Contingent Valuation Approach Research Articles

Consumers’ Valuation of Farmers’ Varieties for Food System Diversity

To increase the diversity in the food system from seed to fork, participatory on-farm breeding schemes have been proposed. For participatory on-farm breeding schemes to be successful, consumers need to be willing to compensate farmers for their efforts in breeding and in diversifying their cultivation. Using vegetables as an example, we investigated whether consumers of four selected European countries liked the idea of having farmers breed their own varieties and whether they would be willing to pay a premium for farmers’ as compared to standard varieties in a supermarket setting. The data was collected in an online survey and a willingness to pay was elicited using a contingent valuation approach. After providing respondents with information about the problem (diversity loss), solution (on-farm breeding), and the benefits of farmers’ varieties, consumers’ acceptance was very high and consumers were willing to pay a small premium. Our findings suggest that farmers’ varieties can be appealing to a wide range of consumers if the appropriate information is provided, as they not only address the increasing demand for more sustainable products but also for more food diversity and tasty products. To our knowledge, this is the first study to examine consumer preferences for farmers’ varieties for food system diversity.

Precondition on microinsurance in Ukraine: Contingent valuation approach for poor population behaviour regarding insurance services

The work represents the risk-behavioral aspects of finance and insurance related to low-income people in Ukraine and answers the main question concerning microinsurance: can microinsurance provide value for low-income people? The definition of microinsurance is presented. The study uses the contingent valuation method, as it used a survey to directly ask low-income people how much they would be willing to pay for insurance. The polling was performed in 2011-2013 and covered about 3000 people. It is found that Urban poor were found to prefer to have an annual microinsurance premium of less than 3% of the Minimal Ukrainian Salary (MUS) and the desired size of annual microinsurance coverage was found to be not less than the 3MUS microinsurance tariff, at a rate 1% of the desired insurance sum.

Central Kentuckians’ Willingness to Pay for Horse Farm Preservation

This study estimates the non-market value of horse farms of Central Kentucky’s equine economic cluster using a contingent valuation approach. Utilizing a payment card, respondents are asked to indicate how much they would be willing to pay in additional taxes for a hypothetical “horse farm preservation program.” Results from the study showed that, on average, a Central Kentucky household was willing to pay an additional $55.14–$67.78 in taxes annually to maintain the equine industry at its current levels. The additional taxes generated would compensate for lost tax revenue from development of the land.

A contingent valuation approach to evaluating willingness to pay for an improved water pollution management system in Dhaka City, Bangladesh.

The city of Dhaka has been ranked repeatedly as the most polluted, the most populous, and the most unbearable city in the world. More than 19.5 million inhabitants live in Dhaka, and the population growth rate of urban areas in Bangladesh is almost double that of rural areas. Rapid urbanization is one of the leading contributors to water pollution in Dhaka and could prevent the country from achieving sustainable development. Therefore, this study estimates respondents' willingness to pay (WTP) to improve water pollution management systems and identifies factors that influence WTP in Dhaka. This study employed the contingent valuation method (CVM) to estimate WTP of the respondents. Data were collected using a structured questionnaire with CVM questions, which was distributed to households in the study areas. The results revealed that 67% of the respondents are willing to pay for an improved water pollution management system, while 31.8% of households are unwilling to pay. The study also found that socio-economic factors (e.g., income and education) and perception significantly influence WTP. Therefore, this paper will provide directives for policymakers in developing an effective policy framework, as well as sensitize all stakeholders to the management of water pollution in Dhaka. The study suggests that social institutions, financial institutions, banks, non-government organizations (NGOs), insurance companies, and the government could provide effective outreach programs for water pollution management as part of their social responsibility.

Stakeholders’ willingness to pay for the new construction and demolition waste landfill charge scheme in Shenzhen: A contingent valuation approach

To promote the sorting and recycling rate of construction and demolition waste (CDW), economically incentive policy has been widely adopted by developed economies. Referring to the successful landfill charge scheme in Hong Kong, a renewal CDW landfill charge scheme was assumed to be implemented in Shenzhen. Instead of thumb rules, this study employed contingent valuation method (CVM) to evaluate the local stakeholders’ willingness to pay (WTP) for disposal of CDW. This study aims to set a reasonable landfill charge level instead of a theoretically ideal one in order to facilitate industry’s behavioral change. In essence, this study attempts to find the tipping point that the stakeholders will change their waste handling behavior. The construction industry of Shenzhen was surveyed and a total of 106 valid questionnaires were collected. Results show the mean WTPs for disposal of Inert CDW, Half mixed CDW and Mixed CDW were RMB¥6.1, 24.0 and 33.6 (about US$ 0.89, 3.53 and 4.94) per ton respectively. Through regression analysis, firm size, ownership, position, environmental concern, perceived benefit and effectiveness were found to have significant effect on stakeholders’ WTP for the disposal of CDW. These results provide useful references for improving the current CDW landfill charge scheme in Shenzhen.

