Detailed vs. fuzzy information in non-market valuation studies: the role of familiarity

Abstract

We apply a split-sample contingent valuation survey to test whether the level of ecological information affects the willingness to pay (WTP) and valuation uncertainty for improved water quality. For respondents who are unfamiliar with water quality problems, the WTP is significantly different between the sample that received detailed ecological information and the sample that received fuzzy information. This study also provides new empirical evidence for the counterfactual; in a situation with high familiarity, more information does not affect mean WTP. The main recommendation to future valuation practice is to provide detailed ecological information in the case when many respondents are unfamiliar with the good. The level of information did not influence valuation uncertainty.

Keywords:

• contingent valuation
• information
• policy
• water quality
• water framework directive
• valuation uncertainty

Acknowledgments

The research was part of the project PlusMinus – Economic assessment for the environment, funded by the Swedish Environmental Protection Agency. We are grateful for this research possibility. We also would like to thank our colleagues for providing feedback to our study. Especially we would like to thank Tore Söderqvist for particularly valuable comments.

Notes

1. Most of the literature reviewed is, as the attentive reader might have observed, rather old. Despite thorough attempts to find newer relevant literature, we found few good examples. As a hypothetical answer to why this is so, a reason might be that previously studies focused mainly on whether information affected WTP at all, such as various types of cheap talk scripts, and so on. This topic might have become rather saturated with studies. Our study arises from fairly new political requirements of cost-benefit analyses due to the texts of the EU Marine Strategy Framework Directive and the EU Water Framework Directive. In these cases, a large number of valuation results are needed, giving incentives for time and money savings in the studies. Thus, this more ‘applied' need for valuation studies has arisen and with that comes new relevant research questions.

2. The county of Västra Götaland is situated on the Swedish west coast and includes the city of Gothenburg.

3. Note that the IOE question allows the respondents that are certain regarding their WTP to express that by revealing an interval with no width, such as “My household is willing to pay between 20 SEK and 20 SEK every month between year 2011 and 2030”.

4. The analysis is based only on answers from Completes.

5. The respondent was asked to state how important they thought the coastal and marine environment was, compared to other societal issues such as healthcare, childcare, education and the job market. The respondent could choose between six different alternatives: ‘Much more important', ‘More important', ‘As important', ‘Less important', ‘Much less important' and ‘Don't know'. If the respondent chose one of the three first alternatives, we defined the respondent as finding the status of marine environments to be an important issue.

6. Whether a respondent thinks that the scenarios are realistic is something that could be influenced by the amount of information given to the respondent when the scenarios are presented. This in turn could influence whether the respondent states that they are willing-to-pay for the implementation of the proposed scenarios or not. In our study, less than 2% in both groups stated that they were not WTP because they did not find the scenarios to be realistic, 1.6% in the group Detailed information and 1.2% in the group Fuzzy information.

7. There have been no indications of that some respondents should have a negative, rather than a zero WTP.

8. It should be noted that the same results hold if familiarity is defined only as experience with water quality in the Orust and Tjörn area. