Estimating the non-market benefits of environmental flows in the Hawkesbury-Nepean River

ABSTRACT

Growth in competing demands for the services supplied to major urban centres by adjacent river systems provides an impetus for the estimation of the non-market benefits generated by flows specifically dedicated to maintaining or improving the environmental condition of those rivers. This paper presents the results of a choice modelling study aimed at addressing the complexities of estimating such environmental flow benefits. The context of the study is the management of the Hawkesbury-Nepean River system, the major water supply for Sydney, Australia. The complexities considered include establishing linkages between river management options and the environmental condition of the river, defining attributes that reflect environmental conditions in terms that are meaningful to survey respondents as well as river managers, modelling stated choices to reflect non-linearities in willingness to pay responses and identifying thresholds in peoples' preferences for specific environmental attributes.

KEYWORDS:

• choice modelling
• environmental flows
• willingness to pay
• non-market benefits

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

1. See Bennett and Blamey (2001).

2. The coefficients of each of the attribute variables included in the choice models represent marginal utilities but are confounded by the scale parameter λ which in turn is a function of the standard deviation of the random component of respondents’ choices (Louvier, Hensher, and Swait 2000). WTP estimates eliminate the influence of the scale parameter because they are calculated as ratios of attribute coefficients. However, marginal utilities across different ranges of attribute levels can be compared with reference to variations in attribute coefficients because the scale parameter is consistent across coefficients estimated in a single-choice experiment.