Willingness To Pay For Improvement Research Articles

Do residential localities matter? Revisiting preference heterogeneity and ranking of ecological attributes of an inland river basin

Recognition of public preferences and the assessment of the river basin are valuable for efficient river basin management, and improvement in ecological attributes of river basin can provide considerable non-market benefits. Accordingly, the current study examines the heterogeneity in preferences and ranking of river ecosystem services amongst residents on the basis of their willingness to pay (WTP) to enhance these services. Given the different environmental and economic conditions of urban and rural residents in China, their views on ecological restoration differ. Various Likert scales were used to explore residents' perceptions and ranking of ecological attributes. Findings revealed that urban and rural residents care about water for their daily life, with the mean value of 2.08 and 2.10 and the lowest standard deviation of 1.63 and 1.59, respectively where the range of scale is ‘1 is the most important and 7 is the least important’. Agricultural and industrial water, weather management in Yangsha Lake, vegetation restoration, biodiversity conservation and downstream ecological protection were the next most imperative ecological attributes. Moreover, the results from random parameter logit (RPL) models show that river water quality has the highest marginal utility value, whereas recreational conditions have the lowest marginal utility value in all respondents' models. A considerable difference exists amongst urban and rural residents' WTP for improvements in ecological amenities. Amongst all households, lower basin residents prefer and value ecological attributes and are ready to pay whatever cost for restoration. Generally, urban residents have high implicit prices for most of river ecosystem attributes. Findings reveal that the policymakers should consider the existing preference heterogeneity when designing ecosystem payment plans and allocating resources.

Directional heterogeneity in WTP models for environmental valuation

Many studies in the stated preference literature on environmental valuation do not include the effects of substitutes and distance in willingness-to-pay (WTP) models, in spite of the relevance of these effects in aggregation and benefit transfer. Heterogeneity in the availability of substitutes over space may cause multidirectional distance effects in WTP. As a result, disregarding this spatial heterogeneity may lead to biased estimators of the distance effect and associated WTP values (Cameron, 2006). In this paper, we demonstrate that distance decay is subject to significant directional effects which tend to be related to differences in the availability of substitutes across the study area. We apply a straightforward methodology to account for such spatial heterogeneity in choice experiments and assess the effect on WTP for improvements in ecosystem services in a lake district. We model distance-decay effects, whilst controlling for heterogeneity between users and non-users and non-use related WTP reasons. The directional effects result in significantly different WTP estimates, different market sizes reflecting the population with positive WTP, and differences in total WTP up to 32%.