Contingent Valuation Method Studies Research Articles

To exclude or not to exclude? The effect of protest responses on the economic value of an iconic urban heritage tree

It is a common practice for many studies using the contingent valuation method (CVM) to censor protest responses, but this practice may make data structures incomplete and lead to sample selection bias at the final analysis stage for economic evaluation. This study adopted the CVM to assess the economic value of Qiedong-Wang-Gong (Bischofia javanica) (QWG), the only urban heritage tree over a thousand years old in Taiwan, and analyzed the effect of protest reponses. A total of 307 valid samples were collected and 27% of the respondents were categorized to protest responses. This study used discriminant analysis and multinomial logistic regression to distinguish the types of protest samples. The results showed that the overall classification performance of the multinomial logistic regression is better than that of the discriminant analysis. The Tobit model was applied to deal protest responses as legitimate zero responses and the result showed that the model underestimated the economic values of QWG significantly. The Heckman two-stage model was utilized to evaluate the effect of censoring protest responses. The result revealed that excluding protest responses from further valuation analysis did not lead to significant sample selection bias. In this study, many respondents failed to quantify their preferences toward protecting QWG in terms of willingness to pay. This study suggested further studies could highlight the current policy about ancient urban trees management to decrease respondents’ protest beliefs in CVM studies.

A Study on the Treatment of No Responses in Contingent Valuation Method with Using the Cases of Sports Facilities in Jeollanam Province

조건부 가치측정법(CVM, contingent valuation method) 연구에서 제시금액에 대한 지불의사 거부자의 응답비율이 60~70% 수준을 상회하는 경우가 많다. 이와 같이 지불의사 거부자의 응답비율이 높을 경우 통상적인 CVM 모형에서는 음(-)의 지불의사액(WTP, willingness to pay)이 도출되거나 통계적으로 유의한 수준의 WTP를 도출하기 어렵다. 이와 관련하여 지불의사가 제시금액보다는 작지만 영(0)보다 큰 경우와 영(0)의 WTP로 나누어 분석하는 스파이크(spike)모형이 널리 활용되어 왔으며, 최근에는 WTP가 영(0)인 응답자들을 식별하여 이들을 분석에서 제외하고 중앙값을 기준으로 WTP를 산정한 후 전체 응답자 중 지불의사가 있는 응답자의 비율을 곱하는 절단된 중앙값(truncated median) 방식을 제안되어 활용되고 있다. 그러나 해당 CVM 분석방법론에 대한 학문적 검토가 아직 충분히 이루어지지 못하고 있는 상황이다. 이에 본 연구에서는 동일한 설문결과를 기준으로 spike모형과 truncated median 방식을 적용하여 분석결과를 비교·검토하고자 하였다. 이를 위해 본 연구에서는 응답자의 77.1%가 지불의사가 없다고 응답한 전라남도 지역의 공설운동장 건설사업 사례를 활용하였으며, 분석결과 truncated median 방식의 WTP 추정결과가 spike모형의 WTP 추정결과보다 낮은 것으로 나타났다.In CVM (contingent valuation method) studies, the response rate of ‘No’ response is often above the 60% to 70% level. A high response rate for a bid would make it difficult to derive negative or statistically significant levels of WTP (willingness to pay) from a typical CVM model. In this regard, a Spike model has been widely used. In this model, WTP is divided to smaller than the suggested amount but larger than zero and zero WTP. Recently, a truncated median model has been proposed to identify respondents whose WTP is zero, excluding them from the analysis, and then multiplying the proportion of the total respondents by the percentage of the paid respondents. However, there is not enough academic review of this methodology. In this study, the results of the analysis were compared and reviewed using the Spike and truncated median models based on the same survey results. To this end, the case of construction of a public playground in South Jeolla Province was used. According to the estimation results, WTP estimation result of the truncated median model was lower than the WTP estimation result of the Spike model.

Contingent Valuation Studies in Orthopaedic Surgery: A Health Economic Review.

