Contingent Valuation Approach Research Articles

Public Value of Enforcing the PM2.5 Concentration Reduction Policy in South Korean Urban Areas

As the number of cars and the electricity produced from coal-fired generation has been increasing, PM2.5, particles smaller than 2.5 μm in diameter, has become a serious problem in South Korean urban areas. This is especially notable, given that the PM2.5 warning was issued 89 times during 2016. Because of this, the South Korean government is seeking to enforce a policy of reducing the number of PM2.5 warnings by half using various policy instruments from now until 2022. This article tries to obtain information about the public value of the enforcement. For this purpose, household willingness to pay (WTP) for the enforcement is investigated, applying the contingent valuation (CV) approach. A survey of 1000 households was carried out in South Korean urban areas. 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 5591 (USD 4.97) per household per year, which is statistically significant. The total public value expanded to the population amounts to KRW 98.9 billion (USD 87.8 million) per year. The information can be utilized in policy-making and decision-making about the reduction of the PM2.5 concentration.

Assessment of the conservation value of Munseom area in Jeju Island, South Korea

ABSTRACTThe ecosystem of munseom area (MA) in Jeju Island, one of the marine protected areas in South Korea, has been continuously threatened by lack of management and pollution of the surrounding sea area. As a result, the South Korean government is trying to implement the systematic management plan to conserve the marine ecosystem of the MA. This article tries to obtain information about the conservation value of the MA. To this end, this study examines household willingness to pay (WTP) for conserving the MA employing the contingent valuation (CV) approach. A total of 1000 South Korean households were involved in the CV survey using a dichotomous choice question. The mean yearly WTP for the conservation is estimated as KRW 1763 (USD 1.50) per household. The national value expanded from the sample to the population is worth KRW 34.0billion (USD 29.0 million) per year. The results imply that the conservation is supported by South Korean households.

A Contingent Valuation Approach to Estimating Regulatory Costs: Mexico’s Day without Driving Program

Little is known about the cost of environmental regulations that target households instead of firms, partly because of significant methodological and data challenges. We use the contingent valuation method to measure the costs of Mexico City’s Day without Driving program, which seeks to stem pollution and traffic congestion by prohibiting vehicles from being driven one day each week. To our knowledge, ours is the first study to focus directly on using stated preference methods to isolate and estimate the private costs of an existing environmental regulation. We find that the Mexican program’s costs are substantial: up to US$130 per vehicle per year, which represents 1%–2% of drivers’ annual income and implies total costs of US$617 million per year. Recent research questions whether driving restrictions programs like Mexico City’s actually have environmental benefits. Our results suggest that whatever benefits these programs may have, they can be quite costly.

South Korean Household’s Willingness to Pay for Replacing Coal with Natural Gas? A View from CO2 Emissions Reduction

Coal is currently a major electric power generation source in South Korea when considering that forty-three percent of electricity that was generated during the first quarter of 2017 came from coal. The amount of CO2 emissions from coal-fired power plant is two times larger than that from natural gas (NG)-fired power plant in the country. In this regard, the Korean government is trying to replace some amount of coal that is used for generation with NG to reduce CO2 emissions. However, the cost of NG-fired generation is about 1.25 times higher than that of coal-fired generation. Thus, the policy-makers demand information about the household willingness to pay (WTP) for the replacement to mitigate CO2 emissions. This paper applies the contingent valuation (CV) approach, and assesses the household’s WTP for replacing one kWh of coal-fired power with that of NG-fired power. For this purpose, a total of 1000 South Korean households were involved in the CV survey employing a dichotomous choice question. In addition to the current electricity price, KRW 121.52 (USD 0.11) per kWh, the respondents were willing to pay KRW 25.35 (USD 0.02) per kWh. The costs of NG-fired and coal-fired generation are KRW 100.13 and 78.05, respectively, per kWh. The difference between the two is KRW 22.08 per kWh, which is smaller than the mean additional WTP (KRW 25.35 per kWh). The household’s additional WTP is bigger than the actual additional cost. It is concluded that the switch of power generation source from coal to NG to reduce CO2 emissions can be supported by South Korean households.

