Contingent Valuation Study Research Articles

Demand for Improved Public Transport Services in the UAE: A Contingent Valuation Study in Dubai

Service quality, being an integral part of urban growth, has been a subject of interest to city transport planners.The provision of better quality public transport service is a challenge in the United Arab Emirates, as this countrystrives to meet the transport requirements fundamental to sustain the investment and economic as well as urbanpopulation growth exhibited over the last few years. United Arab Emirates government intervention strategiesinclude increasing share of public transportation and decreasing transport by private vehicles through betteringbus service delivery. Such shift of demand for public service requires not only understanding of people'swillingness to use and pay for improved public transport services but also market incentives to pull-downpersonal vehicle ownership demand into public transport services. This study examines the willingness of UnitedArab Emirates residents to use and pay for improved public transport services. A contingent valuation survey isconducted on 852 representative sample of cross section of United Arab Emirates residents. Probit and Orderedlogit models are used to analyze the survey data. The study has generated results with significant ramificationsfor policy. It suggests that there is the knowledge that residents, in general, are willing to use and pay higher feesfor using public bus provided its service quality is improved. This has to provide reassurance to the Roads andTransport Authority who may be interested about the potential demand for improved public bus service. In orderfor the United Arab Emirates Government to increase the share of public transportation and decrease transport byprivate vehicles, effort will have to continue to improve the public bus service quality. In particular, marketing ofsuch improved service will have to consider the residents' socioeconomic and demographic as well as sometravel attributes.

Labor as a welfare measure in contingent valuation: the value of a forest restoration project

AbstractI. Schiappacasse, F. Vasquez, L. Nahuelhual, and C. Echeverria. 2013. Labor as a welfare measure in contingent valuation: the value of a forest restoration project. Cien. Inv. Agr. 40(1):69-84. Monetary contributions might not be appropriate welfare measures in contingent valuation (CV) when household incomes are very low. In such cases, willingness to pay (WTP) is restricted by a household’s ability to reduce its consumption of other goods to pay for the environmental good under valuation. Beneficiaries, however, may be willing to contribute their time to work on a project instead of paying money. In this context, we assess the benefits of ecosystem services restoration in a rural area of high conservation value in central Chile, using a CV study that includes two WTP questions, one for cash and another for labor payments. The results indicate that labor payments in the form of a number of working hours per week were highly accepted among people. In fact, in our sample, more people were willing to pay with labor time than with traditional cash payments. When we analyze the economic efficiency of the restoration project considering only cash payments, the net present value (NPV) is negative (-US$ 255,834), but when we consider the value of time payments, the NPV is US$629,980. The results indicate that this approach ought to be seriously considered in contingent valuation in similar social and economic contexts.

The impact of protest responses in choice experiments: an application to a Biosphere Reserve Management Program

Aim of study: To identify protest responses and compute welfare estimates with and without the inclusion of such responses using follow-up statements in a choice experiment exercise. To our knowledge, this is one of the first empirical applications that, following the conventional treatment used in contingent valuation methodology, explicitly deals with the treatment and identification of protest responses in choice experiments.Area of study: the Eo, Oscos y Terras de Burón Biosphere Reserve sited between the regions of Galicia and Asturias. We are interested in the influence of such responses on preference elicitation for alternative management actions in this Reserve.Materials and methods: A face-to-face survey conducted in a sample of residents and non-residents of this Reserve. In total, more than 450 surveys were collected.Main results show that protest responses are fairly common in choice experiments, and their analysis affects the statistical performance of the empirical models as well as the valuation estimates. In fact, when the sample is corrected by protest responses, its size decreases to 303 individuals. Furthermore, we can observe that protest responses are triggered by a less positive attitude towards the wolf.Research highlight: Protest responses are a common issue in choice experiments and, therefore, future exercises should consider them explicitly, as earlier contingent valuation studies have.Key words: Biosphere Reserve; choice experiments; protest responses; willingness to pay.

Using incentives to attract nurses to remote areas of Tanzania: a contingent valuation study

This article analyses (1) how financial incentives (salary top-ups) and non-financial incentives (housing and education) affect nurses' willingness to work in remote areas of Tanzania and (2) how the magnitude of the incentives needed to attract health workers varies with the nurses' geographic origin and their intrinsic motivation. A contingent valuation method was used to elicit the location preferences of 362 nursing students. Without any interventions, 19% of the nurses were willing to work in remote places. With the provision of free housing, this share increased by 15 percentage points. Better education opportunities increased the share by 28 percentage points from the baseline. For a salary top-up to have the same effect as provision of free housing, the top-up needs to be between 80 and 100% of the base salary. Similarly, for salary top-ups to have the same effect as provision of better education opportunities, the top-up should be between 120 and 140%. Our study confirms results from previous research, that those with a strong intrinsic motivation to provide health care are more motivated to work in a remote location. A more surprising finding is that students of older age are more prepared to take a job in remote areas. Several studies have found that individuals who grew up in a remote area are more willing to work in such locations. A novel finding of our analysis is that only nursing students with a 'very' remote origin (i.e. those who grew up farther from a district centre than the suggested remote working place) express a higher willingness to take the remote job. Although we do control for nursing school effects, our results could be biased due to omitted variables capturing individual characteristics.

