Double-bounded Model Research Articles

Is There a Promising Market for the A2 Milk? Analysis of Italian Consumer Preferences

Milk consumption has been on the decline for decades. Part of the cause for this is due to changes in consumer behavior and interest in healthy eating. The aim of this study was to estimate the premium price that consumers are willing to pay for A2 milk. A2 milk is a newcomer type of product containing only A2 beta-casein that is spreading in many countries of the world as a functional food. In addition, it is produced by traditional breeds of cattle that are adapted to the marginal areas and could be a virtuous model of the sustainable management system to which the consumer lately seems to turn in an increasingly conscious way. To accomplish this aim, contingent valuation has been used, which permits using a survey and a direct estimation of the premium price that consumers are willing to pay (WTP). The question format used is a dichotomous choice valuation based on a double-bound model. Statistical analysis was carried out using descriptive statistical analysis. The empirical results reveal that consumers are willing to pay a premium for A2 milk. In addition, individuals interested in product quality and already buying functional products are attracted to this type of product.

Benefit estimation for different types of bikeways using contingent valuation method

Investing in cycling facilities is a common strategy that is used to increase the level of cycling. As the demand for the installation of bike facilities increases, it is becoming necessary to carefully examine installation costs and benefits by the type of bike facilities. In particular, we used the contingent valuation method to estimate the willingness-to-pay (WTP) of additional tax per household as a bid for three types of bikeways, i.e., bike lanes, bike paths shared with pedestrians, and cycle tracks. Specifically, four kinds of modeling approaches, i.e., the single-bounded model, the double-bounded model, the Spike model, and the one-and-one-half-bounded (OOHB) model, were evaluated. Consequently, we analyzed the benefits of the bikeway in Goyang, South Korea, using the WTPs from these four models. The results showed that users are willing to pay the highest price for cycle tracks, and this was followed by bike paths shared with pedestrians and bike lanes. The results of this research can be a useful resource for analyzing users’ preferences concerning the type of bikeways and for estimating the benefits of bikeways. This information will be useful to policy makers in their efforts to make decisions for new bike facilities and to increase the level of cycling.

Accounting for the non-market benefits of water supply improvements to ensure sustainability - the case of Mauritius

The paper uses a contingent valuation survey to estimate the non-market benefits of improvements in the water systems in a small island state. By conceptualising economic benefits through the willingness to pay (WTP) approach, two econometric models are estimated - a participation logit regression model focusing on the intent to contribute an amount of money and a double-bounded model analysing WTP and associated responses. The regression analysis concludes that income, age, education level and household size are important determinants of WTP. The mean WTP is estimated at 0.02% of average monthly household income. Households are willing to pay an equivalent increase of 27% in the mean water bill for a reliable water supply system, confirming significant aggregate benefits on an annual basis. The result of the study is an important component in cost-benefit analysis for water-related investments.

Application of the double-bounded dichotomous choice model to the estimation of crowding acceptability in natural recreation areas

Investigating visitors’ crowding norms is necessary to establish the carrying capacity of natural recreation areas. For this purpose, several question formats have been used, but it is known that these have methodological issues. To reduce these methodological issues, we compared several different question formats to investigate respondents’ perceptions of acceptable crowding limits, using montage photographs of different numbers of people at four sites in Shiretoko and Yakushima World Natural Heritage Site in Japan. We applied the double-bounded dichotomous choice model used in the contingent valuation method. Our use of conventional long- and short-format question models shows that acceptability decreases as the number of people increases, in single- and double-bounded models. This confirms the findings of past studies. Despite differences in the crowding norms as measured using different question formats, there was little difference in the number of people depicted in the photographs. The logit model of the double-bounded dichotomous choice model makes it possible to analyze the impact of differences in the number of people and other relevant factors, including the respondents’ characteristics and attitudes. The number of respondents and the burden on respondents vary in each question format, and each provides different information to managers. A double-bounded dichotomous choice model is shown to be a suitable method to analyze crowding norms at natural recreation sites. This model is less burdensome for respondents and requires fewer samples than some other methods. The choice model also permits one to analyze the influences of visitors' characteristics and other factors on crowding norms.