The value of statistical life for adults and children: Comparisons of the contingent valuation and chained approaches

Estimates of the Value of Statistical Life (VSL) provide a vital input to a variety of policy decisions ranging from health provision to transportation planning. However, the bulk of VSL research has focussed on estimating average values rather than taking account of the potential variation in VSL across groups. Policymakers are particularly concerned that using estimates based on data concerning adults might provide poor proxies of the values associated with preventing child fatalities. We investigate this empirical problem while also addressing methodological critiques of standard contingent valuation (CV) approaches to VSL estimation which ask survey respondents to value an outcome described in terms of both the probability of occurrence and the health impact of an event. A prior lab experiment confirms fundamental problems in subjects’ abilities to provide internally consistent valuations of such compound goods. Given this we compare CV approaches with the ‘chaining method’ of Carthy et al. (1999) which splits the valuation task in two, assessing the probability of an event and the disutility of that event separately and then ‘chaining’ responses together to obtain a VSL estimate. We provide a first application of this method to the estimation of the VSL for children and contrast this with values for adults. Results confirm prior expectations that VSL values for preventing child fatalities significantly exceed those for adults. Finally, we carry out the first replication of the chaining approach in a large and nationally representative sample of parents. We identify many advantages of chaining over CV approaches, however, through a novel variant of a validation test suggested by Carthy et al., we reveal anomalies in the estimates produced by the chaining method suggesting that a robust method for VSL calculation is yet to be refined.

Willingness to Pay for Cataract Surgeries Among Patients Visiting Eye Care Facilities in Dhaka, Bangladesh.

Cataract is the leading cause of avoidable blindness globally. It is estimated that 89% of people with visual impairment live in low- and middle-income countries where the cost of cataract surgery represents a major barrier for accessing these services. Developing self-sustaining healthcare programs to cater the unmet demands warrants a better understanding of patients' willingness to pay (WTP) for their services. Using a sample of patients visiting eye care facilities in Dhaka, Bangladesh, we estimate WTP for two different cataract extraction techniques, namely small incision cataract surgery (SICS) and phacoemulsification. We used contingent valuation (CV) approach and elicited WTP through double-bounded dichotomous choice experiments. We interviewed 556 randomly selected patients (283 for SICS and 273 for phacoemulsification) from five different eye care hospitals of Dhaka. In this paper, we estimated the mean and marginal WTP using interval regression models. We also compared the estimated WTP and stated demand for cataract surgeries against the prevailing market prices of SICS and phacoemulsification. We found the mean WTP of BDT 7579 (US$93) for SICS and BDT 10,208 (US$126) for phacoemulsification are equivalent to 12 and 16days of household income, respectively. Household income and assets appeared as the major determinants of WTP for cataract surgeries. However, we did not find any significant association with gender, occupation, and household size among other socioeconomic characteristics. Comparisons between market prices and average WTP suggest it is possible to have a viable market for SICS, but a subsidy-based model for phacoemulsification will be financially challenging because of low WTP and high costs. Our findings suggest lower-cost SICS can potentially provide patients access to surgeries to treat cataract conditions. Moreover, price discrimination and cross-subsidization could be a viable strategy to increase the service-uptake as well as ensure financial sustainability.

The value of cool roof as a strategy to mitigate urban heat island effect: A contingent valuation approach

The urban heat island effect in Beijing is significant, which has become a serious environmental problem posed to Beijing citizens. As an important measure to alleviate the urban heat island effect, cool roof is recommended in relevant Evaluation Standard for Green Building of China. In order to elicit policy implications, this paper investigates Beijing residents’ willingness to pay for promoting cold roofs to alleviate the urban heat island effect and its determinants. This research applied double-bounded discrete choice format and face to face interview to elicit public’s willingness to pay. 841 Beijing households were randomly selected and interviewed. For 242 (29%) respondents refuse to pay, the spike model was introduced to process the data for it has been proved to outperform the conventional model in dealing with zero responses. The average annual willingness to pay was computed as 1510.854 Chinese Yuan, which is 220.562 US dollars per household. In addition, In terms of the determinants of residents’ willingness to pay, other than conventional demographic characteristics, we added and estimated covariance with regard to environmental knowledge and the theory of planned behavior. The result indicated that social norm, perceived behavior control, and previous knowledge of urban heat island effect and cool roof are statistical significantly related with residents’ willingness to pay. This research suggests that timely information disclosure with regard to urban environment management and pro-environment education are urgently needed in promoting public participation in alleviating the urban heat island effect.