The Opportunity Cost of Labor for Valuing Mangrove Restoration in Mahakam Delta, Indonesia

Worldwide, damage to mangroves is alarming. Restoration is required to recover mangrove ecosystems, and communities’ involvement is a primary factor to reduce the threat to mangroves. Their participation might be interpreted as the appropriate decision concerning conservation and utilization of mangroves. Using a contingent valuation approach, this study assesses mangroves’ values to local communities through their willingness to contribute labor to obtain monetary value. Results showed that the opportunity cost of time was valued at IDR 398.76 thousand (US$29.99) a month or IDR 4.79 million (US$359.90) per year. A total annual benefit of mangrove restoration using the wage rate of time (WRT) is IDR 143 billion (US$10.77 million) per year. Accessing such information is crucial to making the appropriate decisions about conservation of mangroves within the context of developing countries that have poor coastal communities and low incomes. Tobit regression determined that five variables affect willingness to provide labor time and WRT significantly for mangrove restoration. These findings can support decision-makers with the relevant information for assessing a mangrove restoration project.

Going green? Ex-post valuation of a multipurpose water infrastructure in Northern Italy

A contingent valuation approach is used to estimate how households value different multipurpose infrastructures (conventional or green) for managing flood risk and water pollution. As a case study we consider the Gorla Maggiore water park located in the Lombardy Region, in Northern Italy. The park is a neo-ecosystem including an infrastructure to treat waste water and store excess rain water, built in 2011 on the shore of the Olona River in an area previously used for poplar plantation. This park is the first one of this type built in Italy. A novel aspect of our research is that it not only considers the values people hold for different water ecosystem services (pollution removal, recreative use, wildlife support, flood risk reduction), but also their preferences for how those outcomes are achieved (through conventional or green infrastructures). The results indicate that the type of infrastructure delivering the ecosystem services does have an impact on individuals’ preferences for freshwater ecosystem services. Households are willing to pay from 6.3 to 7.1euros per year for a green infrastructure (compared to a conventional one), with a premium up to 16.5euros for a surrounding made of a park. By considering the type of infrastructure within the choice model, we gain a richer understanding of the relationship between social welfare and freshwater ecosystem services.

Determinant of willingness to pay and economic value for tourism object using contingent valuation method: The case of sangiran sites, Province of central Java, Indonesia

In this paper we want to determine the factors of willingness to pay for quality improvement and to estimates of economic value in Sangiran, Central Java Province, Indonesia. This paper used contingent valuation approach. The study involved Sangiran visitors, they were surveyed for their willingness to pay for historical, cultural, and educational function. Finding from this study, the significant factors affecting the individual’s willingness to pay are bid, gender, and income. The economic value of Sangiran sites tourism was estimated between Rp 0.665 billion per year until Rp 2.409 billion per year.

Estimating the economic benefits of a wetland restoration programme in New Zealand: A contingent valuation approach

Decades of failure to evaluate the ecosystem services provided by the Pekapeka Swamp located in Hawke’s Bay, New Zealand, led to decisions that allowed prolonged degradation of the wetland. In 1998 a long-term management plan was adopted to restore and preserve the swamp without evaluating the potential welfare benefits of the plan. This paper employs the contingent valuation method to estimate the total economic value of the restoration and preservation of Pekapeka Swamp. Data required for the analysis was generated using a survey questionnaire administered by mail to 958 households in the Hawke’s Bay region in 2008. An effective response rate of 42% was achieved after a second reminder. Using a dichotomous choice format with a follow-up open-ended valuation question, this study shows that, based on the population of the Hawke’s Bay region, the estimated total economic value ranges from NZ$1.64 million to NZ$ 3.78 million per year and the net present value ranges between NZ$5.05 million and NZ$16.39 million. These results imply that the restoration and preservation of Pekapeka Swamp is an important investment which the authorities should continue to support. These estimates may be used to justify future increases in the level of expenditure on the project.