The public's value of hydrogen fuel cell buses: A contingent valuation study

With the increasing interest in global warming, there has been intense international competition with regard to the introduction of the hydrogen (H2) fuel cell (FC) bus, which represents a promising solution for the low-carbon age. With respect to the investment in H2-based technology development and the expansion of H2 FC vehicles, the consumer attitude is a crucial factor because the Korean government will consider it one of the most important factors in its decision to approve a large-scale introduction of H2 FC buses. In this regard, this study measures the public's willingness to pay (WTP) for a large-scale introduction of H2 FC buses in Korea by employing a survey approach termed the contingent valuation. Furthermore, to enhance statistical efficiency, this study employs the one-and-one-half-bound dichotomous choice method. The annual mean WTP estimate was KRW 4230 (USD 4.55) per household as of 2007. The estimate of the annual benefits to the affected residents was KRW 32.3 billion (USD 34.7 million). The results of this study are expected to be helpful in policy decisions related to the introduction of H2 FC buses and investment in H2 technology development.

A Note on the Expected Biases in Conventional Iterative Health State Valuation Protocols

Typical health state valuation exercises use tradeoff methods, such as the time tradeoff or the standard gamble, involving a series of iterated questions so that a value for each health state by each individual respondent is elicited. This iterative process is a source of potential biases, but this has not received much attention in the health state valuation literature. The issue has been researched widely in the contingent valuation (CV) literature, which elicits the monetary value of hypothetical outcomes. The lessons learned in the CV literature are revisited in the context of the design and administration of health state valuations. The article introduces the main known biases in the CV literature and then examines how each might affect conventional iterative health state valuations. Of the 8 main types of biases, starting point bias, range bias, and incentive incompatibility bias are found to be potentially relevant. Furthermore, the magnitude and direction of the bases are unlikely to be uniform and depend on the range of the value (e.g., between 0 and 0.5). Limitation. This is an overview article, and the conclusions drawn need to be tested empirically. Health state valuation studies, like CV studies, are susceptible to a number of possible biases that affect the resulting values. Their magnitude and direction are unlikely to be uniform, and thus empirical studies are needed to diagnose the problem and, if necessary, to address it.

The effects of extrinsic incentives on respondent behaviour in contingent valuation studies

In contingent valuation studies to assess the economic value of environmental goods, respondents are often given small presents or money amounts at the beginning of the interview to compensate them for their time spent on the survey and to encourage them to be conscientious when answering the questions. Yet, it is still an open question whether this practice biases contingent valuation survey responses, especially stated willingness to pay (WTP) for the respective environmental good. This study employs a set of field experiments to investigate the effect of respondent incentives in the form of monetary and in-kind gifts on responses in a contingent valuation survey. It is analysed how these different kinds of incentives affect (1) respondents’ diligence when answering contingent valuation method questions, (2) the likelihood of a respondent to state a positive WTP and (3) the amount of stated WTP. Results show that with respect to raising respondents' diligence in the survey interview, a moderate monetary incentive is most effective. The results regarding the effect on WTP statements are less clear. While the likelihood to state a positive WTP is increased by most incentives, mean WTP estimates are virtually unaffected.

The value of private versus public risk and pure altruism: an experimental economics test

In 1996, Johannesson et al. published a paper entitled ‘The Value of Private Safety versus the Value of Public Safety’. Based on the preliminary evidence from a hypothetical contingent valuation study for public and private safety, these authors argue that consumers behave as ‘pure altruists’ who consider the cost of a program that might be imposed on other voters when they determine their maximum willingness-to-pay for public safety programs. The authors conclude that further empirical research in this area is warranted. This article presents a set of laboratory economics experiments to test Johannesson et al.'s conjecture under controlled conditions in which participants face an actual risk of financial loss. The laboratory results extend those of Johannesson et al.'s, providing strong evidence of pure altruism in coercive settings involving public risks.

