Approximating WTP and WTA for environmental goods from marginal willingness to pay functions

Udo Ebert

Ecological Economics, 2008, vol. 66, issue 2-3, 270-274

Abstract: Willingness to pay (WTP) and willingness to accept (WTA), for a change in the quantity of an environmental good, can be represented by corresponding Hicksian welfare measures. The paper suggests a simple method of approximating WTP and WTA given the information about the marginal willingness to pay (MWTP) for it. It demonstrates that a polynomial based on the MWTP function allows to approximate the Hicksian measures (which may differ considerably) much better than consumer's surplus in quantity space.

Date: 2008
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