Contingent Valuation Method Survey Research Articles

What determines respondents’ valuation uncertainty? Impact of subjective perceptions from the demand and supply sides

Abstract Based on a contingent valuation method survey on air quality improvement in northern China, we construct several subjective perception determinants of respondents' valuation uncertainty from both the demand and perceived supply sides. Using the individual-level uncertainty measurements initially proposed by Wang and He (2011) and their alternative transformations, we analyze how these factors of demand and perceived supply sides affect people's valuation uncertainty. Our results demonstrate the significant contribution of these determinants in explaining respondents' uncertainty. On the demand side, people who ‘don't know much’ about benefits-related factors have the highest level of uncertainty, and those claiming to ‘know nothing’ most often report the lowest level of uncertainty. On the supply side, people who either do not trust or are not satisfied with the control policies tend to be more certain of their valuation. The subsequent analyses also suggest that these results be interpreted as negative certainty, which is attributed to a lack of interest.

Estimating the cost-effectiveness threshold of advanced non-small cell lung cancer in China using mean opportunity cost and contingent valuation method

ObjectivesMonetizing health has sparked controversy and has implications for pricing strategies of emerging health technologies. Medical insurance payers typically set up thresholds for quality-adjusted life years (QALY) gains based on health productivity and budget affordability, but they rarely consider patient willingness-to-pay (WTP). Our study aims to compare Chinese payer threshold and patient WTP toward QALY gain of advanced non-small cell lung cancer (NSCLC) and to inform a potential inclusion of patient WTP under more complex decision-making scenarios.MethodsA regression model was constructed with cost as the independent variable and QALY as the dependent variable, where the regression coefficients reflect mean opportunity cost, and by transforming these coefficients, the payer threshold can be obtained. Patient WTP was elicited through a contingent valuation method survey. The robustness of the findings was examined through sensitivity analyses of model parameters and patient heterogeneity.ResultsThe payer mean threshold in the base-case was estimated at 150,962 yuan (1.86 times per capita GDP, 95% CI 144,041–159,204). The two scenarios analysis generated by different utility inputs yielded thresholds of 112,324 yuan (1.39 times per capita GDP) and 111,824 yuan (1.38 times per capita GDP), respectively. The survey included 85 patients, with a mean WTP of 148,443 yuan (1.83 times per capita GDP, 95% CI 120,994–175,893) and median value was 106,667 yuan (1.32 times the GDP per capita). Due to the substantial degree of dispersion, the median was more representative. The payer threshold was found to have a high probability (98.5%) of falling within the range of 1–2 times per capita GDP, while the robustness of patient WTP was relatively weak.ConclusionsIn China, a country with a copayment system, payer threshold was higher than patient WTP, indicating that medical insurance holds significant decision-making authority, thus temporarily negating the need to consider patient WTP.

Rural household's willingness to pay for irrigation water use: An application of contingent valuation method, in the case of North Shewa zone, Ethiopia

AbstractThis study aimed to evaluate household's willingness to pay (WTOP) for irrigation water use (IWU) per timad (0.25 ha) of the irrigable land per year and to analyze determinants of WTOP for IWU at individual households based on the contingent valuation method (CVM). The primary data collected for this study was from 120 households using two‐stage sampling techniques such as simple random sampling and purposive from four peasant associations of the Efratana Gidim and Kewit districts by semistructured questionnaire. The secondary dataset was collected from several sources. The collected data were analyzed using descriptive, inferential, and Tobit econometric models. In addition, a seemingly unrelated bivariate probit (SUBP) model was applied to calculate the average WTOP for IWU per timad/year. The CVM survey indicated that from the total sample collected data, 80% of the households showed WTOP for IWU, while the remaining 20% did not show WTOP. The econometric result of the Tobit model showed that the education level of the household, household family size, Irrigation experience, total annual income, and credit utilization influenced farmers' WTOP positively and significantly, while only initial bid price affected the farmer negatively and significantly. Hence, the above variables should be given high emphasis in designing irrigation water‐related projects in the districts. The SUBP model result revealed that the household's average annual WTOP was 854.74 Ethiopia Birr/0.25 ha/year. The estimated MWTOP for IWU is a huge amount of money. Hence, the concerned body has to collect money from households, which has to be used in the development of irrigation systems in the study area. This study recommends that different stakeholders of government should collaborate in raising revenue from the local community and apply it for the desired community development purposes, particularly for food security enhancement as the districts are highly dependent on rainfed agriculture.

