Prioritising environmental management investments using the Contingent Valuation Method

ABSTRACT

An innovative application of the Contingent Valuation Method in the context of prioritising and assessing investments in improving waterway health is described. The approach provides respondents with a feedback loop that allows for a reassessment of amounts bid across a range of investment categories. It allows respondents the opportunity to consider trade-offs between different categories of waterway health investment and between overall waterway health expenditure and spending on other goods and services. The process also reinforces the consequentiality of the survey, thus encouraging the truthful revelation of preferences, and reduces the risk of part-whole bias. The results provide policy-makers with cost-effective inputs into practical decision making contexts.

KEYWORDS:

• Contingent Valuation Method
• waterway management
• prioritisation

Disclosure Statement

No potential conflict of interest was reported by the authors.

Notes

1. The information generated is suited for use in a cost benefit analysis of alternative environmental management investments. It could also be used to weight the outcomes of alternative investments in a multi criteria analysis, although use of that technique is inadvisable (Dobes and Bennett 2009).

2. Using discrete levels rather than asking open-ended questions leads to some rounding errors in willingness to pay estimates. It also may cause respondents to ‘anchor’ their willingness to pay responses on the pre-assigned discrete levels (Herriges and Shogren 1996). However, the approach was considered preferable to the cardinal answers provided to open-ended questions because of the incentive compatibility problems induced by open-ended questioning.

3. The sampling and surveying were conducted by Pure Profile.

4. The screening of respondents was designed, in part, to off-set concerns regarding the capacity of on-line surveys to deliver reliable and robust estimates of willingness to pay from a representative sample. The use of Internet survey delivery has become the only viable mechanism in the context of sampling Sydney residents because of the general reluctance of residents to answer a knock on the door from a stranger, the increasing prevalence of gated communities, the rise of mobile phones over listed, land-line phones and the very low response rates achieved from delivery by mail. Studies, such as those conducted by Lindhelm and Navrud (2011) and Windle and Rolfe (2011), give some confidence to the capacity of on-line surveys to deliver results that are comparable with more conventionally delivered surveys.

5. The data were analysed using Stata version 14.2.

6. The re-weighting ensures that the survey responses are more representative of the Blacktown LGA household population. A description of the process is provided at: https://rmsresults.com/2014/06/24/what-is-rim-weighting/(viewed 9 October 2017)

7. In addition to the OLS analysis of total willingness to pay, mutinomial probit regressions were also run for the individual components of the total. The results showed that age was a consistently significant explanatory variable as were the ‘contact’ variables relating to living locations and activities.

Additional information

Funding

Blacktown City Council.