Willingness To Accept Compensation Research Articles

Residents' willingness to be compensated for power rationing during peak hours based on choice experiment

There is growing interest in demand-side interventions aimed at reducing residential peak-hour electricity consumption in response to energy transition. However, limited knowledge exists regarding residents' willingness to accept compensation (WTC) for power rationing during peak hours. This study empirically evaluates the compensation standards based on residents' willingness to accept power rationing in peak hours based on the Choice Experiment (CE). The results indicate that residents are concerned most with the attributes of power rationing seasons and power rationing periods, requiring higher compensation for power rationing in summer and at night, whether on weekdays or non-weekdays. Further analysis reveals significant regional and group heterogeneity. Specifically, residents in northern regions are not significantly concerned about the power rationing durations compared to those in southern regions, while they are more on power rationing degrees. Analysis based on the Latent Class Analysis (LCA) model shows that two classes of residents are willing to participate in the power rationing agreement for free on both weekdays and non-weekdays, as well as two categories of residents unwilling to participate in the compensated power rationing on non-weekdays. Based on this, we estimate that the adjusted participation rate of residents in compensated power rationing is 96.59% on weekdays, with compensation ranges from 0.67 ￥/kWh to 13.38 ￥/kWh, and a participation rate of 69.69% on non-weekdays, with compensation levels ranging from 3.99 ￥/kWh to 15.34 ￥/kWh. This paper also assesses the costs of power rationing compensation to provide evidence for policymakers when determining the compensation level of the power rationing program.

Integrating in situ conservation of plant genetic resources with ex situ conservation management: Involving custodian farmers, benefits and their willingness to accept compensation

Compensation for custodian farmers to provide agrobiodiversity-conservation services in their farms (in situ) is an emerging global approach because it can generate public benefits when it comes to important plant genetic resources (PGRs) for food and agriculture. This review focused on: i) the integration of in situ conservation to the PGR management involving custodian farmers in a systematic conservation approach; ii) the private benefits obtained by custodian farmers to increase their willingness to actively participate in the conservation service; and iii) the willingness to accept (WTA) compensation of the farmers in providing conservation service relative to opportunity costs. The most recent approaches suggest the integration of in situ conservation with ex situ conservation management for efficient conservation programmes, especially in relation to governance of local agrobiodiversity. Involving custodian farmers in the comprehensive genetic-improvement system appears to be an activity that increases their willingness to participate in agrobiodiversity conservation schemes. Farmers receive private benefits, which are simultaneously reflected in the provision of public benefits. Therefore, WTA compensation, which employs mechanisms in the design of payments for better agro-environmental conservation services, controls the opportunity costs. Overall, farmers seem willing to participate in any type of compensation scheme that is proposed in the different countries. Furthermore, it is possible to capture the WTA, therefore significant progress requires more studies of primary schemes, indepth analysis to capture farmers' preferences on economic, socio-cultural, and environmental factors in scheme design, and the implementation of incentive policies designed with pragmatic tools.

Balancing benefits and risks: Assessing willingness to accept compensation for clean energy facility siting in China-An examination of knowledge, attitudes, and practices.

Provisions for compensation have been widely used to handle siting difficulties in many countries. However, neglecting the factors that influence the residents' willingness to accept compensation (WTA) for the siting of clean energy facilities for the long term has led to the failure of compensation, which could potentially cause stalemates or even conflicts in projects. Given the representativeness of nuclear power plants (NPPs) in the siting of clean energy facilities, this study chose the siting of NPPs as a case study. Moreover, an extended knowledge-attitudes-practices (KAP) model was constructed to explore the key factors that affect the residents' WTA since this model excels at understanding individual behaviors. The results show that the WTA is extremely low. Knowledge has positive effects on attitudes, which is also the most significant predictive factor of the WTA. More knowledge leads to lower pollution perceptions but results in higher safety perceptions and pro-environmental values. Perceptions of safety and pollution mediate the relationship between knowledge and the WTA, but the mediating effects of pro-environmental values are not significant. The negative effects of pollution perceptions are greater than the positive effects of safety perceptions of WTA. These results may serve as a basis to improve public evaluation to handle crises in other countries and regions.