Willingness to Pay for Watershed Management

Equitable payments for ecosystem services are emerging as a viable tool to protect and restore ecosystems. Unlike previous studies using contingent valuation approach in Ethiopia, this study is unique in its scope and target users. It explores the possibility of payment for watershed services as an economic tool in supporting and promoting sustainable land management and financing community-based watershed investments from electric users at a national level. We examine the sensitivity of users’ ability to generate funds for watershed services for sustainable watershed management through the raising of small amounts of money added onto a monthly electrical bill. Sampling frame covered four of the nine regional states of Ethiopia with more than 86% coverage dating back to 2014. A total of 501 urban and rural households and 100 organizations were interviewed over a five-year period from 2014–2019. We used a multistage sampling technique; we first selected cities, towns, and villages based on several data collection methodologies. The findings indicate that about 84% and 90% of households and organizations, respectively, showed their willingness to pay (WTP) additional fees for watershed management that could potentially reduce upland degradation and siltation. Specifically, more than half of the households and organizations and industries were willing to pay the surcharge for watershed management. Likewise, we developed a model estimation of results which verified the WTP amount, respectively. We concluded that funds generated from electric users play a possible role in contributing to the financing of watershed management efforts and could be taken as an important lesson for the watershed management continuum efforts Ethiopia-wide and in other countries.

Do wine tourists care about the labourer?

Background: Consumers worldwide have recently become more aware that their consumption preferences and habits influence not only the environment, but also other people’s lives. These ‘ethical’ consumers are therefore said to consider the moral features of the product or service in their consumption decision. The most prominent ethical consumption label is the Fair Trade label, which was established to enhance the living and working conditions of those working on small-scale farm cooperatives in developing countries.Aim: This paper aims to determine wine tourists’ willingness to pay (WTP) for improved working and living conditions for wine farm workers.Setting: The research was conducted at the largest wine festival in South Africa, the Wacky Wine Festival in Robertson in the Western Cape, an area renowned for its wine and fruit products.Method: The concept of a socially acceptable logo on the wine bottle – signalling fair wages to the farm workers – was assessed by using a double-bounded contingent valuation approach. Wine tourists completed 397 questionnaires during the festival in June 2017.Results: The results indicate that 80% of wine tourists are willing to pay more for socially responsible wines. The responsible wine consumer is typically younger and a premium of R11 per bottle of wine would be accepted if it signals fair treatment of workers.Conclusion: The socially responsible wine tourist in South Africa is more concerned about quality and the moral implications of the wine than the price. There is support for the implementation of a socially responsible label for wine products.

Valuation of Forestry in Selected Dryland Areas of West Bengal: A Contingent Valuation Approach

The paper attempts to consider the valuation of forest resources using the contingent valuation method in the dryland areas of West Bengal. The issue is important as forestry plays a pivotal role so far as dependency on natural resources by the forest-fringe dwellers (the major stakeholders) in the dryland regions of the state is concerned. Both ‘dichotomous-choice type’ closed-ended and open-ended cases are considered to examine the willingness to pay by the forest-fringe dwellers to conserve forests in the dryland areas. It has been estimated that the average willingness to pay by the poverty-stricken forest dwellers for the above-mentioned purpose is ` 9.62 per month. Given that the stakeholders are poor, the amount of willingness to pay (though low) shows the willingness of the stakeholders to conserve forests as they cannot survive without it. JEL Classification: Q20, Q23 and Q51

Knowledge, Preference, and Willingness to Pay for Hepatitis B Vaccination Services among Woman of Reproductive Age in Vietnam.

