Valuing externalities from water supply: Status quo, choice complexity and individual random effects in panel kernel logit analysis of choice experiments

Riccardo Scarpa, Kenneth G. Willis and Melinda Acutt

Journal of Environmental Planning and Management, 2007, vol. 50, issue 4, 449-466

Abstract: Choice experiments are often implemented with choice sets including one alternative depicting the status quo. Utility from status quo is experienced by the respondent, while utility associated with experimentally designed hypothetical alternatives is only conjectured by respondents. The effects of explicitly accounting for such a difference in the econometric analysis of the data are often unreported, or limited to fitting a 'status quo' constant. The paper proposes a model that explicitly accounts for these effects and attempts their decomposition using data from two choice modelling exercises designed to value the provision of environmental goods. Preferences for change versus status quo are explored with standard specifications along with a less usually applied error component analysis via mixed logit. The results suggest that alternatives offering changes from status quo do not share the same preference structure as the status quo alternative, and that estimates of spread parameters in zero-mean error components can be decomposed conditional on respondents' socio-economic characteristics. It is argued that these findings have implications for practitioners and their stance towards the strategies for the econometric analysis of choice modelling data for the purpose of valuation.

Date: 2007
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (73)

Downloads: (external link)
http://www.tandfonline.com/doi/abs/10.1080/09640560701401861 (text/html)
Access to full text is restricted to subscribers.

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: https://EconPapers.repec.org/RePEc:taf:jenpmg:v:50:y:2007:i:4:p:449-466

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/CJEP20

DOI: 10.1080/09640560701401861

Access Statistics for this article

Journal of Environmental Planning and Management is currently edited by Dr Neil Powe, Dr Ken Willis and George Bill Page

More articles in Journal of Environmental Planning and Management from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().