Umeå Economic Studies, Department of Economics, Umeå University
No 720:
The Value of Preserving Nature - Preference Uncertainty and Distributional Effects
Thomas Broberg ()
Abstract: This thesis deals with valuation of nonmarket goods using
contingent valuation and consists of four papers and an introduction to the
research area. Paper [I] examines the public benefits from preserving
old-growth forest in the submountainous region in Sweden. Specifically, it
analyzes a preservation program suggested by the Swedish Environmental
Protection Agency. The results show that people value preservation for
different reasons, not necessarily related to physical use. The paper finds
that the estimated public benefits of the program exceed the estimated
opportunity cost of forgone timber revenues and it should therefore be
implemented. The paper also finds that there is no regional imbalance in
the distribution of the benefits. Paper [II] examines the public benefits
from preserving the four large predators in the Swedish fauna.
Specifically, the paper focuses on the differences in attitudes and
willingness to pay between people in wolf areas and other regions. We find
that a clear majority of people in wolf areas are against preserving
predators and that many of them need to be economically compensated in
order to accept implementation of the predator policy package. The public
in Sweden is, by a narrow margin, against implementation. The overall mean
WTP is approximately SEK 300. It cannot be ruled out that the public
benefits may be outweighed by the public costs following implementation.
Paper [III] presents a new approach for treating preference uncertainty in
contingent valuation. Specifically, it studies how data elicited from a
multiple bounded question should be modelled. The new approach is compared
to one of the conventional approaches and we find that: (1) it is more
intuitive; (2) it better fits the data; (3) it gives more precise estimates
of mean and median WTP; (4) it is less sensitive to distributional
assumptions; and (5) it is better suited for policy analysis. Paper [IV]
examines the income-effect in contingent valuation. Specifically three
issues are analyzed: (1) the choice of income measure; (2) the choice of
modelling assumptions; and (3) the social context. The results show that
the estimated income-elasticity of WTP is fairly sensitive to different
choices. The most statistically precise estimate is produced using
household income and controlling for household characteristics. The third
issue (social context) is approached by studying the answers to a WTP
question conditioning respondents on a change in (1) their personal income
and (2) the average income in Sweden. The results suggest that not only the
income level per se influences WTP, but also its relation to the income of
others.
Keywords: contingent valuation; nonuse values; preference uncertainty; income-effect; (follow links to similar papers)
JEL-Codes: C81; Q20; Q23; Q26; Q28; Q38; (follow links to similar papers)
134 pages, November 16, 2007
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