Willingness-to-pay for urban ecosystem services provision under objective and subjective uncertainty

Helen J. Davies, Hangjian Wu and Marije Schaafsma

Resource and Energy Economics, 2023, vol. 71, issue C

Abstract: There is growing concern that failure to acknowledge the risk and uncertainty surrounding ecosystem services (ES) delivery could have adverse effects on support for ES policy intervention in the long run. However, acknowledging risk may reduce support for policy interventions in the short term. In this paper, we sought to determine whether willingness-to-pay (WTP) for urban forest ES in Southampton, UK is affected by objective and subjective uncertainty surrounding ES delivery. We conducted a discrete choice experiment with a split sample design: one with a scenario specifying risky ES outcomes and one where zero risk was implied. Respondents’ subjective certainty surrounding the provision of ES was determined before and after the choice questions. Despite respondents’ risk aversion, introducing an objective likelihood attribute did not reduce WTP compared to the scenario with implied certain ES outcomes. Furthermore, whilst WTP for the overall scheme was found to be adversely affected by the presence of risk around ES outcomes, subjective uncertainty seemed to reduce WTP more than objective probabilities. Our results therefore support the idea that both objective probabilities and subjective uncertainty should be explicitly incorporated in the design of stated preference studies for ES valuation.

Keywords: Direct utility; Discrete choice experiment; Objective uncertainty; Ecosystem services; Subjective uncertainty; Urban forests (search for similar items in EconPapers)
JEL-codes: Q51 Q57 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eee:resene:v:71:y:2023:i:c:s0928765522000616

DOI: 10.1016/j.reseneeco.2022.101344

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