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Divergence between WTA and WTP Revisited: Livestock Grazing on Public Range

Lili Sun, Gerrit van Kooten and Graham Voss ()

No 2005-06, Working Papers from University of Victoria, Department of Economics, Resource Economics and Policy Analysis Research Group

Abstract: The research reported here provides further empirical support for the contention that there is a divergence between WTA and WTP. The conclusion is based on results from a 2002 survey of Nevada ranchers that asked about willingness to pay for public forage and WTA compensation to part with grazing rights. WTP and WTA are estimated simultaneously, with the estimators used to demonstrate a statistically significant divergence between WTP and WTA. The simultaneous estimation allows us to identify ranch characteristics that influence the discrepancy in valuations. Ranch size, public grazing allotment, financial distress, and long term commitment to ranching are all significant influences on the disparity. We interpret these results both with respect to general differences in welfare measures and with respect to ranch policy.

Keywords: contingent valuation methods; dichotomous choice surveys; WTA versus WTP; grazing rights and public forage (search for similar items in EconPapers)
JEL-codes: Q15 Q24 Q51 (search for similar items in EconPapers)
Pages: 38 pages
Date: 2005-07
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