Willingness to pay for improved energy: Evidence from Kenya

Using a sample respondents of 3665 households and 1669 enterprises, this paper utilizes a double bound, open-ended, contingent valuation approach where those who respond positively to the willingness to pay question, were asked to state the maximum amount they were willing to pay as quality levy. The paper identifies protest responses as those respondents who are not willing to pay for the proposed program or as outliers who may state a willingness to pay value either higher or lower than the average willingness to pay value. Bidders and genuine zeros responses are respondents that either state a zero or a positive willingness to pay respectively. Heckman’s sample-selection procedure is used to test sample selection bias in and also analyze the WTP function.The mean household willingness to pay as quality levy was estimated to be US$ 6.53, US$ 3.85 and US $ 6.34 monthly for firewood, charcoal and electricity respectively while the enterprise willingness to pay as quality levy was estimated to be US $ 355.92 monthly. Income, type of dwelling, education, gender, price, location, type of enterprise and size of employees were identified as important factors that explained the differences in the WTP variations.

Attributing a monetary value to patients' time: A contingent valuation approach

It is hard to ignore the importance of patient time investment in the production of health since the influential paper by Grossman (1972). Patients' time includes time to admission, travel time, waiting time, and treatment time and can be substantial. Patients' time is, however, often ignored in economic analyses. This may lead to biased results and inappropriate policy recommendations, which may eventually influence patients' health, wellbeing and welfare.How to value patient time is not straightforward. Although there is some emerging literature on the monetary valuation of patient time, an important challenge remains to develop an approach that can be used to monetarily value time of patients not participating in the labour market. We aim to contribute to the health economics literature by describing and empirically illustrating how to monetarily value the time of patients not participating in the labour market comprehensively, using the contingent valuation method. It is worth noting that our method can also be applied to people participating in the labour market.This paper describes the development of the contingent valuation survey. We apply our survey approach to a sample of 238 Dutch patients not participating in the labour market: n = 107 Radiotherapy department (data collected between November 2011 and January 2013); n = 44 Rehabilitation department (March 2012–May 2012); n = 87 Orthopaedics department (January to June 2013). Results show that those patients value waiting time the highest (€30.10 per hour) and value travel and treatment time equally with respectively €13.20 and €13.32 per hour.This paper encourages future empirical research refining and applying the developed survey methodology to create more data on how other subgroups of individuals value their patients' time.

Co-financing for viral load monitoring during the course of antiretroviral therapy among patients with HIV/AIDS in Vietnam: A contingent valuation survey.

BackgroundViral load testing is considered the gold standard for monitoring HIV treatment; however, given its high cost, some patients cannot afford viral load testing if this testing is not subsidized. Since foreign aid for HIV/AIDS in Vietnam is rapidly decreasing, we sought to assess willingness to pay (WTP) for viral load and CD4 cell count tests among HIV-positive patients, and identified factors that might inform future co-payment schemes.MethodsA multi-site cross-sectional survey was conducted with 1133 HIV-positive patients on antiretroviral therapy (ART) in Hanoi and Nam Dinh. Patients’ health insurance coverage, quality of life, and history of illicit drug use were assessed. A contingent valuation approach was employed to measure patients’ WTP for CD4 cell count and viral load testing.ResultsHIV-positive patients receiving ART at provincial sites reported more difficulty obtaining health insurance (HI) and had the overall the poorest quality of life. Most patients (90.9%) were willing to pay for CD4 cell count testing; here, the mean WTP was valued at US$8.2 (95%CI = 7.6–8.8 US$) per test. Most patients (87.3%) were also willing to pay for viral load testing; here, mean WTP was valued at US$18.6 (95%CI = 16.3–20.9 US$) per test. High income, high education level, and hospitalization were positively associated with WTP, while co-morbidity with psychiatric symptoms and trouble paying for health insurance were both negatively related to WTP.ConclusionsThese findings raise concerns that HIV-positive patients in Vietnam might have low WTP for CD4 cell count and viral load testing. This means that without foreign financial subsidies, many of these patients would likely go without these important tests. Treating psychiatric co-morbidities, promoting healthcare services utilization, and removing barriers to accessing health insurance may increase WTP for monitoring of HIV/AIDS treatment among HIV+-positive Vietnamese patients.