The Welfare Cost of Beijing’s Lottery Policy: Evidence from a Contingent Valuation Survey

AbstractMotivated by traffic congestion and air pollution, Beijing is one of several major cities to restrict vehicle ownership by requiring residents to win a lottery for the right to obtain an additional car. We examine the welfare cost of preventing people from owning cars because of misallocation: under a lottery, some individuals with low willingness to pay (WTP) for cars can obtain cars, while other individuals with high WTP cannot. We estimate welfare costs using a new contingent valuation method survey of Beijing lottery participants which we designed and conducted explicitly for this purpose. We find that restricting vehicle ownership reduced private welfare by 26 billion yuan. Back-of-the-envelope calculations suggest that the benefits of lower congestion and pollution roughly equal the costs. Our WTP estimates indicate a net welfare gain of approximately 32 billion yuan if Beijing’s lottery were replaced with an auction, which is similar to previous estimates.

Public willingness to pay for the research and development of solar energy in Beijing, China

This study estimates the public willingness to pay (WTP) for the research and development of solar energy in Beijing using a contingent valuation method (CVM). To this end, this study reports the results from a CVM survey of 760 respondents. The results show that Beijing residents are willing to pay an additional CNY5.85 (USD0.86) per household per month, on average, for the research and development of solar energy in Beijing. Respondents’ educational attainment, household income, risk attitudes, and attitudinal beliefs about energy problems have significant and positive influences on their willingness-to-pay decisions, while bid values have a significantly negative effect on their willingness-to-pay decisions. The annual total WTP for the research and development of solar energy in Beijing was estimated at CNY23.78 million (USD3.71 million). Our results can provide useful and important insights for energy regulators, helping them to adjust renewable energy policies and promote the utilization of solar energy.

Household's Willingness to Pay for Improved Solid Waste Management in Gulelle Sub City, Addis Ababa

This study was conducted to assess households willingness to pay (WTP) for improved solid waste management (SWM). Contingent valuation method (CVM) was employed to elicit household's WTP for the proposed improvement in solid waste management service. The data from CVM survey was analyzed by using logistic regression model. The results of the study revealed that largest proportion of households had awareness of inappropriate disposal of wastes and its problems and that they were (78%) ready to pay for the wastes they generate. Furthermore, we found that significant number of the respondents (76 %) were willing to supports proposed improvement in residential solid waste management. Mean monthly willingness to pay is 21 Ethiopian Birr (ETB) with a minimum of 5 ETB and the maximum of 100 ETB, while the rest of the respondents were not willing to contribute. The results of logit regression analysis showed that sex and household size were statistically significant at 5% and 1% respectively. Therefore, the concerned body (municipality, NGO or other voluntary group) should take their part in raising the awareness and perceptions of households on waste management and thus, to improve their willingness to pay for improved SWM.

Games between stakeholders and the payment for ecological services: evidence from the Wuxijiang River reservoir area in China