Influencing Factors and Measurement of “Willingness to Accept” Living with Alligators in a Nature Reserve: A Case Study in National Chinese Alligator Nature Reserve, China

The establishment of nature reserves is an important measure to protect the wild population of Chinese alligators. Due to the overlap of nature reserves and human living areas, there is a certain conflict between economic development and ecological protection. How to formulate a feasible eco-compensation scheme and accurately analyze the influencing factors of eco-compensation willingness is of great significance to alleviate the contradiction between local residents and Chinese alligators. In this study, the contingent valuation method (CVM) was used to measure and analyze the residents’ willingness to accept (WTA) at National Chinese Alligator Nature Reserve (NCANR) located in Anhui province, China. Furthermore, decision tree modeling and logistic regression were used to analyze the influencing factors of residents’ WTA in NCANR, which provides a new insight to the influencing factors of eco-compensation. The results indicate that: (1) 93% of the residents living in NCANR have a WTA compensation, and the amount of WTA is CNY 25,542 (USD 3659.36) per household per year; and (2) individual characteristics, ecological protection cognition and external impact affect the WTA, and external impact on local residents is the most important factor affecting WTA. Therefore, it is necessary to make differential compensation to ensure the fairness of eco-compensation. In addition, the propaganda of eco-compensation should be strengthened, and the boundary of NCANR needs to be further clarified. The sources of funds for eco-compensation are supposed to be broadened, and poverty alleviation can be combined with eco-compensation policies.

The impact of stay‐at‐home policies on individual welfare*

AbstractIn this paper, we perform a choice experiment assessing the impact of stay‐at‐home policies on individual welfare. We estimate the willingness to accept compensation (WTA) for restricting non‐working hours in Sweden during the COVID‐19 pandemic. The WTA for a one‐month stay‐at‐home policy is about US$480 per person, or 9.1 percent of Sweden's monthly per capita GDP. Stricter lockdowns require disproportionately higher compensation than more lenient ones, indicating that strict policies are cost‐effective only if they are much more successful in slowing the spread of the disease. Moreover, older people have a higher WTA of staying home than the rest of the population.

Loss aversion for the value of voting rights: WTA/WTP ratios for a ballot

What is the subjective value of voting rights? This article presents an empirical demonstration of people’s loss aversion for the value of voting rights. By way of vignette experiments using scenarios of the 2020 U.S. presidential election (Studies 1 and 2, with U.S. citizens) and a fictitious direct premier election in Japan (Study 3, with Japanese citizens), the present research measured the willingness-to-accept compensation (WTA) and the willingness-to-pay price (WTP) for a ballot(s) in political elections. A great disparity between WTA and WTP was found regardless of the electoral setting, the proportion and width of ballot alteration, and the initial status. Specifically, the observed WTA/WTP ratios for a ballot(s) were within the range of 5.00–27.36, which is much larger than the ratios for ordinary market goods (about 1.5–2.5) and which is comparable to the ratios for other non-market goods. In addition, WTA for a mere 10% dilution of voting rights is still higher than WTP for full voting rights; the powerful effect of loss aversion might help explain universal barriers against suffrage extension.

Willingness of tobacco farmers to accept compensation for tobacco crop substitution in Lichuan City, China

ObjectiveThis study, conducted in China, explores tobacco farmers’ willingness to accept (WTA) compensation for tobacco crop substitution.MethodsThe contingent valuation method was used to elicit farmers’ WTA compensation. A face-to-face survey...

Resident Willingness to Pay for Ecotourism Resources and Associated Factors in Sanjiangyuan National Park, China

Willingness to Pay (WTP), Willingness to Work (WTW) and Willingness to Accept Compensation (WTA) are the three quantitative criteria for assessing local ecological asset values for the social aspects of ecosystem services and residents' willingness to contribute to and receive compensation for tourism ecology. The objectives of this study are to estimate the residents' willingness to pay, work and accept compensation for conservation at Sanjiangyuan National Park, and to analyze the relationship between residents' attitude towards tourism ecology and the ecological assets of the National Park based on a standard questionnaire survey. The dichotomous choice Contingent Valuation Method (CVM) was employed to determine the willingness. The survey conducted in 2018 collected WTP, WTW, WTA, socio-demFographical information, social trust and resident perceptions toward tourism impacts and relevant management strategies from 244 residents in two counties. Based on generalized linear modeling, income and education level are important for residents' WTP and WTA, but other social characteristics, such as gender and age, do not have significant effects. The social trust is found to be a significant factor on residents' willingness, despite the limitation on education level. Also, government funding is associated with residents' inclination to WTP, WTW and WTA, but the support levels differ among the two counties due to geographical and social heterogeneities. The estimated WTP, WTW and WTA for the Sanjiangyuan National Park in 2018 were 1.2448×107 yuan, 1.247×106 hours and 2.3232×107 yuan yr–1 based on the survey and published demographics. This study, for the first time, estimates the WTP, WTW and WTA for the Sanjiangyuan National Park and informs ecological conservation managers and policy makers. Ultimately, to maintain the long-term benefits arising from sustainable development, compensation should be specifically tailored and site-dependent, and development measures based on local resources should be adopted by governments to actively support eco-tourism activities.