Assessment of Willingness to Pay for Good Agricultural Practice Cabbage

This paper aims to investigate factors determining the probability of consumers’ willingness to pay a premium price for safe cabbage, as well as to estimate the mean willingness to pay a premium price for safe cabbage of consumers. Interviews with survey questionnaire are conducted in Bangkok with 540 respondents. The contingent valuation method with single- and double-bounded models is employed. The coefficients used to calculate mean willingness to pay are estimated by Maximum Likelihood method. The estimation of the change in the probability of people willing to pay for standardized cabbage is assessed by marginal effects of each factor, which are calculated by probit model. The result finds 9 significant variables as the determinants of consumers' willingness to pay. 329 respondents express their willingness to pay for GAP cabbage while 143 respondents show their true zero bids. The estimation of mean willingness to pay, therefore, is done based on these two groups of respondents. The weighted mean willingness to pay for GAP cabbage is 3.54 baht/kilogram over the current market price of normal cabbage. This amount is much lower than the difference in the variable cost between non-GAP and GAP cabbage producers, making it difficult for farmers to turn to standardized process of production.

석탄가스화 복합발전소 건설의 에너지안보 확보편익 추정

석탄가스화 복합발전소는 기존 석탄화력 발전소에 비해 온실가스 및 대기오염물질을 적게 배출할 뿐만 아니라 국제적으로 쉽게 확보할 수 있는 저렴한 저품위 석탄을 사용할 수 있어서 연료를 안정적으로 공급받을 수 있다. 이에 본 논문에서는 석탄가스화 복합발전 건설의 에너지안보 확보편익을 추정하고자 한다. 이를 위해 무작위로 추출된 전국 600가구를 대상으로 설문조사를 수행한 후 얻은 자료에 조건부 가치측정법을 적용하여 분석한 결과를 제시한다. 통계적 효율성의 확보를 위해 이중경계 모형을 적용하며 영(0)의 응답자료를 적절하게 다루기 위해 스파이크 모형을 적용한다. 분석결과 석탄가스화 복합발전소로부터 생산되는 전력 1kWh에 대해 응답자들은 평균적으로 6.05원의 추가적인 지불의사액을 가졌다. 즉 석탄가스화 복합발전소로부터 생산되는 전력에 대한 에너지안보 확보편익은 6.05원/kWh이다. 올해 완공되는 태안 석탄가스화 복합발전소의 예상 연간 발전량은 2.27TWh이므로 에너지안보 확보편익은 연간 13,740백만원으로 추정된다. Integrated gasification combined cycle (IGCC) power plants not only emit less greenhouse gases and air pollutants than conventional coal-fired power plants, but also use low-price, low-quality, and internationally easily procurable coal. Thus we can benefit from safeguarding energy security through building the IGCC power plant. This paper attempts to value the benefits of energy security enhanced by IGCC power plant. To this end, we report here the results from a contingent valuation survey of randomly selected 600 households. A combination of a double-bounded model and a spike model is applied for the purpose of increasing statistical efficiency and dealing with zero(0) willingness to pay data, respectively. The results show that the respondents are additionally willing to pay 6.05 won for 1kWh of electricity generated from IGCC power plant. In other words, the benefits from safeguarding energy security through building the IGCC power plant are 6.05 won per kWh. Given that the expected amount of generation from the Taean IGCC power plant that is scheduled to be built in late 2015 is 2.27 TWh per year, the benefits are estimated to be 13.74 billion won per year.