A gambling or “game” phenomenon can be observed in the complex relationship between sources and receptors of ecological compensation among multiple stakeholders. This paper investigates the problem of gambling to determine payment amounts, and details a method to estimate the ecological compensation amount related to water resources in the Wuxijiang River reservoir area in China. Public statistics and first-hand data obtained from a field investigation were used as data sources. Estimation of the source and receptor amount of ecological compensation relevant to the water resource being investigated was achieved using the contingent valuation method (CVM). The ecological compensation object and its benefit and gambling for the Wuxijiang River water source area are also analyzed in this paper. According to the results of a CVM survey, the ecological compensation standard for the Wuxijiang River was determined by the CVM, and the amount of compensation was estimated. Fifteen blocks downstream of the Wuxijiang River and 12 blocks in the water source area were used as samples to administer a survey that estimated the willingness to pay (WTP) and the willingness to accept (WTA) the ecological compensation of Wuxijiang River for both nonparametric and parametric estimation. Finally, the theoretical value of the ecological compensation amount was estimated. Without taking other factors into account, the WTP of residents in the Wuxi River water source was 297.48 yuan per year, while the WTAs were 3864.48 yuan per year. The theoretical standard of ecological compensation is 2294.39–2993.81 yuan per year. Under the parameter estimation of other factors, the WTP of residents in the Wuxi River water source area was 528.72 yuan per year, while the WTA was 1514.04 yuan per year. The theoretical standard of ecological compensation is 4076.25–5434.99 yuan per year. The main factors influencing the WTP ecological compensation in the Wuxi River basin are annual income and age. The main factors affecting WTA are gender and attention to the environment, age, marital status, local birth, and location in the main village.

Research Note:Exaggeration Bias-Corrected Contingent Valuation Method: The Case of Olle Trail

Researchers have criticized the traditional contingent valuation method (CVM) due to its potential response bias. To address this bias, several studies have employed improved CVM survey designs. When respondents disguise the truth, non-sampling errors are created that cannot be corrected by these elaborate survey modifications. To reduce this type of non-sampling error, Park and MacLachlan (2008) suggested the exaggeration bias-corrected (EBC) CVM, which assumes a functional mechanism between real and spurious willingness to pay (WTP). The authors verify the effectiveness of the EBC-CVM in non-sampling error reduction, which in turn derives more error-corrected economic value. Few studies have employed the EBC-CVM in a tourism context. The main goals of this study are to introduce EBC-CVM and to test its validity in a tourism study. The results indicate that EBC-CVM contributes to the reduction of non-sampling errors. The implications of the findings are discussed.

Protest response and willingness to pay for culturally significant urban trees: Implications for Contingent Valuation Method

The Contingent Valuation Method (CVM) could assist green-space planning, management and appreciation by assigning a monetary value to urban trees. However, the use of CVM is limited by its inherent methodological weaknesses. A critical concern is the existence of a large proportion of survey respondents providing zero willingness-to-pay (WTP) and that these responses are not amenable to economic theory — known as ‘protest’ responses. Censoring protest responses from further treatment is a common practice, which warrants reconsideration in light of our CVM survey results. The survey involved 800 residents requested to state their WTP for preserving the culturally significant stonewall trees in urban Hong Kong. About 28% of respondents returned a zero WTP. For all respondents the strength of protest beliefs was assessed, and the relationship between protest beliefs and WTP were examined. Our analysis produced contradictory results: some protest items varied negatively with WTP as expected, but other items increased with it. Respondents' stated positive WTP harbored latent protest beliefs which are related to non-economic preference. The findings stand at odds with the assumptions underlying the censoring treatment and raise questions about the validity of WTP estimates. These methodological implications should be taken into account in using CVM.

Correcting for non-response bias in contingent valuation surveys concerning environmental non-market goods: an empirical investigation using an online panel

Data collection for economic valuation by using Internet surveys and pre-recruited Internet panels can be associated with severe disadvantages. Problems concerning sample coverage and sample representativeness can be expected. Representation errors may occur since people can choose whether to be part of an Internet panel and subsequently whether they wish to participate in the survey, thereby introducing two elements of potential self-selection. These elements may be correlated with preferences, thus making the respondents a non-random and non-representative sample, ultimately biasing results. This paper analyses a sample used for an Internet contingent valuation method survey eliciting preferences for improvements in water quality of a river. We find that some variables that affect the survey participation decision also affect willingness-to-pay, consequently biasing our welfare estimates. We show how adjusting willingness-to-pay for this bias can be accomplished by using a grouped data model incorporating a correlation parameter to account for selection.