Background Hepatitis B virus (HBV) vaccine is a critical approach to prevent HBV transmission from mother to child. However, despite high HBV prevalence, evidence about the preference of women of productive age for HBV vaccine in Vietnam was constrained. This study aims to explore the preference and willingness to pay (WTP) for the HBV vaccine in Vietnamese women in productive age. Methods A cross-sectional study was conducted in Hanoi in April 2016. A structured questionnaire was used to collect information about respondents' socioeconomic status and knowledge about HBV vaccination. A contingent valuation approach was employed to measure the WTP for the HBV vaccine. Logistic and interval regressions were used to determine the associated factors. Results Among 807 women, 80.8% were willing to have the vaccine injected which had the average price of 108,600 VND (95% CI, 97,580 VND–119,570 VND). Participants not suffering any diseases during pregnancy were more likely to be willing to pay for the HBV vaccine (OR = 3.41, 95% CI = 1.73–6.70). Not having the antenatal examination at central hospitals and working as farmers/workers were positively correlated with willingness to pay for this vaccine, while the number of children of respondents had a negative correlation with WTP. Conclusions Our sampled women expressed a high willingness to pay for the vaccine. The price people were willing to pay for the vaccine, however, is equal to half of the actual price. These findings implied needs for better targeted public education interventions about HBV and the involvement of local medical staffs and the media in providing information. Efforts to reduce the price of the vaccine should also be warranted for scaling-up the coverage of this vaccine.

Measuring the extent to which Londoners are willing to pay for public art in their city

Contemporary research into future cities tends to focus on technology, architecture and infrastructure. However, this study highlights the importance of public art projects for our future cities. Very little empirical evidence and academic studies exist to determine whether or not public art is core to the life and demand of citizens. Using a hybrid contingent valuation (CV) and wellbeing valuation (WV) survey approach (Bakhshi et al., 2015), we collected data at two public art initiatives organised by MTArt Agency. 60% of our sample audience were willing to pay at least £5 for the implementation of more public art in their local area, with 84% willing to pay at least £2, and 84% of our sample said regular public art initiatives would increase their wellbeing. A binary logistic regression model was then used to measure the extent to which Londoners are willing to pay for public art and which factors influenced their decision. This paper evaluates the potential financial support and desire from citizens towards public art in their cities. We find evidence to suggest that Londoners are willing to pay for more public art in their local area and discover a range of explanatory variables which influenced their decisions. We hope to add to the existing academic research by demonstrating a core need from the audience towards public art, particularly, a willingness to pay for public art projects to become an integral part of their city experience. It is important to understand the economic value of public art initiatives within smart cities context because it will allow policy makers, urban planners and developers to implement such initiatives in the future. With this innovative multi-disciplinary approach, we hope to enable arts projects to engage wider demographics, obtain stronger financial support and become a more meaningful integration into our urban realm.

Traditional poultry farmers’ willingness to pay for using fly larvae meal as protein source to feed local chickens in Benin

This study estimated poultry farmers’ willingness to pay (WTP) for fly larvae meal as animal protein source to feed local chickens in Benin. A double-bounded contingent valuation approach was used to collect data from 480 poultry farmers, and an interval regression model was performed. We found that 82.10% of poultry farmers are willing to pay for using fly larvae meal. The average WTP was estimated at FCFA/kg 225.10 (€/kg 0.34), indicating a potential and reliable demand in fly larvae meal. Our analysis suggests that public actions can sensitize poultry farmers and support innovative small companies to produce and market fly larvae meal.

Preferences for bio jet fuel in Sweden: The case of business travel from a city airport

A viable green alternative to petroleum-based jet fuel is urgently needed in order for the aviation industry to meet its environmental targets. This study elicited Swedish business organisations’ willingness to pay (WTP) a price premium for flights using bio-fuel blends using a contingent valuation approach. It also examined whether certain company characteristics had an effect on the stated WTP. It was found that the overall mean price premium amounted to 11.9 percent of the base price of flights, which is not high enough to cover the actual costs to airlines of using a 50/50 fuel blend. Only one-third of the respondents reported sufficiently high WTP to cover the associated costs of using bio jet fuel at current price levels. Furthermore, organisations that encouraged employees to choose the least expensive ticket at all times had lower WTP than organisations with no explicit travel policy. Accordingly, use of least-cost travel policies would prevent commercialisation of bio jet fuel. Moreover, voluntary actions by organisations in the form of price premiums on green flights could not create Swedish market demand for bio jet fuel. Development of other policy instruments is therefore vital to establish long-term market predictability and demand.

Valuing visitor access to forested areas and exploring willingness to pay for forest conservation and restoration finance: The case of small island developing state of Mauritius

Small island developing states share as common constraints their small size, geographical dispersion, greater vulnerability to rapid and drastic environmental change, and limited administrative and technical resources. Within these, they have to cater for urban and agricultural areas, as well as enough natural landscape for ecosystem services. Funding for conservation of forest ecosystems on these islands has received relatively less attention and national park systems are chronically underfunded. We used Mauritius as a case study to investigate the willingness to pay for conservation of state and privately owned forests. It is part of a biodiversity hotspot with highly threatened forest ecosystems, but has known some conservation successes. We designed and administered survey based contingent valuation approach to estimate the willingness to pay entry fees to visit forest areas across the island. Study results suggest international and domestic tourists have a mean willingness to pay of USD 7.73 and USD 3.74 respectively, for conservation. These values represent amounts visitors are willing to pay every time they visit a public or private forested site. Results show that mid-level supervisory roles positively influence willingness to pay values. Results also show that people aged 50 and above, not having any supervisory role, married with one child or less, tend to have lower willingness to pay for conservation.

