Do contingent valuation estimates of willingness to pay for non-use environmental goods pass the scope test with adequacy? A review of the evidence from empirical studies in the literature

James Burrows, Rebecca Newman, Jerry Genser and Jeffrey Plewes

Chapter 5 in Contingent Valuation of Environmental Goods, 2017, pp 82-152 from Edward Elgar Publishing

Abstract: This chapter focuses on a key test of rational choice in CV studies: do estimates of WTP for environmental amenities derived from split-sample (external) tests in CV studies increase as the amount of the good (or the number of goods) increases (i.e., as scope increases), and, if so, are the WTP estimates “adequately†responsive to scope? For the 111 studies of environmental non-use and mixed use/non-use environmental amenities in our study, after fractional allocation of mixed results and appropriate weighting of studies based on common underlying data, more studies fail (54 percent of the total) than pass (46 percent). Contrary to expectations, the percentage of studies failing scope has increased over time: over the 1987–2001 period, 49 percent of the studies failed a scope test vs 59 percent for the 2001–2016 period. We also find that even the scope tests that “pass†often do not exhibit “adequate†scope sensitivity. For the 21 studies that lend themselves to appropriate quantitative analysis, nine have scope elasticities less than 0.10 and 12 have scope elasticities less than 0.2; only three have scope elasticities above 0.5. The high frequency of no or limited scope elasticities documented in this study suggests that warm glow is an important element of measured WTP for non-use environmental amenities.

Keywords: Economics and Finance; Environment (search for similar items in EconPapers)
Date: 2017
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