Increasing provision of ecosystem services through participation in a conservation program

Grasslands provide a variety of goods and services that benefit humans, but only a few have a market value. Despite the benefits provided, native grasslands continue to be degraded. Lack of a proper valuation, including a monetary value of grassland nonmarket goods and services, has become one of the factors contributing to the degradation trend. The objective of this research was to quantify the cost of increasing the provision of ecosystem services from grassland ecosystems in the Gulf Coastal Plains and Ozarks (GCPO) Landscape Conservation Cooperative geographic area of the U.S. A contingent valuation method (CVM) was used to estimate landowner willingness to accept (WTA) monetary compensation in exchange for implementing management practices preserving grassland ecosystems. The mean WTA compensation was $290.10 per acre per year for a 10-year contract. Required compensation increased with landowner income, frequency of contacts with state wildlife agencies, and percentage change in grassland area. Landowner age and proximity to the nearest local park were negatively associated with WTA. The total cost of preserving ecosystem services, estimated based on WTA, was US$3 billion per year and 57 times larger than the 2016 Conservation Reserve Program (CRP) allocation for this purpose in the amount US$50 million. However, the preservation cost varied from US$1.7 million to 1.1 billion depending upon the number of ecological attributes to be preserved and corresponding levels of ecosystem services. Results will be helpful in quantifying future funding levels necessary for implementation of coordinated conservation activities in grasslands and other ecosystems, prioritizing ecosystem services for restoration, and developing conservation programs in the U.S. and other countries.

Risk aversion, trust in institutions and contingent valuation of healthcare services: trying to explain the WTA-WTP gap in the Dutch population

BackgroundThe preferences of citizens are a basic element to incorporate into the decision-making process when planning health policies. Contingent valuation (CV) is a common method for calculating the value for citizens that new technologies, interventions, and the provision of services or policies have. However, choosing the correct CV tool may not be a neutral decision. This work aims to assess the substitution of a healthcare service by comparing valuation differences between the willingness to pay (WTP) for the maintenance of the service versus the willingness to accept compensation (WTA) for its substitution, both of which are related to subject characteristics, with a particular focus on trust in institutions and risk aversion.MethodsA CV study was designed to study Dutch population preferences when physician assistants replace anaesthesiologists. Differences between the distributions of WTA and WTP were compared through full decomposition methods, and conditional quantile regression was performed.ResultsNearly two-thirds of surveyed citizens expressed null values for WTA and WTP. The other third systematically reported a value of WTA higher than that of WTP, which increased further with lower income and the possible presence of a strategic bias. In contrast, being more than 65 years old, having trust in government, and preferring anaesthesiologists decreased the WTA-WTP difference. Risk aversion had no clear association with the WTA-WTP gap.ConclusionsKnown differences between the perceived value of health services from the perspective of gains and losses could be related to people’s characteristics. Trust in government but not aversion to risk was related to the WTA-WTP differences. Identifying a profile of citizens who are averse to losing health services should be considered when designing and implementing health services or interventions or making disinvestment decisions.

How much will farmers be compensated for water reallocation from agricultural water to the local ecological sector on the edge of an oasis in the Heihe River Basin?

Water reallocation from the agricultural sector to the ecological sector is an effective way to protect and improve the ecological environment and promote sustainable development in inland river basins. The concept of ecological compensation provides us with a key approach to coordinating economic development and ecological construction. However, most existing studies have paid insufficient attention to the ecological compensation mechanism for the cross-sector transfer of water resources. Taking the Heihe River Basin in northwestern China as a case, the object of this study is to evaluate farmers’ willingness to accept compensation (WTA) for transferring saved irrigation water to the local ecological sector on the basis of distinguishing regions and crops and to determine whether it is reasonable to take it as the ecological compensation standard. Based on the pre-investigation and double-bounded dichotomous contingent valuation model, the number of questionnaires is allocated according to the differences in the number of households in different villages, and face-to-face interviews are conducted by random sampling, The results show that the minimum farmers’ WTA for transferring seed maize, maize, and seed watermelon saved irrigation water to the local ecological sector are 0.53 RMB per m³, 0.24 RMB per m³ and 2.09 RMB per m³, respectively, and they are between the shadow price of agricultural water use in typical irrigation zones and the value of water resource ecological services This indicates not only that the evaluation of farmers' WTA can promote the coordinated development of economy–society–ecology but also that differentiated ecological compensation standards are needed on the edge of the oasis in the Heihe River Basin. If the compensation period is ten years, the total cost of this ecological compensation project is approximately 469 million RMB. In addition, the study also reveals that the start-up bid, irrigation cost, cultivated land area, proportion of agricultural labour and compensation policies variables have a positive impact on farmers’ WTA, whereas the proportion of agricultural income and the impact of land desertification and salinization, ecological wetland degradation and wind-sand weather on production and life variables have a negative effect. Furthermore, the findings indicate that cash, agricultural subsidies and in-kind subsidies are the most acceptable compensation modes.

