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When a Good Is a Bad (or a Bad Is a Good)—Analysis of Data from an Ambiguous Nonmarket Valuation Setting

Petter Gudding (), Gorm Kipperberg (), Craig Bond (), Kelly Cullen () and Eric Steltzer ()
Additional contact information
Petter Gudding: Norwegian Environment Agency, 7010 Trondheim, Norway
Gorm Kipperberg: UiS Business School, University of Stavanger, 4036 Stavanger, Norway
Craig Bond: UiS Business School, University of Stavanger, 4036 Stavanger, Norway
Kelly Cullen: Department of Natural Resources and the Environment, University of New Hampshire, Durham, NH 03824, USA
Eric Steltzer: Department of Energy Resources, Commonwealth of Massachusetts, Boston, MA 02114, USA

Sustainability, 2018, vol. 10, issue 1, 1-16

Abstract: This paper analyses data from a contingent valuation experiment carried out in a context with large degree of preference heterogeneity and valuation ambiguity. Despite this challenge, by implementing estimation of an unrestricted valuation function on pooled data from two elicitation formats, utilizing all preference information available from the survey, we are able to estimate welfare measures with an acceptable degree of statistical confidence. It turns out that an offshore wind farm, a priori believed to constitute a bad that people would be willing to pay to avoid, instead was a good that people would be willing to forego under compensation. This was true on average but not for all study participants. Two key determinants of preferences were spatial proximity to the proposed wind farm and perceptions of the visual impacts of wind turbines. Individuals who would be near and thought wind turbines are “ugly” had a mean willingness to pay to avoid the wind farm of about $508 per household per year. In contrast, those who would be far away and perceived wind turbines to be “beautiful” had a negative mean willingness to pay to avoid the wind farm of about −$595 per household per year.

Keywords: contingent valuation; willingness to pay; renewable energy; wind power; households; preference heterogeneity (search for similar items in EconPapers)
JEL-codes: Q Q0 Q2 Q3 Q5 Q56 O13 (search for similar items in EconPapers)
Date: 2018
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