A greater emphasis on providing high-value orthopaedic interventions has resulted in increased health economic reporting. The contingent-valuation method (CVM) is used to determine consumer valuation of the benefits provided by healthcare interventions. CVM is an important value-based health economic tool that is underutilized in orthopaedic surgery. The purpose of this study was to (1) identify previously published CVM studies in the orthopaedic literature, (2) assess the methodologies used for CVM research, and (3) understand how CVM has been used in the orthopaedic cost-benefit analysis framework. A systematic review of the literature using the MEDLINE database was performed to compile CVM studies. Search terms incorporated the phrase willingness to pay (WTP) or willingness to accept (WTA) in combination with orthopaedic clinical key terms. Study methodology was appraised using previously defined empirical and conceptual criteria for CVM studies. Of the 160 studies retrieved, 22 (13.8%) met our inclusion criteria. The economics of joint arthroplasty (n = 6, 27.3%) and non-operative osteoarthritis care (n = 4, 18.2%) were the most common topics. Most studies used CVM for pricing and/or demand forecasting (n = 16, 72.7%); very few studies used CVM for program evaluation (n = 6). WTP was used in all included studies, and one study used both WTP and WTA. Otherwise, there was little consistency among included studies in terms of CVM methodology. Open-ended questioning was used by only ten studies (45.5%), a significant number of studies did not perform a sensitivity analysis (n = 9, 40.9%), and none of the studies accounted for the risk preference of subjects. Only two of the included studies applied CVM within a cost-benefit analysis framework. CVM is not commonly reported in orthopaedic surgery and is seldom used in the context of cost-benefit analysis. There is wide variability in the methods used to perform CVM. We propose that CVM is an appropriate and underappreciated method for understanding the value of orthopaedic interventions. Increased attention should be paid to consumer valuations for orthopaedic interventions.

Willingness to pay for public health services in rural Central Java, Indonesia: Methodological considerations when using the contingent valuation method

In the health sectors of low- and middle-income countries, contingent valuation method (CVM) studies on willingness to pay (WTP) have been used to gather information on demand variation or financial perspectives alongside price setting, such as the introduction of user fees and valuation of quality improvements. However, WTP found in most CVM studies have only explored the preferences that consumers express through their WTP without exploring whether they are actually able to pay for it. Therefore, this study examines the issues pertaining to WTP estimation for health services using the conventional CVM.We conducted 202 household interviews in 2008, in which we asked respondents about three types of public health services in Indonesia and assessed WTP estimated by the conventional CVM as well as in the scenario of “resorting to debt” to recognize their budget constraints.We find that all the demand curves for both WTP scenarios show gaps. Furthermore, the gap for midwife services is negatively affected by household income and is larger for the poor. These results prove that CVM studies on WTP do not always reveal WTP in the latter scenario. Those findings suggest that WTP elicited by the conventional CVM is different to that from the maximum price that prevents respondents from resorting to debt as their WTP. In order to bridge this gap in the body of knowledge on this topic, studies should improve the scenarios that CVM analyses use to explore WTP. Furthermore, because valuing or pricing health services based on the results of CVM studies on WTP alone can exacerbate the inequity of access to these services, information provided by such studies requires careful interpretation when used for this purpose, especially for the poor and vulnerable sections of society.

PRM5 A REVIEW AND CLASSIFICATION OF CONTINGENT VALUATION METHOD STUDIES IN SUB-SAHARA AFRICA

The primary objective is a review, classification and critical appraisal of contingent valuation method (CVM) healthcare studies conducted in Sub-Sahara Africa based on criteria by O'Brien and Gafni (1996). The secondary objective is to determine the impact of the Bamako Initiative adopted in the early 1990s on CVM studies in the same setting. CVM African healthcare studies (willingness to pay (WTP) and willingness to accept (WTA)), were identified using a comprehensive literature search in EconoLit, Google Scholar, Medline, PubMed and Web of Science between 1981 to 2010. CVM studies evaluated included WTP and WTA studies reporting primary data were included for evaluation. Primary assessment of the studies was based on the conceptual framework for evaluation of contingent valuation of healthcare programs (5 Items)(O'Brien and Gafni 1996). Secondary assessment was based on the time horizon of publication: pre-, during- (1990s), or post- BI, and area of intervention. Twenty-four CVM studies were evaluated: all used WTP and compensating variation. Elicitation techniques were dominated by bidding game (42%), followed by dichotomous choice (33%), and then payment card and the open ended formats (12.5%). Majority of studies (83%) were published after 2000, the remainder were published in the 1990s. Interventions included insurance (25%), medication (38%), and health services (38%). Healthcare CVM studies in Sub-Sahara Africa are limited despite the introduction of Bamako Initiative. The predominance of the bidding game elicitation technique in evaluated studies may be a reflection of the actual African market conditions. There is continuing debate as to which is the most appropriate CVM for healthcare studies conducted in Africa This debate will continue until these methods are compared to actual markets. CVM studies may start to engage the political market as Africa moves towards universal health coverage.

