Dichotomous Choice Contingent Valuation Research Articles

Willingness to Pay for Recycling Food Waste in the Brisbane Region

Kerbside recycling in Australia has focused on paper, cardboard, plastics and bottles and in some areas green waste. Another area for potential kerbside recycling is organic waste. This study uses a dichotomous choice contingent valuation format with follow-up open-ended willingness to pay question to estimate the household willingness to pay for the introduction of a kerbside recycling scheme for kitchen waste. Two provision rules were used. The first sample split contained a majority decision rule while the second sample split contained a provision rule where participation is voluntary. Households across the Brisbane statistical sub-division currently pay in the order of $250 per annum for their kerbside waste collection scheme. This study indicates that on average Brisbane households would be WTP an additional $32 to $35 per year for a general waste bin where food waste is split from general waste. There was no significant difference in results between sample splits with majority or voluntary provision rules. Whether the provision of a food waste recycling scheme is economically efficient requires a consideration of all the potential costs and benefits. Other relevant costs and benefits for inclusion in a benefit cost analysis would include those associated with bin replacement, any additional collection and transport costs, composting costs, revenues from compost sales and avoided landfill costs. If a compulsory food waste recycling scheme could be provided to all households for less than $32 to $35 per household per annum then the benefits of the scheme would exceed the costs and would be considered to be economically efficient and desirable from a community welfare perspective. Given the difficulties of estimating precise WTP values from dichotomous choice data, any BCA of a compulsory scheme incorporating the results of this study should undertake sensitivity testing that includes the range of values reported including dichotomous choice and open-ended means to determine the robustness of BCA results to variations in the welfare estimate. Notwithstanding, the results of any BCA, decision-makers also need to be cognisant of the high proportion of respondents who did not support a kerbside food waste recycling scheme. The data from the study could also be used to undertake a BCA of a voluntary scheme.

A mixed approach to payment certainty calibration in discrete choice welfare estimation

This article provides further empirical evidence of payment uncertainty in dichotomous choice (DC) Contingent Valuation (CV) and proposes an alternative way of certainty calibration, moving away from conventional recoding of uncertain responses. In an international CV application, the main sources of payment uncertainty are identified related to imperfect knowledge and information about the public good involved, future supply levels, income constraints, price levels and the survey instrument. Together these sources of uncertainty are responsible for a third of the error variance in the estimated discrete choice model. Accounting for the heterogeneity induced by payment uncertainty in the welfare estimation procedure with the help of a mixed probit model yields a significantly lower welfare measure albeit at the expense of estimation precision.

Valuing forest biodiversity through a national survey in France: a dichotomous choice contingent valuation

In order to improve French forest accounts, a national survey was carried out during the year 2001 with the aim of collecting data on public preferences and behaviors toward forest. Some 1815 households were contacted via telephone and asked about their recreational activities and willingness-to-pay (WTP) for the preservation of forest biodiversity. The WTP for forest biodiversity preservation is estimated by a dichotomous choice contingent valuation (DC-CV) method. As the dichotomous choice equation for biodiversity preservation and the estimated WTP can be dependent on the choice of recreational visits in forests, a bivariate probit technique was implemented to account for this relationship. The nonparametric estimate of the mean WTP was 49.25€ per household and per year. The results of the parametric models show that a bivariate probit model is more suitable than the univariate model because recreational visits and WTP for biodiversity preservation are significantly correlated. Moreover, regional mean WTPs highlight significant difference (from 44.67€ to 64.17€ per household and per year).

Recreational value, user heterogeneity and site characteristics in contingent valuation

We propose an adaptation of the Dichotomous Choice Contingent Valuation Method, applied to the recreational quality of a site and to heterogeneity between visitors (tourists and residents). This method is based on a set of repeated valuation questions and is used to study relations between the components of environmental goods. We propose its application to public coastal sites in south-western France. We show that programmes regarding the ocean, beaches and forests are generally independent of one another. In order to stress the heterogeneity of users, two separate models are assessed. The way time is taken into account then appears to be one of the most interesting sources of divergence between tourists and residents. Individual WTP per day also varies. This confirms that beaches used by residents provide high economic benefits although they generate little indirect revenue. Finally, contingent valuation appears to be a useful alternative for analyzing the multiple dimensions of a public policy.

