Ståle Navrud

Environmental valuation in developing countries: The recreational value of wildlife viewing

Abstract Few environmental valuation studies have been carried out in developing countries. This study shows that the Travel Cost (TC) and the Contingent Valuation (CV) methods can be successfully applied to value natural resources in developing countries. These two independent methods were used to estimate the recreational value of wildlife viewing, which is a valid, but very conservative, estimate of the total economic value of the wildlife species. The annual recreational value of wildlife viewing in Lake Nakuru National Park in Kenya was found to be 7.5–15 million USD. The flamingos accounted for more than 1 3 of the value. Recognizing that this is only one of many parks in Kenya, and that wildlife viewing is becoming an important part of the global trend of increasing ecotourism, this clearly shows that sustainable management of wildlife resources could provide a very significant and much needed revenue source for developing countries in the future. The challenge for the developing countries is to find ways to realize this economic potential, which also secures the preservation of wildlife.

Environmental Value Transfer: Issues and Methods

Preface S. Navrud and R. Ready.- Foreward A.C. Fisher.- 1. REVIEW OF METHODS FOR VALUE TRANSFER S. Navrud and R. Ready.- 2. BENEFIT AND INFORMATIONAL TRANSFERS D. Brookshire and J. Chermak.- 3. CORRESPONDENCE AND CONVERGENCE IN BENEFIT TRANSFER ACCURACY: META-ANALYTIC REVIEW OF THE LITERATURE R. Rosenberger and T. Phipps.- 4. TRANSFERRING LANDSCAPE VALUES: HOW AND HOW ACCURATELY? J.M.L. Santos.- 5. MORBIDITY VALUE TRANSFER R. Ready and S. Navrud.- 6. UNCERTAINTY, BENEFIT TRANSFERS, AND PHYSICAL MODELS: A MIDDLE RIO GRANDE VALLEY FOCUS D. Brookshire, J. Chermak and R. DeSimone.- 7. ESTIMATING THE ECONOMIC VALUE OF IMPROVEMENTS IN RIVER ECOLOGY USING CHOICE EXPERIMENTS: AN APPLICATION TO THE WATER FRAMEWORK DIRECTIVE N. Hanley, R.E. Wright, and B. Alvarez-Farizo.- 8. CONTRASTING CONVENTIONAL WITH MULTI-LEVEL MODELING APPROACHES TO META-ANALYSIS: EXPECTATION CONSISTENCY IN UK WOODLAND RECREATION VALUES I.J. Bateman and A.P. Jones.- 9. BENEFIT TRANSFER USING META-ANALYSIS IN RECREATION ECONOMIC VALUATION R. Shrestha, R Rosenberger, and J. Loomis.- 10. BENEFIT VALUE TRANSFERS CONDITIONAL ON SITE ATTRIBUTES: SOME EVIDENCE OF RELIABILITY FROM FOREST RECREATION IN IRELAND R. Scarpa, W.G. Hutchinson, S.M. Chilton, and J. Buongiorno.- 11. CAN USE AND NON-USE VALUES BE TRANSFERRED ACROSS COUNTRIES? D. Kristofersson and S. Navrud.- 12. THE APPLICATION OF BAYESIAN METHODS IN BENEFIT TRANSFER C. Leon, R. Leon, and F. Vazquez-Polo.-13. IMPROVING THE PRACTICE OF BENEFITS TRANSFER: A PREFERENCE CALIBRATION APPROACH S. Pattanayak, V. K. Smith, and G. Van Houtven.- 14. HOW MUCH IS ENOUGH? THE VALUE OF INFORMATION FROM BENEFIT TRANSFERS INA POLICY CONTEXT D. Barton.- 15. LESSONS LEARNED FOR ENVIRONMENTAL VALUE TRANSFER S. Navrud and R. Ready.

How Do Respondents with Uncertain Willingness to Pay Answer Contingent Valuation Questions

Four elicitation methods are compared in a split-sample, contingent-valuation study valuing avoidance of episodes of ill health linked to air pollution: two discrete methods and two more-continuous methods. Respondents to a traditional payment card (PC) question gave willingness-to-pay values that were lower than those implied by dichotomous-choice (DC) responses. However, follow up questions showed that DC respondents were less certain of their stated behavior than were PC respondents. When respondents were told to be “almost certain” of their responses, responses to the DC and the PC formats converged. (JEL Q21)

Are Internet Surveys an Alternative to Face-to Face Interviews in Contingent Valuation?

With the current growth in broadband penetration, Internet is likely to be the data collection mode of choice for stated preference research in the not so distant future. However, little is known about how this survey mode may influence data quality and welfare estimates. In a first controlled field experiment to date as part of a national contingent valuation (CV) survey estimating willingness to pay (WTP) for biodiversity protection plans, we assign two groups sampled from the same panel of respondents either to an Internet or in-person (in-house) interview mode. Our design is better able than previous studies to isolate measurement effects from sample composition effects. We find little evidence of social desirability bias in the in-person interview setting or satisficing (shortcutting the response process) in the Internet survey. The share of “don’t knows”, zeros and protest responses to the WTP question with a payment card is very similar between modes. Equality of mean WTP between samples cannot be rejected. Considering equivalence, we can reject that mean WTP from the in-person sample is more than 30% higher. Results are quite encouraging for the use of Internet in CV as stated preferences do not seem to be significantly different or biased compared to in-person interviews.