Monumental trees and their existence value: the case study of an Italian natural park

The paper deals with the evaluation of the existence value of monumental trees in a protected area. Financial resources to be destined for protection interventions have been decreasing more and more, with a high risk of losing this natural heritage. A Contingent Valuation Method (CVM) survey was carried out among the Madonie Park (Sicily, Italy) resident households to evaluate the existence value of monumental trees of the nature trail named Piano Sempria-Piano Pomo, represented by a population of Giant hollies and by 7 other individual trees. These are the main results of the CVM survey: the overall response rate was 40%, individual average WTPs ( Willingness To Pay ) were €12.37 for the protection of the holly population and €13.45 for all the monumental trees along the nature trail. The median WTPs were €2.00 and €5.00, respectively. The aggregate WTP estimates for the Park residents range from a minimum of €10,520.40 to a maximum amount of €83,479.37 depending upon the investigated resource and the statistics considered.

Anglers' responses to bait certification regulations: the case of virus-free bait demand

The threat of viral haemorrhagic septicaemia (VHS) to the sport fish of the Great Lakes region has caused the state of Michigan to regulate some types of fishing bait that could spread the disease. Given large-scale fish kills from VHS are uncertain and regulation costly, it is important to consider the knowledge level of anglers and their estimated benefits from these regulations. About 75% of anglers self-reported being at least somewhat familiar with VHS and VHS regulations, and agreeing that VHS is a serious threat to the health of Great Lakes’ fish populations. Demand for a popular baitfish susceptible to VHS, emerald shiners, was estimated using a contingent valuation method survey. The results suggest increased likelihood of purchase and mean willingness to pay point estimate premiums between 15% and 29% for certified bait. The inclusion of an educational piece on VHS and regulations in our survey did not lead to significant demand differences from those who did not receive the extra information. These results may help regulators efficiently allocate funding for the prevention of spreading VHS and allow bait shops to understand better the value of certified bait.

Once there was a river: a benefit–cost analysis of rehabilitation of the Jordan River

The Jordan River is among the world’s most famous and culturally and historically significant waterways. The lower stretch of the river, however, has been a victim of development in a water scarce region, with current flows less than 5 % of historical levels. Furthermore, as it functions as an international border in a region of conflict, access to the river and its potential as a tourist attraction has been limited. Recently, there have been numerous calls for rehabilitation of the river. This study presents a first estimate of the economic benefits of such rehabilitation and compares them to the estimated costs. Identical contingent valuation method surveys were administered in Israel, Jordan, and the Palestinian Authority. Evidence from this study shows that, despite the large opportunity costs of increasing environmental flows, rehabilitation of the lower Jordan would produce positive net economic benefits. This is true even though the study estimated only the benefits to local populations, and not to international tourists or those outside the region. Net benefits are maximized when taking a regional, as opposed to strictly national, approach.

Willingness to pay for downtown public goods generated by large, sports-anchored development projects: The CVM approach

North American cities have long encouraged redevelopment of their downtown cores to counteract the flight of residents and business to the suburbs in the postwar period. Building subsidized arenas and stadiums for professional sports teams downtown became common in the 1990s. In recent years, downtown stadiums and arenas have been proposed as components in larger redevelopment projects containing a number of other amenities, as well, including housing and other entertainment attractions. The justification for such developments rests in part on the public goods generated by vibrant, prosperous downtowns. Yet little is known about the value of such downtown public goods. This paper reports the results of two Contingent Valuation Method surveys to determine willingness to pay for new National Hockey League arenas in downtown Edmonton and Calgary in the Canadian province of Alberta. The hypothetical scenarios in both surveys varied to include affordable housing, a casino, and cultural space in addition to the arena. The surveys provide the first estimates of willingness to pay for downtown public goods for sports arenas, and also provide the first estimates of scope effects, that is, the willingness to pay for expansions of public goods, in the sports economics literature.

