Journal
ECOLOGICAL ECONOMICS
Volume 79, Issue -, Pages 21-31Publisher
ELSEVIER
DOI: 10.1016/j.ecolecon.2012.04.013
Keywords
Choice experiment; Environmental valuation; Spatial heterogeneity; Distance decay; Substitutes
Funding
- EU DG Research F6 project AquaMoney [SSPI-022723]
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Many studies in the stated preference literature on environmental valuation do not include the effects of substitutes and distance in willingness-to-pay (WTP) models, in spite of the relevance of these effects in aggregation and benefit transfer. Heterogeneity in the availability of substitutes over space may cause multidirectional distance effects in WTP. As a result, disregarding this spatial heterogeneity may lead to biased estimators of the distance effect and associated WTP values (Cameron, 2006). In this paper, we demonstrate that distance decay is subject to significant directional effects which tend to be related to differences in the availability of substitutes across the study area. We apply a straightforward methodology to account for such spatial heterogeneity in choice experiments and assess the effect on WTP for improvements in ecosystem services in a lake district. We model distance-decay effects, whilst controlling for heterogeneity between users and non-users and non-use related WTP reasons. The directional effects result in significantly different WTP estimates, different market sizes reflecting the population with positive WTP, and differences in total WTP up to 32%. Crown Copyright (C) 2012 Published by Elsevier B.V. All rights reserved.
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