Measuring the Willingness to Pay for Tap Water Quality Improvements: Results of a Contingent Valuation Survey in Pusan

With increasing concern regarding health, people have developed an interest in the safety of drinking water. In this study, we attempt to measure the economic benefits of tap water quality improvement through a case study on Pusan, the second largest city in Korea. To this end, we use a scenario that the government plans to implement a new project of improving water quality and apply the contingent valuation (CV) method. A one-and-one-half bounded dichotomous choice question (OOHBDC) format is employed to reduce the potential for response bias in multiple-bound formats such as the double-bound model, while maintaining much of the efficiency. Moreover, we employ the spike model to deal with zero willingness to pay (WTP) responses from the OOHBDC CV survey. The CV survey of 400 randomly selected households was rigorously designed to comply with the guidelines for best-practice CV studies using person-to-person interviews. From the spike OOHBDC CV model, the mean WTP for the improvement was estimated to be KRW 2,124 (USD 2.2), on average, per household, per month. The value amounts to 36.6% of monthly water bill and 20.2% of production costs of water. The conventional OOHBDC model produces statistically insignificant mean WTP estimate and even negative value, but the OOHBDC spike model gives us statistically significant mean WTP estimate and fitted our data well. The WTP value to Pusan residents can be computed to be KRW 31.2 billion (USD 32.1 million) per year.

Estimation efficiency of RP/SP models considering SP design and error structures

SP attribute values are sometimes set X times or 1/X times the RP attribute values in the direction that changes respondents' RP behaviour. In estimating RP/SP models, assumptions on error structures are required: (a) RP and SP have both a common error component and independent error components (general model); (b) RP and SP have a common error component and SP only has an independent error component (SP-off-RP model); (c) RP and SP have independent error components only (independent model); and (d) RP and SP have a common error component only (double-bound model). This study simulates and examines the estimation efficiency of RP/SP models based on the D-error considering both error structures and attribute differences. Insights obtained are the following. (1) The general model offers better estimation efficiency in the neighbourhood of X=1.0. (2) For the SP-off-RP model and the independent model, the larger the variance in the error components of the SP model relative to the RP model, the larger the value of X that is required to minimise the D-error. The authors propose a method for designing an SP experiment in which the level-of-service of the SP differs from that of the RP by only a single attribute value.

Consumers’ willingness to pay for beef direct sales. A regional comparison across the Pyrenees

Willingness to pay (WTP) for direct market of beef is investigated in two Spanish and two French regions located on both sides of the Pyrenees. Given the novelty of this distribution system, especially in Spain, a contingent valuation approach is undertaken, and a double-bounded model is estimated. Different patterns of awareness, use and WTP are found across regions. Likewise, the profile of current and potential users of direct sale chains is investigated. Experience in the different stages involved from choice to final consumption of beef, intensity of varied beef consumption, familiarity with direct market of food in general, and beef in particular, are some of the relevant factors to explain WTP and the probability of getting engaged into a direct distribution system of beef.

Estimating Ecological Value of Small Hydropower Using Contingent Valuation Method: An Application to Tongjiqiao Reservoir in Zhejiang Province, China

Abstract The small hydropower (SHP) will be less competitive in the absence of environmental value. The lack of information has become an important obstacle challenging decision-makers in resource-use choices. This paper is an application of contingent valuation method (CVM) in rural China to estimate the willingness- to-pay (WTP) for environmental services provided by exiting hydropower station. Using the single-bounded and dichotomouschoice CVM, the ecological value of Tongjiqiao Reservoir (TJQR) is estimated, and the annual mean WTPs of single-bounded and double-bounded CVM estimation are 141.05 and 219.52 Yuan (RMB)/a, respectively. The 95% confidence interval of annual WTP on an average is 118.47, 166.79 Yuan (RMB)/a and 204.41, 236.22 (Yuan RMB)/a, respectively. In contrast, double-bounded model could obtain much more information of WTP of the investigated, thus reducing the confidence interval of estimation, and enhancing the estimation accuracy of the WTP. According to the estimated mean WTP of the double-bounded CVM, the total ecosystem service value of the TJQR is 15.54 million Yuan (RMB). Compared with the conventional electricity of fossil power and large hydropower, the SHP will be less competitive in the absence of non-market value, ignoring that the environmental impacts of existing SHP will undermine the healthy development of clean energy sector.