Farmers’ heterogeneous preferences towards results-based environmental policies

Heterogeneity of farmers’ preferences and willingness to accept compensation (WTA) related to a results-based agri-environmental policy were investigated using a choice experiment and latent class analysis. A quarter of farmers would be willing to switch to a results-based agri-environmental scheme (AES) with a moderate compensation request, whereas one quarter supported the status quo. Willingness to reform the AES was found among all farmers, but the current practice-based approach generally appeared to be more acceptable than the new proposed policy. Responses to the results-based AES differed between farmer groups. Therefore, attention should be paid in policy design to ensuring desirable programme coverage among different regions and farm types.

Poyang lake wetlands restoration in China: An analysis of farmers’ perceptions and willingness to participate

The purpose of this study is to inform the stakeholders about individual farmers’ attitudes toward Poyang Lake wetlands restoration, preferences about compensation policies, and their willingness to participate in wetland restoration. Using survey data from the Poyang Lake region, this paper investigates the factors affecting individual farmers’ willingness-to-accept (WTA) compensation amounts and the decision to participate. Particularly, we incorporate into analysis farmers’ knowledge about wetland restoration and perceptions toward government policies. The research findings first suggest individual characteristics and household attributes affect both farmers’ willingness to participate and WTA. While numbers of seniors and of farm laborers in the household have larger impact on participation decisions, marriage status, house value and household income play more important roles in determining the WTA compensation amount; 2) Positive attitudes toward government wetland policy not only increase willingness to participate but decrease WTA compensation amount; 3) A better understanding of the environmental benefits of wetland restoration leads to acceptance of a lower compensation amount. Our study provides important policy implications to the government that supplementing monetary compensation with educational programs and policy campaigns may increase farmers’ participation in wetland restoration.

Estimates of willingness to accept compensation to manage pine stands for ecosystem services

Many ecosystem services are often overlooked in active management of private forests leading to their production below the levels preferred by the society. This study used the contingent valuation method (CVM) to estimate willingness to accept (WTA) compensation for managing a hypothetical tract of loblolly pine (Pinus taeda) for multiple ecosystem services. The CVM scenario involved four forest management alternatives representing increasing levels of forest management restrictions. A structural random effects probit model was constructed to quantify WTA compensation amounts. Mean WTA estimates ranged from $190.22 to $595.23 per hectare (ha) per year and increased with the intensity of forest management restrictions. Based on the WTA estimates, the total cost of increasing ecosystem production ranged from $0.88 to $4.76 billion per year. Increased budgets and private partnerships might be needed to implement forest management regimes facilitating multiple ecosystem services.

Sustainability of returning wheat straw to field in Hebei, Shandong and Jiangsu provinces: A contingent valuation method

In China, returning wheat straw to the field (RWSF) is the most popular way of utilizing wheat straw. RWSF can not only improve soil quality, but also help to control agricultural pollution from wheat straw burning. However, the increased production cost caused by RWSF reduces farmers' enthusiasm to adopt this approach. This study estimated farmers' willingness to accept compensation (WTA) for RWSF by using the contingent valuation method (CVM), and identified determinants that influence farmers' WTA by using an ordered choice model (OCM). It aimed to determine how much compensation should be given to farmers for encouraging them to adopt RWSF and which factors affect their WTA. The results showed that, currently, the increased cost caused by adopting RWSF was 743 RMB/ha, and which was fully burdened by farmers. Although more than 90% of the surveyed farmers adopted RWSF, only 3.8% of these farmers were willing to adopt RWSF voluntarily without any compensation. The farmers' WTA of adopting RWSF was 479 RMB/ha, and it was much higher than the current subsidy rate of 300 RMB/ha in Jiangsu, which could not effectively encourage farmers to adopt RWSF voluntarily. Farmers' WTA is not only positively affected by the increasing production cost caused by RWSF and negatively influenced by the benefits resulting from RWSF, but also restricted by social-economic characteristics such as age, education, income etc. It is costly for the Chinese government to subsidize all the farmers adopting RWSF, letting farmers to become aware of the long-term environmental value of RWSF is an effective measure to motivate them to protect environment responsibly by adopting RWSF. These findings are useful in improving the current provincial subsidy policies or designing new subsidy policies nationwide for RWSF, and helpful in encouraging famers more sustainably adopting RWSF and promoting cleaner wheat production.