A Multivariate Probit Analysis of Willingness to Pay for Cave Conservation: A Case Study of Yanchep National Park, Western Australia

This study employed the double-bounded dichotomous choice contingent valuation technique along with factor analysis to estimate visitors' willingness to pay (WTP) for the Yanchep Caves Recovery Project (YCRP). Two payment vehicles were used to elicit WTP: park entry fee and cave entry fee. The main contribution of this paper is the joint estimation of the two payment vehicles using the multivariate probit model by allowing the error terms of the two models to be correlated. Emphasis was given to testing whether parameters of the two bid levels should be constrained and to overcoming anchoring bias. The estimated median WTP for cave and park entry fees when accounting for anchoring effect and constrained parameters was AU$10.20 and AU$16.40, respectively. Without correcting for the anchoring effect, the WTP probability is overestimated for lower bids and underestimated for higher bids.

Implications of Bid Design and Willingness-To-Pay Distribution for Starting Point Bias in Double-Bounded Dichotomous Choice Contingent Valuation Surveys

We examine starting point bias in double-bounded dichotomous choice contingent valuation surveys. We investigate (1) the seriousness of the biases for the location and scale parameters of the willingness-to-pay (WTP) in the presence of starting point bias; (2) whether or not these biases depend on the distribution of WTP and on the bid design; and (3) how well a commonly used diagnostic for starting point bias—a test of the null that bid set dummies entered in the right-hand side of the WTP model are jointly equal to zero—performs under various circumstances. Monte Carlo simulations suggest that the effect of ignoring starting point bias depends on the bid design and on the true distribution of WTP. A well-balanced, symmetric bid design may result in very modest biases even when the anchoring mechanism is very strong. The power of bid set dummies in detecting starting point bias is low. They tend to account for misspecifications in the distribution assumed by the researcher for the latent WTP, rather than capturing the presence of starting point bias.

Preventing land loss in coastal Louisiana: Estimates of WTP and WTA

A dichotomous-choice contingent-valuation survey was conducted in the State of Louisiana (USA) to estimate compensating surplus (CS) and equivalent surplus (ES) welfare measures for the prevention of future coastal wetland losses in Louisiana. Valuations were elicited using both willingness to pay (WTP) and willingness to accept compensation (WTA) payment vehicles. Mean CS (WTP) estimates based on a probit model using a Box–Cox specification on income was $825 per household annually, and mean ES (WTA) was estimated at $4444 per household annually. Regression results indicate that the major factors influencing support for land-loss prevention were income (positive, WTP model only), perceived hurricane protection benefits (positive), environmental and recreation protection (positive), distrust of government (negative), age (positive, WTA model only), and race (positive for whites).

Environment as Cultural Heritage: The Armenian Diaspora's Willingness-to-Pay to Protect Armenia's Lake Sevan

This paper presents a study of willingness-to-pay of the Armenian Diaspora in the United States to protect Armenia's Lake Sevan, a unique and precious symbol of the Armenian cultural heritage. Dichotomous choice contingent valuation questions were asked by mail surveys to elicit respondents'willingness to pay for the protection of Lake Sevan. The results show that on average, each household of the Armenian Diaspora in the United States would be willing to provide a one-time donation of approximately US$80 to prevent a further degradation of Lake Sevan, and approximately US$280 to restore the quality of the lake by increasing its water level by 3 meters.

Ordering anomalies in choice experiments

This paper investigates whether responses to choice experiments (CEs) are subject to ordering anomalies. While previous research has focussed on the possibility that such anomalies relate to position in the sequence of choice tasks, our research reveals that the particular order of tasks matters. Using a novel experimental design that allows us to test our hypotheses using simple nonparametric statistics, we observe ordering anomalies in CE data similar to those recorded in the dichotomous choice contingent valuation literature. Those ordering effects operate in both price and commodity dimensions and are observed to compound over a series of choice tasks. Our findings cast serious doubt on the current practice of asking each respondent to undertake several choice tasks in a CE while treating each response as an independent observation on that individual's preferences.