Consistency in preferences for road safety: An analysis of precautionary and stated behavior

This study analyzes stated willingness to pay (WTP) for traffic safety, the use of traffic safety equipments, and the consistency between the two. Using data from a Swedish contingent valuation study we find that the estimated value of a statistical life (VSL) based on the respondents' rear-seatbelt usage is similar to the estimate found using the respondents' stated WTP. However, when estimating VSL based on the respondents' use of bicycle helmets we find a significantly higher VSL; the VSL from bicycle-helmet usage is 7 times higher than the estimate based on seatbelt usage. Moreover, we do not find any strong relationship between risk perception and usage, or individual stated WTP and usage. Hence, the main conclusion, based on our analysis, is that stated and observed WTP are not consistent.

Valuing recreational fishing in Tasmania and assessment of response bias in contingent valuation*

We report results from contingent valuation studies in each of two Tasmanian fisheries that estimate the value of a day’s recreational fishing. Published studies estimating the economic value of recreational fishing in Australia and New Zealand are limited, although the economic and social benefits associated with this activity are sizable and the importance of understanding the behaviour of recreational fishers for the sustainable management of aquatic resources is well recognised. In our contingent valuation surveys, we use a double‐bounded version of the dichotomous choice question, which improves the statistical efficiency of the estimates relative to those based on a single dichotomous choice question. We test and control for response bias, in the form of anchoring and a shift effect, that may occur in data collected using a double‐bounded dichotomous choice (DBDC) elicitation format. We highlight the importance of identifying and correcting for response bias in DBDC models on a case‐by‐case basis. Our estimation results show that there is no significant difference in the willingness to pay for a day of recreational fishing across individuals who caught different number of fish in either fishery. This suggests that high and low catch fishers placed the same value on a day’s fishing.

Willingness to pay for more sustainable e-waste management: a contingent valuation study in greece

Management of Waste Electric and Electronic Equipment (WEEE also called e-waste) has become an issue of critical importance recently also in the frame of industrial ecology besides waste management per se, mostly due to their content in hazardous materials and the extensive implications of any intervention in a broad industrial spectrum. The effectiveness of any landfill diversion scheme depends on its acceptance by the local community and the industry, as well as adequate funding. This paper presents a contingent valuation approach in order to examine public environmental awareness and to assess the willingness-to-pay (WTP) for the environmentally sound management of WEEE in Greece, based on a suitable, customized and easy-to-comprehend questionnaire. The survey revealed a still relative public ignorance on the subject and a reluctantly limited WTP. The latter is mostly triggered by the fact that respondents believed that associated expenses should be covered either by authorities or manufacturers (protest votes). However, based on the responses of those declaring a positive WTP, the average fee respondents are willing to pay exceeds the current recycling fee. Thus, existing recycling fees could be potentially increased in order to cover additional expenses for the development of infrastructure in areas not currently included in the national WEEE recycling program, as well as to provide the public with a dense network of disposal sites/bins in an effort to boost participation and WEEE recycling rates.

The conservation value of the Shinan Tidal Flat in Korea: a contingent valuation study

Tidal flats are well known as highly productive areas that support the ecosystem by providing essential nutrients. However, they have been increasingly reclaimed as sites for factories or farms in Korea. Recently, an increasing number of Koreans have been calling for the conservation of tidal flats, with the demand that they be designated as protected areas. Thus, policy-makers and the public require monetary information on the conservation value of tidal flats. This paper attempts to assess the conservation value of tidal flats in Shinan, Korea, by using the contingent valuation (CV) method. A CV survey of Korean households was conducted to estimate their willingness to pay (WTP) for the conservation of the Shinan Tidal Flat and the avoidance of its development. In general, the respondents accepted the contingent market, and on average, Korean households were willing to pay a significant amount. The mean WTP for the conservation of the Shinan Tidal Flat was estimated to be approximately KRW 3100 (USD 2.75) per year per household. This implies that Korean households may be willing to pay a total of approximately KRW 54.5 billion (USD 48.3 million) annually for 5 years. The results can be used in the decision-making process of policy-makers about the conservation of the Shinan Tidal Flat.

Contingent Valuation: A Practical Alternative when Prices Aren't Available

A person may be willing to make an economic tradeoff to assure that a wilderness area or scenic resource is protected even if neither that person nor (perhaps) anyone else will actually visit this area. This tradeoff is commonly labeled “passive use value.” Contingent valuation studies ask questions that help to reveal the monetary tradeoff each person would make concerning the value of goods or services. Such surveys are a practical alternative approach for eliciting the value of public goods, including those with passive use considerations. First I discuss the Exxon Valdez oil spill of March 1989, focusing on why it is important to measure monetary tradeoffs for goods where passive use considerations loom large. Although discussions of contingent valuation often focus on whether the method is sufficiently reliable for use in assessing natural resource damages in lawsuits, it is important to remember that most estimates from contingent valuation studies are used in benefit–cost assessments, not natural resource damage assessments. Those working on benefit–cost analysis have long recognized that goods and impacts that cannot be quantified are valued, implicitly, by giving them a limitless value when government regulations preclude certain activities, or giving them a value of zero by leaving certain consequences out of the analysis. Contingent valuation offers a practical alternative for reducing the use of either of these extreme choices. I put forward an affirmative case for contingent valuation and address a number of the concerns that have arisen.

