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Understanding the distribution of economic benefits from improving coastal and marine ecosystems

Kristine Pakalniete, Juris Aigars, Mikolaj Czajkowski (), Solvita Strake, Ewa Zawojska and Nick Hanley ()
Additional contact information
Kristine Pakalniete: AKTiiVS Ltd., Latvia
Juris Aigars: Latvian Institute of Aquatic Ecology
Solvita Strake: Latvian Institute of Aquatic Ecology

No 2016-26, Working Papers from Faculty of Economic Sciences, University of Warsaw

Abstract: The ecological status of coastal and marine waterbodies world-wide is threatened by multiple stressors, including nutrient inputs from various sources and increasing occurrences of invasive alien species. These stressors impact the environmental quality of the Baltic Sea. Each Baltic Sea country contributes to the stressors and, at the same time, is affected by their negative impacts on water quality. Understanding who benefits from improvements in coastal and marine waters is key to assessing public support for policies aimed at achieving such changes. We propose a new approach to account for variability in benefits related to differences in socio-demographics of respondents, by using a structural model of discrete choice. Our method (1) provides a convenient way of incorporating a wide range of socio-demographics as explanatory variables in conditional multinomial logit models without the risk of collinearity, and (2) is more statistically efficient than the alternative, typically used approaches. The new technique is applied in a study which examines the preferences of Latvian citizens towards improvements of the coastal and marine environment quality that could help the Baltic Sea waters of Latvia reach Good Environmental Status as required by the European Union's Marine Strategy Framework Directive. Applying the discrete choice experiment method, we find that overall, Latvians are willing to pay for reducing losses of biodiversity, for improving water quality for recreation by reduced eutrophication, and for reducing new occurrences of invasive alien species. A significant group within the sample seems not to value environmental improvements in the Baltic Sea, and, thus, is unwilling to support costly measures for achieving such improvements. The structural model of discrete choice reveals substantial heterogeneity among Latvians towards changes in the quality of coastal and marine waters of Latvia.

Keywords: good environmental status; coastal and marine water quality; biodiversity; invasive alien species; eutrophication; discrete choice experiment; observed preference heterogeneity; socio-demographic characteristics; hybrid choice model (search for similar items in EconPapers)
JEL-codes: C35 D12 H41 Q25 Q26 Q51 Q53 Q57 R50 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-agr, nep-dcm and nep-env
Date: 2016
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http://www.wne.uw.edu.pl/index.php/download_file/3071/ First version, 2016 (application/pdf)

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