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Measuring the Economic Value of Two Habitat Defragmentation Policy Scenarios for the Veluwe, The Netherlands

Paulo Nunes (), C. Martijn van der Heide, Jeroen van den Bergh and Ekko van Ierland
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C. Martijn van der Heide: Agricultural Economics Research Institute (LEI), Public Issues Division

No 2005.42, Working Papers from Fondazione Eni Enrico Mattei

Abstract: This paper offers an economic value assessment of a nature protection programme in the Veluwe. This programme involves two defragmentation scenarios: the first scenario connects the central part of the Veluwe with the IJssel river forelands in a north-eastern direction, while the second scenario is focused on defragmentation in a south-western direction, where the Rhine river forelands are located. The valuation is based on a questionnaire that was administered during face-to-face interviews in the Veluwe area and through the Internet. We employ a contingent valuation approach to assess the respondents’ willingness to pay for the realisation of the defragmentation scenarios. It appears that the mean willingness to pay for the two defragmentation scenarios are € 59.7 and € 162.2 per respondent. These two willingness-to-pay estimates, which refer to a lump sum payment (or ‘once-and-for-all payment’), are based on a lognormal and Weibull distribution respectively. In addition to the willingness to pay, we also estimate recreation benefits of the Veluwe. To that end, we use the travel cost technique, the purpose of which is to arrive at an estimate of the site’s consumer surplus. According to this technique, the yearly recreational benefits are estimated between € 0.06 and € 0.45 per visitor. Whereas the former estimate is based on the fuel costs only, the latter covers also insurance and maintenance costs, and capital depreciation. Finally, we performed an aggregation of individual WTP estimates over Dutch households. With the resulting aggregate estimates we are able to compare the total costs and benefits of the two scenarios for habitat fragmentation in the Veluwe. The result of such a simple comparison turns out to critically depend on whether the mean or median estimate is used for aggregation. If aggregation of individual WTP estimates is based on mean values, then the benefits far exceed the estimated costs of defragmentation. In other words, based on an integrated economic-ecological analysis it makes sense to execute the defragmentation measures described in the scenarios. However, aggregate estimates obtained by using median values result in higher costs than aggregate estimates that are based on mean values. Even stronger, median-based estimates show that the costs of implementing scenario 2 are higher than the total benefits of this scenario.

Keywords: Economic value; Nature protection; Defragmentation policy; Veluwe (search for similar items in EconPapers)
JEL-codes: Q50 Q57 Q58 (search for similar items in EconPapers)
Date: 2005-03
New Economics Papers: this item is included in nep-tur
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Citations: View citations in EconPapers (4)

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Handle: RePEc:fem:femwpa:2005.42