Temporal insensitivity of willingness to pay and implied discount rates

Soo-Il Kim and Tim Haab

Resource and Energy Economics, 2009, vol. 31, issue 2, 89-102

Abstract: A number of studies have defined and tested the temporal sensitivity of willingness to pay to payment schemes and the resulting implied discount rates for environmental projects. We demonstrate that those studies have imposed restrictive assumptions on the structure of the willingness to pay function and the underlying decision process. We investigate the temporal sensitivity of willingness to pay using a new temporal willingness to pay function applied to a proposed oyster reef restoration program. We find that (1) holding the length of the project constant, the temporal willingness to pay for the project is the same across different payment schemes, (2) temporal willingness to pay does not vary significantly across projects of varying lengths, and (3) estimated discount rates are low relative to previous studies, but vary significantly across payment schemes and project lengths.

Keywords: Discount; rates; Hyperbolic; discounting; Contingent; valuation; Oyster; reef; restoration (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (20)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:resene:v:31:y:2009:i:2:p:89-102

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