Perceptions and valuation of GM food: A study on the impact and importance of information provision

Given the scientific uncertainties and differing arguments for and against genetically modified food, perceptions and valuation may depend on information about their different and conflicting potential effects. In this study we explore generic attitudes towards genetically modified organisms, particularly in food, and adopt an economic contingent valuation approach to highlight the relevance of information provision. The study focuses on young college students, who are more scientifically informed than the rest of the population. It explores perceptions and economic valuation of genetically modified food, and exposes respondents randomly to three information treatments concerning genetically modified organisms’ impacts (negative, positive or mixed). Applying the contingent valuation methodology allows us to expose individuals to a situation where they can express their willingness to accept a genetically modified ingredient in exchange for lower prices. We observe that exposing respondents to critical arguments about this kind of food negatively affects their economic valuations, whereas positive or mixed information have no impact. Albeit the conclusions are limited in terms of generalizability to the rest of the population, the results suggest there may still be scope for information provision. Furthermore, both policy-makers and firms may benefit from a more informed public. Policy-makers can gauge public opinion to legitimize policy options and firms can shape market decisions based on more informed and stable consumer preferences.

Beneficiaries’ Willingness to Pay for Resuscitation Provided by Ambulance Attendants: A Survey Using the Contingent Valuation Approach

Background: Japanese emergency medical services (EMS) can be used by anyone for free. Recently, EMS usage has increased; the increased costs and the prolonged time for ambulance transport have become recent social problems. Objective: We surveyed the willingness to pay (WTP) for resuscitation provided by EMS. Methods: In November 2011, men and women (3160) aged 20 - 59 years were asked to assume that they were experiencing a cardiopulmonary arrest (CPA), and their WTP for EMS services was assessed in the following three situations: Case A, ambulance transport alone; Case B, chest compression in addition to ambulance transport; and Case C, artificial ventilation through chest compression and intratracheal intubation, in addition to ambulance transport. We calculated the mean WTP for each case. Results: The WTP for Case A, B, and C were ￥6,696 ($65.0), ￥16,081 ($156.1), and ￥27,505 ($267.0), respectively. The WTP for Case B was significantly higher in respondents aged 40 - 59 years compared to those aged 20 - 39 years. The WTP for case B and C were significantly higher in males compared to females. WTP was significantly lower in students than it was in private employees. Although women’s intention to pay was higher than that of men, their WTP was lower than that of men. Public employees’ and students’ intention to pay was significantly lower than that of private employees. Conclusions: Our study provides information about the optimal fee for EMS, which will be useful for discussions on the feasibility of introducing a fee for EMS in Japan.

Willingness-to-pay for a bus fare reform: A contingent valuation approach with multiple bound dichotomous choices

The aims of this study are twofold: to measure travelers’ willingness to pay (WTP) for bus travel under various travel distance for performing a bus fare reform, and to evaluate the reliability and validity of contingent valuation approach of dichotomous choice with multiple follow-up questions (DCm). To achieve so, this study designs triple-bound dichotomous choice contingent valuation scenarios, and employs multilevel interval regression to capture possible endogeneity within individuals. The estimated models using data with all three bounds, with the first two bounds, and with any specific single bound mostly gave consistent parameter significances and effect directions. However, the WTP estimated using the single third bound model demonstrated a different pattern from the other models, suggesting possible weariness effects. The analysis results also revealed yea-saying and free-riding effects, implying that respondents tended to say yes if their first two responses were yeses, and say no if their first two responses were noes. The yea-sayers had high income and low frequency in using public transit. On the other hand, the free riders significantly less supported the bus fare reform. Under well control of bound and path effects, WTP estimated by the proposed models was consistent with the WTP estimated with actual mode choice data, implying an anchor effect of current stage-based bus fares on travelers’ WTP for future distance-based bus fare scheme. This study suggests that researchers who use DCm to evaluate WTP should investigate internally inconsistent responses caused by psychological and technical factors; DCm provides robust WTP estimates if the survey has been carefully designed with potential bound and path effects well controlled. More importantly, those internally inconsistent responses also provide information that is useful to fare reform.

Evaluation of Urban Consumer Willingness to Pay for Organic Leafy Vegetables

ABSTRACTExcessive application of chemical fertilizers and the remnants of pesticides in food products can be a threat to people’s health. Technological developments and changes in lifestyle and food regime have increased the frequency of diseases such as cancer. Modern agriculture systems have been criticized and a consensus reached for introduction of organic agriculture to increase efficiency and reduce damage to the environment and public health. Consumers’ willingness to pay (WTP) for organic leafy vegetables was studied with a contingent valuation approach in Rasht City, Iran. Among the studied variables, income, education level, and family history of cancer positively and significantly affected consumers’ WTP for organic leafy vegetables. Mean WTP was 4.22% higher for organic leafy vegetables than for conventional vegetables. There was a positive attitude toward using organic leafy vegetables and farmers could benefit from producing organic products.