An examination into the factors that influence consumers’ perceptions of value

Recent trends in ticketing, such as dynamic ticket pricing, indicate a fundamental shift towards demand-based pricing strategies. As such, research is needed to understand the factors that may influence the price that consumers are willing to pay for tickets. Using the contingent valuation method (CVM), the current study examined the value that consumers placed on a ticket to a National Basketball Association game. Previous CVM research suggests that valuations differ based on whether the participant is on the buy side or the sell side of the transaction. Therefore, the current study examined the difference between buyer and seller valuations in addition to identifying factors that influenced these valuations. Results indicated a strong difference between buyer and seller valuations, which is consistent with previous CVM studies. Further, the factors that influenced these valuations, including the printed price on the ticket, also differed based on whether the participant was buying or selling the ticket.

Economic value of conserving river water quality: results from a contingent valuation survey in Yamuna river basin, India

River Yamuna is an important river in India that flows through the national capital—New Delhi. The river water offers a variety of functional uses in its basin area. A progressive deterioration of river water quality had rendered it to become almost a channel of wastewater. However, there is a willingness-to-pay (WTP) for the conservation of river water quality among the citizens of the basin. This paper reports on an application of Contingent Valuation Method (CVM) for estimating the economic value of river water conservation (both for current water quality maintenance and for the restoration of river water quality). The results show that there exists a WTP for the conservation of river water quality, which is about 14.93% higher for water quality restoration than that for maintenance of current water quality. Some of the issues in undertaking the CVM studies in developing countries are also discussed in the paper.

WILLINGNESS TO PAY FOR AMATEUR SPORT AND RECREATION PROGRAMS

A contingent valuation method (CVM) survey in Alberta, Canada, allows estimation of the household willingness to pay (WTP) for enhancements in the province’s extensive sport and recreation programs. The estimated annual WTP of $18 per household for small enhancements in the programs far exceeds the estimated WTP of households in the United States to avoid the loss of major league sports teams, as determined in previous CVM studies. Those opposed to gambling, which helps to fund the Alberta programs, are more likely to favor using income taxes to finance expansions. (JEL H41, L83)

다속성 효용이론에 근거한 조건부 가치측정법을 이용한 낙동강 하구의 환경가치 추정

This paper attempts to measure the environmental value of the Nakdong-river estuary, which is ecologically important but confronted with the threat of development. Especially, in order to elicit the environmental values of its four attributes, contingent valuation method(CVM) based on multi-attribute utility theory is applied and the CVM survey was rigorously designed to comply with the guidelines for best-practiced CVM studies. We surveyed a randomly selected sample of 400 and 350 households in Busan and six large cities(Seoul, Incheon, Daegu, Daejeon, Gwangju, and Ulsan), respectively and asked respondents questions in person-to-person interviews about how they would willing to pay for the estuary conservation and management program. Respondents overall accepted the contingent market and were willing to contribute a significant amount(2,457 won in Busan and 3,560 won in six large cities), on average, per household per year, which implies that there exists a large difference between the two. The aggregate values of the Nakdong-river estuary in Busan and six large cities amount to 2.92 and 22.32 billion won, respectively, per year. In addition, expanding the values to Korea produces 51.34 billion won per year. The quantitative values can be utilized in planning and decision-making about development versus conservation of the estuary.

Analysing decision behaviour in stated preference surveys: A consumer psychological approach

This paper applies a typology adapted from the consumer psychology literature to a Contingent Valuation Method (CVM) survey. We argue that the typology is helpful as a way of identifying responses that contain useful information on preferences for the environmental good in question, relative to those which are unlikely to contain such information. Applying this framework to a CVM study of agri-environmental payments in Germany, we find that some 90% of responses are preference-revealing; this distribution changes when the framing of the good is changed. The typology may be of most use during the design stage of future CVM studies, since it enables researchers to increase the fraction of responses that are useful.

