Keywords
respondent uncertainty, contingent valuation method, travel cost method, valuation, ecosystem services
Start Date
1-7-2012 12:00 AM
Abstract
Respondent uncertainty is often considered as one of the main limitations of the stated preference methods, which are nowadays being widely used for valuing environmental goods and services. These methods usually assume that respondents know their preferences with certainty. However, empirical evidence demonstrates that respondents are often uncertain when answering contingent valuation questions. It has been argued that this affects the validity of the results derived from the contingent valuation method. This is a relevant issue since outcomes of valuation are often being used for decision making in environmental management and in setting environmental policies. This article examines the effect of respondent uncertainty on welfare estimates by comparing the results from stated preferences (contingent valuation method) with those from revealed preferences (travel cost method). The latter are based on observed rather than stated (hypothetical) behavior and can therefore serve as a baseline for testing the validity of results obtained from the former methods. In this study this is done in the context of beach protection against erosion. Respondent (un)certainty levels about their stated willingness to pay are elicited using a five-category polychotomous choice question. Two different approaches for uncertainty calibration are tested. One approach shows no advantages of incorporating information on respondent uncertainty, while the other one shows gains only at one out of two beaches. Finally, the most important factors that cause respondent uncertainty are identified and analyzed.
The effect of respondent uncertainty on economic value estimates
Respondent uncertainty is often considered as one of the main limitations of the stated preference methods, which are nowadays being widely used for valuing environmental goods and services. These methods usually assume that respondents know their preferences with certainty. However, empirical evidence demonstrates that respondents are often uncertain when answering contingent valuation questions. It has been argued that this affects the validity of the results derived from the contingent valuation method. This is a relevant issue since outcomes of valuation are often being used for decision making in environmental management and in setting environmental policies. This article examines the effect of respondent uncertainty on welfare estimates by comparing the results from stated preferences (contingent valuation method) with those from revealed preferences (travel cost method). The latter are based on observed rather than stated (hypothetical) behavior and can therefore serve as a baseline for testing the validity of results obtained from the former methods. In this study this is done in the context of beach protection against erosion. Respondent (un)certainty levels about their stated willingness to pay are elicited using a five-category polychotomous choice question. Two different approaches for uncertainty calibration are tested. One approach shows no advantages of incorporating information on respondent uncertainty, while the other one shows gains only at one out of two beaches. Finally, the most important factors that cause respondent uncertainty are identified and analyzed.