Environmental Valuation – To Use or Not to Use? A Comparative Study of the United States and Europe

Valuation methods have been used for five main purposes in environmental decision-making. Cost–benefit analysis (CBA) of projects, CBA of new regulations, natural resource damage assessment, environmental costing, and environmental accounting. The relatively lower importance attached to economic efficiency in environmental decision-making in most European countries compared to the U.S.A., both legally and in practice, might account for our general finding that there are very few valuation studies in Europe which have served as a decisive basis for environmental policy and regulations. However, with EUs goal to establish environmentally adjusted national accounts and to apply CBA to environmental policy and regulations, time seems ripe for an increased use of valuation techniques in Europe.

Valuing Mortality Risk Reductions from Environmental, Transport, and Health Policies: A Global Meta‐Analysis of Stated Preference Studies

We conduct, to our knowledge, the first global meta-analysis (MA) of stated preference (SP) surveys of mortality risk valuation. The surveys ask adults their willingness to pay (WTP) for small reductions in mortality risks, deriving estimates of the sample mean value of statistical life (VSL) for environmental, health, and transport policies. We explain the variation in VSL estimates by differences in the characteristics of the SP methodologies applied, the population affected, and the characteristics of the mortality risks valued, including the magnitude of the risk change. The mean (median) VSL in our full data set of VSL sample means was found to be around

Valuing Health Impacts from Air Pollution in Europe

7.4 million (2.4 million) (2005 U.S. dollars). The most important variables explaining the variation in VSL are gross domestic product (GDP) per capita and the magnitude of the risk change valued. According to theory, however, VSL should be independent of the risk change. We discuss and test a range of quality screening criteria in order to investigate the effect of limiting the MA to high-quality studies. When limiting the MA to studies that find statistically significant differences in WTP using external or internal scope tests (without requiring strict proportionality), we find that mean VSL from studies that pass both tests tend to be less sensitive to the magnitude of the risk change. Mean VSL also tends to decrease when stricter screening criteria are applied. For many of our screened models, we find a VSL income elasticity of 0.7-0.9, which is reduced to 0.3-0.4 for some subsets of the data that satisfy scope tests or use the same high-quality survey.

Economic valuation of policies for managing acidity in remote mountain lakes: examining validity through scope sensitivity testing

Health impacts make up asignificant portion of the damage costs fromair pollution. In lack of European valuationstudies on morbidity impacts, cost-benefitanalyses, transport and energy externalitystudies, and green accounting exercises inEurope have all used values from more than tenyear old US valuation studies. Results from anew Contingent Valuation study, using animproved version of the survey design of themost transferred US morbidity study, show thatrespiratory symptom days and asthma attacks arevalued lower in Norway than in the US.Correction were made for differences inpurchase power between the two countries, butthe US values are still expressed in 1986dollar values; indicating that the differencebetween the two estimates could be even higher.Thus, the practise of transferring US estimatesand only adjusting the values with the consumerprice index could lead to highly biased valuesin the Norwegian case. The difference betweenthe US and Norwegian values can be explained byimproved CV survey and sample design, differentpreferences in Norway compared to the US, anddifferent public health care systems. We do notknow if we can generalise the results from thisNorwegian study to the rest of Europe, but thestudy clearly illustrates the uncertainty intransferring results from one country toanother.

Contingent valuation and actual payment for voluntarily provided passive-use values: Assessing the effect of an induced truth-telling mechanism and elicitation formats

Abstract.The paper introduces the reader to the contingent valuation method for monetary valuation of individuals’ preferences regarding changes to environmental goods. Approaches to the validity testing of results from such studies are discussed. These focus upon whether findings conform with economic-theoretic expectations, in particular regarding whether valuations are sensitive to the size (or ‘scope’) of environmental change being considered, and whether they are invariant to alterations in study design which are irrelevant from the perspective of economic theory. We apply such tests to a large sample study of schemes to alter the acidity levels of remote mountain lakes. Results suggest that, when presented with environmental changes which respondents are concerned about, their values exhibit scope sensitivity and conform to theoretical expectations, and therefore could be used for formulating policy. However, when presented with changes which respondents feel are trivial, their values fail tests of theoretical consistency and are not scope sensitive, and therefore cannot be used within economic appraisals. Interestingly we find that qualitative focus group analyses are good indicators of whether a given change is likely to be considered trivial or not and therefore whether scope sensitivity tests are likely to be satisfied.

Valuing the social benefits of avoiding landscape degradation from overhead power transmission lines: Do underground cables pass the benefit–cost test?

A fundamental question about the contingent valuation (CV) method is to what degree it predicts actual payments (AP). This has particularly been an intriguing matter related to voluntary provision of public goods representing primarily passive-use values. This paper reports the results from such a CV–AP comparison. Applying a voluntary payment mechanism there exists a theoretical expectation of upward bias in CV estimates and downward bias in AP. This study applied an induced truth-telling mechanism in one treatment group to assess the hypothetical bias effect in CV. The CV estimates in this treatment group were significantly lower than in the group that did not face this mechanism. But this effect was limited to those responding/acting to dichotomous choice, not affecting those responding to open-ended questions about willingness to pay.