Municipal solid waste management, source-separated waste and stakeholder’s attitude: a Contingent Valuation Study

Recognition of the social costs associated with traditional practices of urban waste management in India led to the formulation of Municipal Waste Management and Handling rules (2000). However, compliance with the proposed collection and disposal involves higher commitment in terms of both time and money on the part of the residents, local bodies as well as the state and central government. In this context, information about the value of the environmental improvements conferred upon the city dwellers would be important from the planner’s perspective. Given the non-market characteristic of waste disposal services, we infer about beneficiaries’ perceived demand for the proposed service by means of Double-Bounded Dichotomous Choice Contingent Valuation Survey conducted in the Bally Municipality in the district of Howrah, West Bengal. We estimate the average WTP by controlling for anchoring bias and use the annualized value of cost to examine the feasibility of the proposed system.

Applying the dissonance‐minimising format to value cultural heritage in developing countries*

We adapt the dissonance‐minimising (DM) format proposed by Blamey et al. [Land Economics, 75 (1999) 126] in a dichotomous choice contingent valuation survey to estimate the economic benefits of preserving a cultural heritage site in Vietnam. We find that the DM format can be successfully applied to avoid biases because of yea‐saying in a developing country context.

Willingness to Pay towards the Conservation of Ecotourism Resources at Gunung Gede Pangrango National Park, West Java, Indonesia

The objectives of this study are to determine the visitors’ willingness to pay for conservation of the resources at Gunung Gede Pangrango National Park (TNGP), and to determine the satisfaction of visitors towards the use of the ecotourism resources of the park. The dichotomous choice Contingent Valuation Method (CVM) was employed to determine the willingness to pay (WTP). A total of 423 respondents were interviewed face-to-face to collect the data. The results show that most visitors are satisfied with the ecotourism resources in TNGP, many of the visitors have come to TNGP more than once. In order to sustain the benefits derived from the resources at the park, the visitors agree that various organization involved must cooperate to conserve and protect the ecotourism resources. The economic benefit of conservation of the ecotourism resources at TNGP was measured using the visitors’ WTP for higher entrance fee to the park. A logit regression model was used to determine visitors’ willingness to pay. The results indicate that income, gender (male) and residential (urban) were the significant factors that influencing the visitors’ WTP for the entrance fee to TNGP. The mean WTP is found to be RP 7629.77 per visit. It is estimated that in 2004 the benefits of conservation of the ecotourism resources in TNGP amounts to RP 452 million.

Measuring the environmental value of Saeng Island in Busan, Korea with allowing for zero values

This paper attempts to deal with zero willingness to pay (WTP) responses from dichotomous choice (DC) contingent valuation (CV) surveys. It also will apply a recently proposed one-and-one-half-bound (OOHB) question format in order to obtain an appropriate welfare measure such as the mean WTP. To this end, the spike model suggested by Kriström (1997) is adjusted and applied to modeling OOHB DC-CV data with zero WTP responses. The mean WTP per household was 2,716 Korean won per annum and the overall results show that the OOHB spike model outperforms the conventional OOHB model significantly.

Economic valuation of flood risk exposure and reduction in a severely flood prone developing country

ABSTRACTThis paper presents the results of a dichotomous choice contingent valuation (CV) study of reduced flood risks in Bangladesh. Sensitivity of willingness to pay (WTP) to varying risk exposure levels is tested in a ‘natural experiment’, targeting floodplain residents facing regular annual flooding and a disaster flood once every five to ten years. Accounting for price, income and education levels, both subjective risk aversion and objective baseline risk exposure affect stated WTP for a common level of flood protection. We find a number of problems with the CV application in this specific developing country context. Half of the respondents are unable to pay in financial terms, but are willing to contribute in kind. The combined use of a monetary and non-monetary measure of WTP would have lowered the number of zero bids considerably. A test-retest carried out six months after the original survey shows that the stated WTP values are reliable.

Assessing the economic value of a public birdwatching interpretative service using a contingent valuation method

AbstractAlthough resource interpretative services are an essential conservation management tool that can add value to ecotourism experiences, there has been little empirical investigation on the ‘true’ economic value of such services. As such, this study's objective is to estimate the economic value of public interpretative services at a publicly supported Korean birdwatching festival, using a dichotomous choice contingent valuation method. Logit estimation results indicate that bid, age, income and birdwatching experience are important factors in explaining willingness‐to‐pay for interpretative services. The mean value of the publicly supported interpretative services is estimated to be 4,961 South Korean Won (approximately US$5) per person. Copyright © 2009 John Wiley & Sons, Ltd.