Valuing the potential economic impact of climate change on the Taiwan trout

The purpose of this study is to estimate the value of the potential economic impact of climate change on the Taiwan trout (also referred to as Oncorhynchus masou formosanus), an endangered species that only lives in high mountain stream sections in which the water temperature is lower. A two-stage approach is adopted to estimate the value of the change in the Taiwan trout stock due to a change in climate. The first stage involves establishing the relationship between the Taiwan trout stock and climate change, while the second stage involves estimating the non-market value of the change in the Taiwan trout population using the double bound model associated with the contingent valuation method (CVM). Our results indicate that the total Taiwan trout population will decline from 1612 to 974, 560, and 146 if precipitation in Taiwan increases by 0.6 mm/day, while the temperature increases by 0.9 °C, 1.8 °C, and 2.7 °C, respectively. The mean willingness to pay per person per year to avoid a change in the trout stock caused by climate change is found to be US$16.22, US$25.72, and US$33.60, respectively.

Detecting Starting Point Bias in Dichotomous-Choice Contingent Valuation Surveys

We examine starting point bias in CV surveys with dichotomous choice payment questions and follow-ups, and double-bounded models of the WTP responses. We wish to investigate (1) the seriousness of the biases for the location and scale parameters of WTP in the presence of starting point bias; (2) whether or not these biases depend on the distribution of WTP and on the bids used; 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. Because starting point bias cannot be separately identified in any reliable manner from biases caused by model specification, we use simulation approaches to address this issue. Our Monte Carlo simulations suggest that the effect of ignoring starting point bias is complex and depends on the true distribution of WTP. Bid set dummies tend to soak up misspecifications in the distribution assumed by the researcher for the latent WTP, rather than capturing the presence of starting point bias. Their power in detecting starting point bias is low.

How much are people willing to pay for silence? A contingent valuation study

Despite its major importance in the urban environment, the problem of noise has received little attention from environmental economists. In this paper the economic value of a noise reduction programme is evaluated. The chosen technique is contingent valuation using the recently proposed one and one-half bound question format. This new question format reduces the potential for response bias in multiple bound formats such as the double bound model while maintaining much of its efficiency. Through the estimations it is found that urban residents generally value noise negatively, that is, households are willing to pay for a noise reduction. In particular, it is found that households are willing to pay approximately four euros per decibel per year. A further finding is that interviewees show scope sensitivity; that is, households display a different willingness to pay for different degrees of noise reduction, most are willing to pay more for larger decreases in the level of disturbance from noise.

Bias and efficiency of single versus double bound models for contingent valuation studies: a Monte Carlo analysis

The dichotomous choice contingent valuation method can be used either in the single or double bound formulation. The former is easier to implement, while the latter is known to be more efficient. We analyse the bias of the ML estimates produced by either model, and the gain in efficiency associated to the double bound model, in different experimental settings. We find that there are no relevant differences in point estimates given by the two models, even for small sample size. The greater efficiency of the double bound is confirmed, although differences tend to reduce by increasing the sample size. Provided that a reliable pretest is conducted, and the sample size is large, use of the single rather than the double bound model is warranted.

Bias and Efficiency of Single vs Double Bound Models for Contingent Valuation Studies: a Monte Carlo Analysis

The Dichotomous Choice Contingent Valuation Method can be used either in the single or double bound formulation. The former is easier to implement, while the latter is known to be more efficient. We analyse the bias of the ML estimates produced by either model, and the gain in efficiency associated to the double bound model, in different experimental settings. We find that there are no relevant differences in point estimates given by the two models, even for small sample size, and no estimator can be said to be less biased than the other. The greater efficiency of the double bound is confirmed, although differences tend to reduce by increasing the sample size. Provided that a reliable pre-test is conducted, and the sample size is large, use of the single rather than the double bound model is warranted.