Insensitivity to Scope in Contingent Valuation Studies

Insensitivity to Scope in Contingent Valuation Studies

Insensitivity to Scope in Contingent Valuation Studies

Insensitivity to Scope in Contingent Valuation Studies

Insensitivity to Scope in Contingent Valuation Studies

Insensitivity to Scope in Contingent Valuation Studies

Insensitivity to Scope in Contingent Valuation Studies

Insensitivity to Scope in Contingent Valuation Studies

Adequate responsiveness to scope in contingent valuation

The standard test for scope sensitivity in contingent valuation studies determines whether the response to changes in scope is statistically significant; it does not address whether the magnitude of response is appropriate given the specified changes in scope. We examine contingent valuation studies that implemented scope tests to determine what they imply about the adequacy of response to scope. We find that in the vast majority of studies, the magnitude of response cannot be assessed. Only three studies permit such an assessment: Samples and Hollyer (1990), Diamond et al. (1993) and Chapman et al. (2009). The first two papers find that responses to their surveys did not vary adequately with scope. The third study passed the standard scope test, but we show that the magnitude of response in this study is inadequate by straightforward methods of assessment and cannot be explained by diminishing marginal utility or substitution. More research is needed on this issue, including wider application of adding-up tests on incremental parts, as well as the development of other methods that permit an assessment of the magnitude of response or other tests of rationality.

Valuation of Tobacco Control Policies by the Public in North Carolina: Comparing Perceived Benefit With Projected Cost of Implementation

After 40 years of continuous decline, smoking rates in the United States have stabilized signaling a challenge for tobacco control. Renewed decline may be guided by public opinion where support for tobacco control is strong. This study sought the public's preferences about tobacco control strategies. This contingent valuation study investigated whether the public's valuations of 2 tobacco control policies outweighed their implementation costs. In a hypothetical referendum, a representative sample of North Carolinians aged 45-64 years (n = 644) was asked to indicate whether they would prefer a policy that would halve the youth smoking rate or one that would reduce smoking-related deaths by 10%, and to indicate how much additional tax they would be willing to pay to implement their preferred policy. This willingness-to-pay value formed the perceived "benefit" component in a cost-benefit analysis. Costs to halve youth smoking were calculated from evidence about the resources required to increase the state tobacco excise tax. Costs to reduce tobacco-related deaths were based on evidence about the resources required for a counseling quitline offering free nicotine replacement therapy. The majority (85%) of respondents voted to halve the youth smoking rate. The mean maximum amount per person that voters were willing to pay in 1 year to do that was $14.90 (95% CI, $10.10-$19.60), and the maximum amount per person they were willing to pay in 1 year to reduce smoking-related deaths was $13.70 (95% CI, $2.10-$25.40). When aggregated to the North Carolina population aged 45-64 years (N = 2,400,144), the perceived benefit of halving youth smoking was $35.8 million. Implementation of a program to achieve this outcome would cost $109.8 million. Aggregating to the same population, the perceived benefit of a 10% reduction in tobacco-related deaths was $32.9 million, an amount that exceeds the $12.8 million estimated cost of achieving the outcome. A counseling quitline with free nicotine replacement therapy would achieve a positive net benefit.

Contingent Valuation: From Dubious to Hopeless

Approximately 20 years ago, Peter Diamond and I wrote an article for this journal analyzing contingent valuation methods. At that time Peter's view was that contingent valuation was hopeless, while I was dubious but somewhat more optimistic. But 20 years later, after millions of dollars of largely government-funded research, I have concluded that Peter's earlier position was correct and that contingent valuation is hopeless. In this paper, I selectively review the contingent valuation literature, focusing on empirical results. I find that three long-standing problems continue to exist: 1) hypothetical response bias that leads contingent valuation to overstatements of value; 2) large differences between willingness to pay and willingness to accept; and 3) the embedding problem which encompasses scope problems. The problems of embedding and scope are likely to be the most intractable. Indeed, I believe that respondents to contingent valuation surveys are often not responding out of stable or well-defined preferences, but are essentially inventing their answers on the fly, in a way which makes the resulting data useless for serious analysis. Finally, I offer a case study of a prominent contingent valuation study done by recognized experts in this approach, a study that should be only minimally affected by these concerns but in which the answers of respondents to the survey are implausible and inconsistent.