What do income tests tell us about the gap between WTA and WTP for public goods?

Theory relates the gap between WTA (willingness to accept compensation) and WTP (willingness to pay) to the income elasticity of WTP. It has been suggested that empirical estimates of the income elasticity of WTP can therefore be used to test whether an observed gap between WTA and WTP is consistent with rational behavior. We examine this issue for the case of non-market public goods. We identify the theoretically appropriate tests of income sensitivity, and examine conditions for valid income sensitivity tests. We show that income tests may provide false signals in common settings, indicating an inconsistency where none exists.

Implications of the WTP–WTA Disparity for Benefit–Cost Analysis

Differences between estimated willingness to accept compensation (WTA) and willingness to pay (WTP) that are larger than can be explained by standard economic theory raise questions about which measures should be used for benefit–cost analysis (BCA). These differences do not create a new problem but accentuate an existing one: the fact that the Kaldor–Hicks compensation test is ambiguous when its two components conflict. This conflict is more likely when the difference between WTA and WTP measures of a change is large. In many cases, the same individuals receive benefits and incur costs from a policy change and their preferences for the policy cannot depend on whether they ask whether their WTP for the benefit exceeds the cost they will incur or their WTA to forgo the benefit exceeds the cost they will save. In cases where benefits and costs are incurred by different people, it seems more useful to evaluate the fundamental question – whether the benefits to some justify the harms to others – than to obscure this question through a technical debate about valuation measures.

A new meta-analysis on the WTP/WTA disparity

This study reports a new meta-analysis of papers that elicit willingness-to-pay (WTP) and willingness-to-accept compensation (WTA) measures of value for the same good. We investigate the effects of type of good and several survey-design features on the WTP/WTA disparity, measured as the logarithm of the ratio of mean WTA to mean WTP. Confirming Horowitz and McConnell׳s (2002) pioneering meta-analysis, we find the disparity is smaller for ordinary private goods than for public and non-market goods, that it is not solely an artifact of using hypothetical transactions or other weak experimental or survey methods, and that it is smaller for studies using student subjects. In addition, we find that the disparity is smaller when subjects have experience valuing the good in real markets or through repeated experimental trials. In contrast to Horowitz and McConnell, we find the disparity is significantly smaller in studies using incentive-compatible elicitation mechanisms. The disparity is smaller in more recent studies, an effect that is attributable only in part to changes in study characteristics.

Non-Marginal Cost-Benefit Analysis and the Tyranny of Discounting

This paper uses the Kaldor-Hicks compensation principle to compute the present value (PV) of a non-marginal future event. Three theoretical results stand out: First, decreasing returns to capital create a wedge between the PV of future generations' willingness to pay (WTP) and the PV of their willingness to accept compensation (WTA); second, the discount rates implicit in the computation of the PVs are endogenous, and rising (declining) over time for the future generations' WTP (WTA); and third, decreasing returns to capital may make it impossible to compensate future generations according to their WTA, effectively defeating the tyranny of discounting. A back-of-the-envelope calibration suggests that this last result is realistic in the case of climate change. A cost-benefit analysis based on the Kaldor-Hicks compensation principle may therefore be impossible if future generations are entitled to a world without climate change; and an environmental trust fund - no matter how large it is - may be insufficient to adequately compensate future generations.

Measuring the Local Costs of Conservation: A Provision Point Mechanism for Eliciting Willingness to Accept Compensation

Protected areas are employed worldwide as a means of conserving biodiversity. Unfortunately, restricting access to such areas imposes opportunity costs on local people who have traditionally relied on them to obtain resources such as fuelwood and bushmeat. We use contingent valuation to estimate the local benefits forgone from loss of access to a number of protected area types in Uganda. Methodologically, we innovate by implementing a “provision point” mechanism to estimate willingness to accept compensation (WTA) for loss of access to protected areas. We show that the provision point reduces mean WTA by a significant degree. (JEL Q51, Q56)