Valuing the Environment: Courts' Struggles with Natural Resource Damages

Valuing the environment is an extremely difficult and contentious issue. Courts have struggled with this issue in determining natural resource damages (NRD) under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA) and the Oil Pollution Act of 1990 (OPA). Beginning with the D.C. Circuit opinion in Ohio v. Department of Interior, courts and legal scholars have engaged in an extensive debate about the proper techniques for calculating NRD. However, to a great extent, this debate has taken place on a general and abstract level. Instead of examining the theory of natural resource damages, this Article analyzes how courts have handled the problem of calculating NRD in practice. It examines all of the cases where a court has ruled on the validity of specific economic evidence for calculating natural resource damages in the twelve years following the Exxon Valdez disaster and the Ohio decision. It focuses on two principles of calculating natural resource damages that were identified by the Ohio court: the principle that damages should be calculated on the basis of restoration costs, and the principle that the contingent valuation method (CVM) should be used to calculate nonuse values. This Article finds that courts have been more receptive and better prepared to evaluate evidence based on restoration costs than evidence based on valuation studies. It also finds that we have encountered significant difficulties in using CVM studies for NRD cases. Based on this experience, this Article suggests a simplified, alternative structure for determining which economic technique to apply in NRD claims. Under this structure, emphasis on the valuation of the environment is replaced by an emphasis on restoring damaged resources.

Multiple Value Expression in Contingent Valuation: Economics and Ethics

Contingent valuation method (CVM) surveys have become a popular way of placing a monetary value on various aspects of the environment with the aim of determining whether the benefits of a proposed project outweighs the costs. Litigation over natural resource damages has used CVM results as evidence of the size of compensation required. However, despite attempts to set down definitive rules, survey redesign and data manipulation fail to address some key issues raised by CVM studies. Among these is evidence that modified lexicographic preferences, where the substitutability of environmental quality with other commodities is rejected, can be common. Human value formation with respect to the environment combines ethical and economic aspects in a more complex way than most economists have assumed. This paper reports new evidence confirming the influence of ethical beliefs about rights for endangered species in determining willingness to pay (WTP) responses to a CVM survey. One subsample of those holding rights...

Estimating the Benefits of Agri-environmental Policy: Econometric Issues in Open-ended Contingent Valuation Studies

This paper reports on an open-ended Contingent Valuation Method study of the conservation benefits of Environmentally Sensitive Areas (ESAs) in Scotland. The ESA scheme is a central component of agri-environmental policy in the UK, and an interesting policy question concerns the extent of non-market benefits generated by such ESAs. The econometric issues we raise in this paper revolve around bid curves. Bid curves are estimated in open-ended Contingent Valuation Method (CVM) studies for three reasons. These are: (1) as a test of theoretical validity; (2) as a test of discriminant validity; and (3) as a means of benefits transfer. Within the first and last of these aims, the partial relationship between willingness to pay (WTP) and independent variables such as income is of interest. There are several econometric issues involved in estimating such relationships, First, the selection process implicit in obtaining positive WTP bids should be explicitly modelled. Second, many CVM surveys suffer from item non-response with respect to 'sensitive' questions such as the respondent's income; these non-responses may be non-random in nature. Finally, it is possible to dis-aggregate the effect of marginal changes in, say, income on WTP into two elements, namely: an effect on the probability that the individual will be willing to pay something; and secondly, an effect on how much they are willing to pay.

The endangered species act and economic values: a comparison of fines and contingent valuation studies

Economic theory holds that the level of punishment set for a violation of a law reflects, or should reflect, the marginal social damage of the violation. This paper considers the implications of this theory with respect to the Endangered Species Act of 1973 (ESA). In particular, we examine the punishment set forth in the ESA as an indicator of marginal social damage. We compare the level of punishment, or fines, in the ESA to other attempts at measuring the marginal social value of threatened and endangered species, namely contingent valuation method studies. The comparison indicates that fines in the ESA do not depict the marginal social damage incurred with each `taking' of a threatened or endangered species. Further, the comparison shows that the fines are, if anything, too low. Possible modifications to the ESA should consider a fine structure that reflects the degree, or level, of species endangerment. Proposed or existing endangered species legislation in other nations should perhaps also incorporate such a structure.

