Modeling Certainty-Adjusted Willingness to Pay for Ecosystem Service Improvement from Agriculture

Shan Ma, Frank Lupi, Scott Swinton and Huilan Chen

No 103734, 2011 Annual Meeting, July 24-26, 2011, Pittsburgh, Pennsylvania from Agricultural and Applied Economics Association

Abstract: The public demand for ecosystem services measured by willingness to pay (WTP) in contingent valuation studies provides important information for designing Payment-for-Ecosystem-Service (PES) programs. However, the hypothetical markets for contingent valuation and respondents’ unfamiliarity with certain ecosystem services may increase their preference uncertainty, which may increase variance and even cause bias in WTP estimates. Taking advantage of a unique stated preference data set that includes a follow-up question rating the respondent’s certainty level, this study evaluates alternative methods of modeling certainty-adjusted WTP for cleaner lakes and abated global warming. Results suggest that the incorporation of self-reported uncertainty into binary choice models significantly reduces the median WTP and appears to improve our understanding of the demand for ecosystem services.

Keywords: Environmental Economics and Policy; Research Methods/Statistical Methods; Risk and Uncertainty (search for similar items in EconPapers)
Pages: 38
Date: 2011
New Economics Papers: this item is included in nep-env
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:ags:aaea11:103734

DOI: 10.22004/ag.econ.103734

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