Modeling Shifts in Willingness to Pay from a Bayesian Updating Perspective

This paper derives a structural shift empirical specification for a double-bound dichotomous choice contingent valuation methodology premised upon willingness-to-pay (WTP) shifts ensuing from a representative model of respondent Bayesian updating behavior. We demonstrate by way of data simulations that a traditional structural shift specification may often fail at estimating true WTP in this context. Further simulations demonstrate that a simple extension of the traditional structural shift model derived explicitly from our Bayesian framework can correct for much of the WTP bias, with an empirical application confirming the simulation outcomes. Finally, we investigate the relationship between strategic behavior and WTP shifts. <i>(JEL Q26, Q50, Q51)</i>

Valuing a wind farm construction: A contingent valuation study in Greece

Our analysis is based on data from a double-bounded dichotomous choice contingent valuation study implemented to elicit public attitudes towards renewable energy generation and their willingness to pay for the construction of a wind farm in the area of Messanagros in the island of Rhodes, Greece. Results indicate that there are significant positive values deriving from the proposed project. Respondents report a mean willingness to pay a premium in their bi-monthly electric bills of €8.86 for the sole purpose of the construction of the wind farm. The estimated economic benefits to the local population are weighed against the investment cost in a cost–benefit analysis to inform policy making and implications for EU energy policy are provided.

What are Barrier Islands Worth? Estimates of Willingness to Pay for Restoration

A dichotomous-choice contingent-valuation survey was conducted in the State of Mississippi (USA) to estimate willingness to pay (WTP) for three restoration options being considered for the state's barrier islands. Random-effects probit models were estimated, and parametric and non-parametric WTP estimates and confidence intervals were calculated. Turnbull lower-bound mean WTP was $22 per respondent to maintain the existing footprint over a 30-year period, $152 to restore 2,338 acres (pre-1969 footprint), and $277 to restore 5,969 acres (pre-1900 footprint). Econometric results indicate that for the Pre-Camille and Pre-1900 options, coastal residents and those citing storm protection, recreation impact, and environmental impact as primary decision factors, were more likely to support restoration, with marginal effects of these greater for the Pre-Camille option. For the Status-Quo option, 75% of respondents voted in favor of restoration, and the offered bid was not significant; only the hurricane-protectio...

What are Barrier Islands Worth? Estimates of Willingness to Pay for Restoration

A dichotomous-choice contingent-valuation survey was conducted in the State of Mississippi (USA) to estimate willingness to pay (WTP) for three restoration options being considered for the state’s barrier islands. Random-effects probit models were estimated, and parametric and non-parametric WTP estimates and confidence intervals were calculated. Turnbull lower-bound mean WTP was $22 per respondent to maintain the existing footprint over a 30-year period, $152 to restore 2,338 acres (pre-1969 footprint), and $277 to restore 5,969 acres (pre-1900 footprint).Econometric results indicate that for the Pre-Camille and Pre-1900 options, coastal residents and those citing storm protection, recreation impact, and environmental impact as primary decision factors, were more likely to support restoration, with marginal effects of these greater for the Pre-Camille option. For the Status-Quo option, 75% of respondents voted in favor of restoration, and the offered bid was not significant; only the hurricane-protection and environmental-impact variables were significant for this option.

Mountain substitutability and peak load pricing of high alpine peaks as a management tool to reduce environmental damage: A contingent valuation study

High alpine peaks throughout the world are under increasing environmental pressure from hikers, trekkers, and climbers. Colorado's “Fourteeners”, peaks with summits above 14,000 feet are no exception. Most of these peaks have no entrance fees, and reach ecological and social carrying capacity on weekends. This paper illustrates how a series of dichotomous choice contingent valuation questions can be used to evaluate substitutability between different alpine peaks and quantify the price responsiveness to an entrance fee. Using this approach, we find that peak load pricing would decrease use of popular Fourteeners in Colorado by 22%. This reduction is due almost entirely to substitution, rather than income effects. There is also price inelastic demand, as 60% of the hikers find no substitution for their specific Fourteener at the varying cost increases posed in the survey. The no substitute group has a mean net benefit of $294 per hiker, per trip, considerably higher than visitor net benefits in most recreational use studies.