Research Note:Estimation of the Non-Market Value of Sports Events: A Case Study of the Civic Pride Generated by the 2009 Shanghai ATP Masters 1000

This study uses Contingent Valuation Method surveys to estimate the non-market value of local residents' civic pride generated by the 2009 Shanghai ATP Masters 1000 (2009SAM1000). Using a dataset of 1,800 public intercept surveys, the paper shows that the average individual willingness to pay for the civic pride generated by the 2009SAM1000 was 24.2 yuan, and the total value of local residents' civic pride generated by the event was 110.80 million yuan. The results also indicate that several factors influenced civic pride and willingness to pay for the match, including gender, educational qualifications (EQ), annual household income (AHI), and the aggregative indicator of the product of AHI and EQ.

Estimating Willingness to Pay for River Amenities and Safety Measures Associated with Shale Gas Extraction

This paper utilizes a Contingent Valuation Method survey of a random sample of residents to estimate that households are willing to pay an average of US$12.00 per month for public projects designed to improve river access and US$10.46 per month for additional safety measures that would eliminate risks to local watersheds from drilling for natural gas from underground shale formations. These estimates can be compared with the costs of providing each of these two amenities to help foster the formation of efficient policy decisions.

Comparing households’ total economic values and recreation value of instream flow in an urban river

The empirical importance of non-use values relative to use values appears to vary by uniqueness of the natural environment being valued. At one extreme is the Grand Canyon, where non-use values are orders of magnitude higher than use values. For protecting water quality used for water-based recreation and drinking water, non-use values are still significant, but about half the magnitude of these two use values. In this paper we investigate the relative importance of non-use values for maintaining instream flows in an urban river in the City of Fort Collins, Colorado, USA. At the request of the City Council, a contingent valuation method (CVM) survey was conducted. A dichotomous choice CVM survey of households estimated that the Total Economic Values (TEV – sum of non-use and recreation) of city households is $234 per year. A second CVM question specifically about recreation use value of the same households yielded an estimated annual WTP of $90 per year. Thus, the TEV to maintain current instream flow is 38% recreation value and 62% non-use values, suggesting the importance of non-use values even for a non-unique, but locally significant urban river. Summing up the TEVs per household in the city yields an annual value of $171 per acre foot, several times larger than annual water lease rates in Northern Colorado. However, the present value of this TEV per acre foot is less than the price for purchasing water rights in order to maintain instream flows. Thus, unless the City of Fort Collins partners with downstream cities, who would also benefit from instream flows, annual leases are the most efficient option for maintaining instream flows.

The Provision Point Mechanism and Scenario Rejection in Contingent Valuation

The provision point mechanism mitigates free-riding behavior in economic experiments. In two contingent valuation method surveys, we implement the provision point design. We ask respondents for their perceptions about the success of the provision point mechanism. We find that respondents who believe that the provision point would not be met are more likely to saynoto a contingent valuation dichotomous choice question. The scenario rejection that arises may result in biased willingness-to-pay estimates.

The Value of Managing Urban Solid Waste: Evidence from Enugu State, Nigeria

ABSTRACT Empirical findings of a contingent valuation method survey conducted in Enugu State, Nigeria, from July to September 2003, to elicit from urban residents monetary values placed on improved solid waste management facilities. Two formats were used in the study: a referendum design that mimics a typical political referendum and a stochastic payment card design, which incorporates uncertainty into an individual's valuation of an environmental quality improvement. Results indicate that the traditional referendum design produced a lower mean willingness to pay.

Using the Contingent Valuation Method for Dollar Valuations of Library Services

An application of the contingent valuation method (CVM) for estimating the economic value of a regional public library service is described, and some of the key methodological issues surrounding CVM and other stated preference techniques are discussed with reference to library use and funding contexts. Given the range of valuations that can result from different forms of question, it is important to only compare resulting benefit‐cost ratios based on the same survey design. However, if CVM surveys are carefully designed and administered, they can produce estimates that are as convincing as those produced by other valuation methods. It was found that the Wagga Wagga City Library, in New South Wales, Australia, provides good value for the money, in line with that of other comparable studies in the United States and Norway.