Health care contingent valuation studies: a review and classification of the literature

Purpose: The contingent valuation method (CVM) is a survey‐based approach for eliciting consumer's monetary valuations for programme benefits for use in cost‐benefit analysis (CBA). We used the conceptual framework of O'Brien and Gafni (1996) to classify and critically appraise health care CVM studies. Methods: Search of computerized health care and economic citation databases (e.g. MEDLINE, ECONLIT) and manual search for papers published between 1984–1996 reporting primary data valuing health programme benefits in monetary units by CVM using willingness‐to‐pay (WTP) or accept (WTA). We classified studies using both empirical (i.e. who was surveyed and how) and conceptual criteria (i.e. which measure of consumer utility was measured and why). Results: 48 CVM studies were retrieved; the majority (42) undertook money valuation in the context of cost benefit analysis (CBA), with the remainder being pricing/demand studies. Among the 42 CBA studies, the consumer utility being measured (i.e. compensating (CV) vs. equivalent variation (EV) was explicitly stated in only three (7%) studies). WTP was measured in 95% of studies and WTA in 5%. By cross‐tabulation, 42 (91%) studies were designed as WTP/CV, two (4%) were WTP/EV, two (4%) were WTA/CV and no studies used WTA/EV. Most studies were administered by mail (52%) with 38% being in‐person interviews. Value elicitation techniques included open‐ended questions (38%), payment cards (19%) discrete choice questions (26%) or bidding games (29%). Some form of construct validation tests, particularly associations between WTP and income, were done in 21 studies (50%). Conclusions: (i) The number of health care CVM studies is growing rapidly and the majority are done in the context of CBA; (ii) there is wide variation among health care CVM studies in terms of the types of questions being posed and the elicitation formats being used; (iii) classification and appraisal of the literature is difficult because reporting of methods and th (This abstract was borrowed from another version of this item.)

A Test for Payment Card Biases

Concerns have been raised that payment cards used in contingent valuation method studies may be subject to range and centering biases. This paper develops a payment card using an exponential response scale. A test for biases is conducted with four versions of the payment card that have greatly different ranges and center values. Range and centering biases are not found except when the payment card truncates, or does not present, the upper end of the value distribution that respondents may desire to select.

Valuing preferences for wetland preservation: A Wakkerstroom case study

Abstract Wetland loss rates remain high as the full value of wetland services is understated. This is partly due to the benefits of wetland preservation (non‐use) being unpriced, as they are not traded in markets. These benefits are reflected by option, existence and bequest demands for wetland preservation. The contingent valuation method (CVM) was used to estimate the value of non‐market wetland preservation benefits, by asking members of the Wakkerstroom Natural Heritage Association (WNHA) to, state their willingness‐to‐pay (WTP) to preserve the Wakkerstroom wetland. For option value, the median WTP class ranged from R17.51 to R20.00 per month, whilst existence and bequest values had the same median WTP class which ranged from R15.01 to R.17.50 per month. Well‐designed CVM studies can help to make the public, policy‐makers and individual farmers more aware of the benefits of wetland preservation, leading to more informed decisions being made about wetland use.

ESTIMATING WETLAND PRESERVATION PRESERVATION VALUES: A WAKKERSTROOM CASE STUDY

Wetland loss rates remain high as the full value of wetland services is understated. This is partly due to the benefits of wetland preservation (non-use) being unpriced, as they are not traded in markets. These benefits are reflected by option, existence and bequest demands for wetland preservation. The Contingent Valuation Method (CVM) was used to estimate peoples' willingness-to-pay (WTP) for wetland preservation, using the Wakkerstroom wetland as a case study. Median WTP for option, existence and bequest values ranged from R15.01 -R20.00 per month. Key determinants of these values were annual household income, respondent education and age, household size and membership of other environmental organizations. Well designed CVM studies can help to make the public, policy-makers and individual fanners more aware of the value of wetland preservation, leading to more informed decisions being made about wetland use.

The evaluation of river water quality improvements by the contingent valuation method

The results of an application of the Contingent Valuation Method (CVM) to the estimation of the recreational benefits which would result from improvements in river water quality are described. This case study is used as a basis to discuss the wider, generic issues in the application of the CVM: in particular, the problems of defining the population who benefit; the nature of the goods; why they benefit; and the questions of validity and reliability. A series of recommendations both as to appropriate methodological procedures to be adopted in CVM studies are given and as to areas where further theoretical and methodological research is required.