels in electricity production. This review was motivated by the global tendency for a substitution of conventional fuels by renewable energy sources (RES) during the global financial crisis. It studies research on the preferences and attitudes of local communities towards investments in renewable energy projects and their perception of the use of new energy technologies in their daily lives, through various case studies worldwide. An effort is made to identify the parameters that influence consumers' energy behaviour, together with their interest, or lack thereof, in the environmental impact of using fossil fuels to produce energy and their willingness to reduce it. Applications of contingent valuation are examined, which are employed to analyse public attitudes towards the use of RES for electricity production. Willingness-to-pay is observed to be correlated to socioeconomic characteristics including education, interest in environmental issues and knowledge of RES. Finally, the profile of a typical green energy consumer and appropriate policy paths for the penetration of RES into the energy market are outlined.

Assessing the comprehensive restoration of an urban river: An integrated application of contingent valuation in Shanghai, China

Around 2000, China began to address the comprehensive restoration of its urban rivers and attempt to restore river ecosystem services. This paper reports an integrated contingent valuation of the ecosystem services of Zhangjiabang Creek in Shanghai, which is in the most developed region of China. A total of 1440 questionnaires were delivered, and 1153 were returned as usable in August 2008. The willingness to pay for the restoration of the urban river is 20.22RMB (2.91USD) per month per household under the payment card and 110.64RMB (15.92USD) under the dichotomous format. Several important methodological issues of the contingent valuation method (CVM) are observed, including the disparity between willingness to pay and willingness to accept, the difference between payment card and dichotomous choice question formats, and the comparison of different models in welfare estimation using dichotomous choice data. Several new findings are disclosed for these three issues of CVM.

Do experimental auction estimates pass the scope test?

Scope insensitivity is a popular anomaly in many valuation studies. Although scope insensitivity is a problem that may be present in any valuation method, most previous literature has focused on evaluating scope sensitivity within the context of contingent valuation applications. Nevertheless, it is necessary to understand the demand-revealing properties of experimental auctions since they are increasingly used to value products, such as quasi-public goods. In this paper, we test explicitly whether estimates coming from experimental auctions may pass a scope test. We conduct experimental auctions on products with a subset of attributes (part) and a comprehensive set of attributes (whole) related to animal welfare using two multi-product auction approaches: sequential and simultaneous. Results show that estimates pass the scope test when multi-product auctions are conducted simultaneously but not when they are conducted sequentially for all valued products. Implications of these findings are discussed.

Who Pays More for a Cultural Festival, Tourists or Locals? A Certainty Analysis of a Contingent Valuation Application

ABSTRACTCultural festivals are one of the most common representations of diversification strategies in tourist demand in cities boasting abundant historical heritage. The goal of this work is to estimate the economic value allocated by tourists and local residents to a classical music festival in the emblematic city of Santiago de Compostela (Spain). The contingent valuation method is used to ascertain whether there are any significant differences between the value declared and to study the sensitivity of the findings in a range of socio‐economic variables. Finally, the problems of hypothetical bias are explored, as are the possible implications for management of pricing policies. Copyright © 2011 John Wiley & Sons, Ltd.

A mixed approach to payment certainty calibration in discrete choice welfare estimation

This article provides further empirical evidence of payment uncertainty in dichotomous choice (DC) Contingent Valuation (CV) and proposes an alternative way of certainty calibration, moving away from conventional recoding of uncertain responses. In an international CV application, the main sources of payment uncertainty are identified related to imperfect knowledge and information about the public good involved, future supply levels, income constraints, price levels and the survey instrument. Together these sources of uncertainty are responsible for a third of the error variance in the estimated discrete choice model. Accounting for the heterogeneity induced by payment uncertainty in the welfare estimation procedure with the help of a mixed probit model yields a significantly lower welfare measure albeit at the expense of estimation precision.

Contingent valuation method and the changeover to the euro: an empirical application

Several countries may adopt the euro in the near future. Whether the change of currency may lead to different responses in non-market valuation surveys remains an open question. A contingent valuation application was carried out shortly after the changeover to the euro in Spain, with half of the participants being assigned a payment card in euro and the other half in pesetas. Results show that higher amounts were stated in euro than in pesetas, which is consistent with the “euro illusion” hypothesis, a phenomenon observed in experiments involving market goods, in which people have the tendency to bid higher amounts for the currency having a lower nominal value.

