Economics at your fingertips  

Estimating discount rates for environmental goods: Are People’s responses inadequate to frequency of payments?

Felipe Vásquez-Lavín, Moisés Carrasco, Manuel Barrientos, Stefan Gelcich and Roberto D. Ponce Oliva
Authors registered in the RePEc Author Service: Felipe A. Vásquez Lavín

Journal of Environmental Economics and Management, 2021, vol. 107, issue C

Abstract: Most stated preference studies estimate discount rates using a split-sample approach. Each sample faces a different payment frequency (for instance, 1, 5, 10) together with a randomly assigned bid vector; both the frequency of payments and the bid are fixed for a specific individual. This paper evaluates whether allowing respondents to choose their preferred payment frequency affects the estimated discount rate. We use data from a contingent valuation survey of a network of marine reserves and estimate discount rates using both an exogenous and endogenous approach. The former calculates the mean of the willingness to pay (WTP) for each sample and then finds the discount rate that makes the present value of each payment frequency equivalent. The latter estimates the WTP and the discount rate jointly. Results show that allowing people to choose the payment schedule significantly reduces the implicit discount rate. We observed the highest reductions in discount rates when we used all the information available from the valuation questions to bound the WTP distribution. Our analysis suggests that the exogenous approach would not be recommended for testing the adequacy of people’s responses to the frequency of payments.

Keywords: Intertemporal preferences; Discount rate; Exponential discounting; Contingent valuation (search for similar items in EconPapers)
JEL-codes: Q Q22 Q51 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed

Downloads: (external link)
Full text for ScienceDirect subscribers only

Related works:
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:

DOI: 10.1016/j.jeem.2021.102446

Access Statistics for this article

Journal of Environmental Economics and Management is currently edited by M.A. Cole, A. Lange, D.J. Phaneuf, D. Popp, M.J. Roberts, M.D. Smith, C. Timmins, Q. Weninger and A.J. Yates

More articles in Journal of Environmental Economics and Management from Elsevier
Bibliographic data for series maintained by Catherine Liu ().

Page updated 2023-05-12
Handle: RePEc:eee:jeeman:v:107:y:2021:i:c:s0095069621000292