How to ‘Sell’ an Environmental Good: Using Labels to Investigate Scope Effects

Mikołaj Czajkowski () and Nick Hanley ()
Additional contact information
Mikołaj Czajkowski: Faculty of Economic Sciences, University of Warsaw

No 2008-03, Working Papers from Faculty of Economic Sciences, University of Warsaw

Abstract: Insufficient sensitivity to scope remains one of the pivots of criticism addressed at validity of stated preference methods. Many studies demonstrate failure of a scope test of some sort, while many others show that WTP responses are sensitive to the scope of environmental change. Despite some existing explanations and reasons for insensitivity to scope (embedding, warm glow, uncertainty over supply of a public good, awareness of all options) there seems to exist no clear conclusion on how to deal with it. The paper provides an alternative explanation for insufficient sensitivity to scope, based on redefinition of value drivers of environmental goods. In the proposed framework respondents’ WTP need not depend only on physical characteristics of a valued good but may also partly be a function of a ‘label’ under which the environmental good is ‘sold’. To investigate this problem and empirically test the hypothesis and its implications, a CE study in a biodiversity valuation setting is designed and conducted. The conceptual framework and empirical evidence provide an alternative explanation for problems with the insufficient sensitivity to scope observed in many studies. Finally, we set out some implications of the nature of labels as value drivers for the design of future valuation studies.

Keywords: scope test; embedding; warm glow; label effect; CE; CVM; biodiversity (search for similar items in EconPapers)
JEL-codes: Q51 Q57 Q23 (search for similar items in EconPapers)
Date: 2008-08
View list of references

Published in Stirling Economics Discussion Papers, no. 2008-16

Downloads: (external link)
http://www.wne.uw.edu.pl/inf/wyd/WP/WNE_WP3.pdf First version, 2008 (application/pdf)

Related works:
Working Paper: How to ‘Sell' an Environmental Good: Using Labels to Investigate Scope Effects (2008)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:war:wpaper:2008-03

Access Statistics for this paper

More papers in Working Papers from Faculty of Economic Sciences, University of Warsaw
Contact information at EDIRC.
Series data maintained by Michał Szkałuba ().