The Valuation of Contingent Convertible Catastrophe Debt Under Simple Solvency and Liquidity Covenants

In this paper we study a new bond-like security issued by the reinsurer Swiss Re and it is a write-off debt instrument whose write-off is triggered by solvency and event-driven covenants. This instrument is called Contingent Convertible Catastrophe Bond or CoCoCAT. We employ a contingent claims valuation approach in the spirit of Leland (1994) and we derive the write-off and default policies for the CoCoCAT investors and equity holders respectively. We find that under simple solvency covenants, the issuer finds it optimal to lever 100% with CoCoCAT debt to extract tax shields. We also find that simple liquidity covenants can explain why issuers do not issue too much debt because liquidity may be more valuable than tax shields.

Mothers' willingness to pay for HPV vaccines in Anambra state, Nigeria: a cross sectional contingent valuation study.

BackgroundHuman papilloma virus (HPV) vaccination in Nigeria will require substantial financing due to high cost of HPV vaccine and inexistence of structures to support adolescent vaccination. Alternative sources are needed to sustain the government funded HPV vaccination programme. This study assessed Nigerian mothers’ willingness-to-pay (WTP) for HPV vaccine. We also compared the difference between the average WTP and estimated costs of vaccinating a pre-adolescent girl (CVG).MethodsWe conducted a quantitative, cross-sectional, survey-based study in which 50 questionnaires were distributed to each of 10 secondary schools located in two rural and one urban city in Anambra state. The questionnaires were then randomly distributed to girls aged 9–12 years of age to give to their mothers. Contingent valuation approach using the payment card technique was used to estimate the average maximum WTP among the survey participants. Correlates of WTP for HPV vaccination were obtained using multivariate logistic regression. Estimated CVG was obtained by adapting cost of HPV vaccine delivery in Tanzania to the Nigerian setting.ResultsA total of 438 questionnaires (88 %) were returned. The average WTP was US$ 11.68. This is opposed to estimated delivery cost of US$ 18.16 and US$ 19.26 for urban and rural populations respectively at vaccine price offered by the Vaccine Alliance (Gavi) and US$ 35.16 and US$ 36.26 for urban and rural populations respectively at the lowest obtainable public sector vaccine price. Demand for HPV vaccine was deemed high (91.6 %) and was significantly associated with respondents previously diagnosed of HPV infection.ConclusionDemand for HPV vaccine was high although short of estimated CVG. High demand for vaccine should be capitalized upon to increase vaccine uptake. Education on cervical cancer and provider-initiated vaccination should be promoted to increase vaccine uptake. Co-payment could be a feasible financing strategy in the event of national HPV vaccination.

Willingness to Pay (WTP) for Improved Ecosystem Services of Pallikaranai Marshland: A Contingent Valuation Approach

Willingness to Pay (WTP) for Improved Ecosystem Services of Pallikaranai Marshland: A Contingent Valuation Approach

The economic value of the Colombo Public Library, Sri Lanka: contingent valuation approach

Net Revenue of a public library is not an indicator of the true value of services rendered by a public library to the wider society. The peoples’ perception of the service of the library or economic value is the true value of the library. The Contingent Valuation Method (CVM) used to assess the economic value of a public library which is not a service in the free market economy. This study employs CVM: a branch of the Stated Preference Method to measure the economic value of the Colombo Public Library (CPL) Sri Lanka. The payment vehicle is a Trust Fund. The logistic regression has been applied to estimate the Willingness to Pay (WTP) of citizens which elicited through single bound dichotomous choice question with onetime payment option. The WTP for the population is aggregated by using mean probabilistic logic WTP of the sample. The study found that annualized economic value of the CPL is higher than its total capital and recurrent expenditure per year. Thus, continuation of public funding is acceptable even CPL makes financial losses to the Colombo Municipal Council.

The value of informal care in the context of option B+ in Malawi: a contingent valuation approach

The value of informal care in the context of option B+ in Malawi: a contingent valuation approach