Designing a forest-energy policy to reduce forest fires in Galicia (Spain): A contingent valuation application

Recent issues of this journal have presented an interesting debate regarding forest fires in Galicia, Spain. This article proposes a forest-energy programme that will contribute to reducing the risk of forest fires in this Atlantic Region of Southern Europe. We apply the contingent valuation method to assess a programme whereby 10% of the electricity produced from coal, fuel oil and gas would be replaced by electricity generated in biomass power plants. The programme would begin implementation in 2005 and it would take 6 years (up to 2010) before we reach the 10% goal. The results show that Galician households are willing to pay a mean of 38 Euros per year. In addition, we have introduced an innovative procedure to detect protest responses related to the payment vehicle in a contingent valuation. Heckman's sample-selection procedure is used to analyse the WTP function.

Which monetary values for the quality of our environment? The example of pollution in the Krška kotlina alluvial aquifer in Slovenia

The increasing integration of economic issues into environmental policy has put the valuation of environmental goods and services at the forefront of the agenda of experts and researchers involved in the design and implementation of this policy. In the case of water, the European Union Water Framework Directive clearly indicates the need to consider environmental and resource costs in designing water pricing policies that better account for the environmental objectives of the Directive. And the assessment of environmental and resource costs is also referred to in the context of the definition of alternative environmental objectives in cases where costs of reaching the Directive's objectives are considered disproportionate or for allowing the development of new sustainable economic activities. The paper presents the application of contingent valuation to assess the environmental costs that originate from groundwater (nitrates and pesticides) pollution in the Krško kotlina aquifer. Average willingness-to-pay values for groundwater quality improvements to stabilize groundwater quality below drinking water standards or to reduce pollution close to natural background concentrations are equal to 4,7 € and 4,8 € per household per month, respectively. The location where respondents live, their income level or their appurtenance or not to an environmental organization are independent variables that influence respondents' willingness to pay. The relatively low overall statistical significance of the regressions obtained stresses that only part of the variability of respondents' responses can be explained with the information obtained and variables considered. This is however in line with similar studies undertaken in other parts of Europe and elsewhere. Overall, the paper demonstrates that contingent valuation is possible under Slovenian conditions. In addition to providing estimate of values of environmental costs and benefits, such contingent valuation surveys would contribute to raising people's awareness on water protection and on significant water management issues faced in Slovenia. Finally, the paper suggests continuing to test and develop different valuation methods in Slovenia for other water types (e.g. surface water) as part of the support to the implementation of the Water Framework Directive.

Valuing human organs: an application of contingent valuation

PurposeThis paper aims to estimate a supply response to monetary incentives to donate organs using a survey based on Adams, Barnett and Kaserman.Design/methodology/approachThe paper uses bootstrap techniques to estimate the characteristics of individuals and their willingness to accept monetary compensation for an organ donation commitment. It uses the estimates to fuel a simulation that examines the relationship between a market‐clearing price and the usability rate. The usability rate is the proportion of deaths that result in tissues that are viable for transplant.FindingsBy analyzing the relationship between usability rate and market‐clearing price, the paper identifies three important ranges. When the usability rate is about 5 percent, a donation‐only system (zero price) should clear the market. At a usability rate between 2 and 5 percent, modest monetary incentives can attract a supply response that will clear the market. When the usability rate is less than 2 percent, supply becomes sufficiently inelastic so that even large monetary incentives will not solve the shortage problem.Practical implicationsIf the market mechanism were capable of yielding a greater number of organs for transplantation than the current system, then its adoption would save numerous lives and significantly reduce the cost of treating a variety of serious diseases. Also, it is useful in a benefit‐cost analysis framework designed to measure the social value of refinements in the coordination system.Originality/valueBy relating the market‐clearing price of organs to their usability rates, this paper draws attention on the importance of interdisciplinary studies.