How can we value an environmental asset that very few have visited or heard of? Lessons learned from applying contingent and inferred valuation in an Australian wetlands case study

To date, the majority of environmental assets studied in the economic valuation literature clearly have high amenity and recreational use values. However there are many cases where small, but nevertheless unique and important, ecosystems survive as islands amongst large areas of modified, productive, or urban, landscapes. Development encroaches on the landscape and as urban landscapes become more concentrated these types of conservation islands will become increasingly more important. Previous experience with economic valuation suggests that lower total values for smaller contributions to conservation are more liable to be swamped by survey and hypothetical bias measures. Hence there needs to be more understanding of approaches to economic valuation for small and isolated environmental assets, in particular regarding controlling stated preference biases. This study applied the recently developed method of Inferred Valuation (IV) to a small private wetland in South-East Australia, and compared willingness to pay values with estimates from a standard Contingent Valuation (CV) approach. We found that hypothetical bias did seem to be slightly lower with the IV method. However, other methods such as the use of log-normal transformations and median measures, significantly mitigate apparent hypothetical biases and are easier to apply and allow use of the well-tested CV method.

Consumers’ Willingness to Pay for Net-Zero Energy Apartment in South Korea

In South Korea, buildings account for more than 25% of the nation’s total greenhouse gas emissions. Therefore, the government aims to make zero energy buildings mandatory from 2025, onward. For the housing sector, the government has recently built and operated a pilot net-zero energy apartment (NZEA) and plans to expand it to several cities. This article attempts to obtain information about the consumers’ willingness to pay (WTP) for the NZEAs. To this end, households’ additional WTP for the NZEAs over a conventional apartment was investigated, applying the contingent valuation (CV) approach. The data on the WTP were gathered from a CV survey of 1000 interviewees and analyzed, employing a dichotomous choice question and the spike model, respectively. The mean value of the additional WTP is obtained as KRW 0.46 million (USD 424) per m2, which is statistically significant. This value corresponds to 17.0% of the conventional apartment price per m2 (KRW 2.76 million, USD 2436). It can be concluded that the households in South Korea place a significant value on a NZEA over a conventional apartment. In addition, we have investigated the characteristics of consumers which affect the probability that consumers accept additional payment of an amount of money for NZEA over a conventional apartment, finding that higher income earners, higher education, and male consumers have a higher probability.

Public Willingness to Pay for Increasing Photovoltaic Power Generation: The Case of Korea

Renewable energy receives particular attention in Korea because of concerns about climate change and scarce traditional energy resources. The government plans to enhance photovoltaic (PV) power’s share of total power generation from 0.5% in 2014 to 10.1% in 2029. The present study tries to look into the public willingness to pay (WTP) for increasing PV power generation, applying the contingent valuation approach. A survey of 1000 interviewees was carried out in Korea. The observations of the WTP responses were gathered using a dichotomous choice question and analyzed employing the mixture model. The mean household WTP estimate is obtained as KRW 2183 (USD 1.9) per month, which possesses statistical significance. The total yearly WTP expanded to the population is worth KRW 476.9 billion (USD 423.1 million). These values can provide a useful basis for policy-making and decision-making about the economic feasibility of increasing PV power generation.

The Public Value of Reducing the Incidence of Oil Spill Accidents in Korean Rivers

Oil spill accidents involving cars or boats for transport in rivers can contaminate drinking water sources. During the past ten years, an annual average of forty-six cases of oil spill accidents have occurred in Korean rivers. Because of this, the Korean government is seeking to reduce the incidence of oil spill accidents in rivers by half. This article aims to evaluate the public value of the reduction. Household willingness to pay (WTP) for the reduction was investigated, applying the contingent valuation approach. A survey of 1000 households was carried out in Korea. The data on the WTP were gathered using a dichotomous choice question and analyzed employing the spike model. The mean WTP estimate is obtained as KRW 6188 (USD 5.28) per household per annum, which is statistically meaningful. The total public value expanded to the population amounts to KRW 120.8 billion (USD 103.0 million) per year. The information can be utilized in policy-making and decision-making about the reduction of the incidence of oil spill accidents in rivers by half.