Deciphering the Public Interest: Contingent Valuation as a Participatory Planning Tool

This paper considers the increased application of contingent valuation (CV) methodology as a tool for measuring collective preference. Such an approach could help decipher the public interest regarding large urban development projects and confront the challenges raised by the use of unclear public interest rhetoric in the context of contemporary boosterism. The CV methodology is compared to more traditional means of evaluating public preference (political processes and traditional public participation). The literature offers two approaches that apply CV methodology in a participatory planning context. A critique of each is provided, and a new alternative is proposed for enhancing participatory planning through the use of CV.

Contingent Valuation: Comparing Participant Performance in Group-Based Approaches and Personal Interviews

This paper reports a Contingent Valuation application to estimate the non-market costs and benefits of hydro scheme developments in an Icelandic wilderness area. A deliberative group-based approach, called Market Stall, is compared to a control group consisting of conventional in-person interviews, in order to investigate flaws of Contingent Valuation, such as poor validity and protest responses. Perceived property rights suggested the use of willingness-to-accept in compensation for wilderness loss and willingness-to-pay for hydro scheme benefits. The study is novel as it applies participant behaviour observation to gain insights into the shortcomings of conventional data collection modes. Main drawbacks with in-person interviews were found to be low motivation, standardised information and time pressure which hindered individuals from carefully considering their preferences. Market Stall performed better in the study: welfare estimates were more easily explained by socio-economic variables, the non-response rate was lower, and respondents were more engaged. Our research findings also suggest that participant behaviour can be used to supplement conventional validity tests.

Contingent Valuation: Comparing Participant Performance in Group-Based Approaches and Personal Interviews

This paper reports a Contingent Valuation application to estimate the non-market costs and benefits of hydro scheme developments in an Icelandic wilderness area. A deliberative group-based approach, called Market Stall, is compared to a control group consisting of conventional in-person interviews, in order to investigate flaws of Contingent Valuation, such as poor validity and protest responses. Perceived property rights suggested the use of willingness-to-accept in compensation for wilderness loss and willingness-to-pay for hydro scheme benefits. The study is novel as it applies participant behaviour observation to gain insights into the shortcomings of conventional data collection modes. Main drawbacks with in-person interviews were found to be low motivation, standardised information and time pressure which hindered individuals from carefully considering their preferences. Market Stall performed better in the study: welfare estimates were more easily explained by socio-economic variables, the non-response rate was lower, and respondents were more engaged. Our research findings also suggest that participant behaviour can be used to supplement conventional validity tests.

An application of contingent valuation and decision tree analysis to water quality improvements

This paper applies contingent valuation and decision tree analysis to investigate public preferences for water quality improvements, and in particular reduced eutrophication. Such preferences are important given that the development of EU water quality legislation is imposing significant costs on European economies. Results are reported of a survey undertaken of residents of Århus County, Denmark for water quality improvements in the Randers Fjord. Results demonstrate strong public support for reduced eutrophication and identify key determinants of such support.

Social Capital, Attachment Value, and Rural Development: A Conceptual Framework and Application of Contingent Valuation

who are critical of the migration approach believe more attention should be focused on place-based policies. Place-based policies are designed to enhance the quality of life and economic opportunities within rural America so less reliance need be placed on migration-or at least those who choose to migrate will not be doing so simply because they have no choice. Critics of the migration approach often advance several additional arguments. First, the (labor) migration approach is not relevant to those not in the labor force, e.g., the elderly. Second, the urban areas bear costs unless excess public service capacity exists in those areas. Third, crime and other types of social pathology may increase in the receiving urban areas-especially if the rural migrants do not have the skills and education to find meaningful employment. Fourth, the migration from one's existing place of residence may come at a social and psychological cost to the individuals/families simply because home has value. Fifth, when carried to its extreme, those rural communities that have outlived their economic functionality will cease to exist-and these communities may have value to others. For example, urban residents may find value in a landscape that has villages and small towns in which they can visit, relax, and recreate. This paper has two purposes. The first is to gain an improved understanding of the attachment values placed on one's communityespecially in relation to the migration decision and the type and amount of social capital individuals have generated within their locale. Second, we pioneer the use of contingent valuation (CV) as a method for measuring one's attachment value to his or her community.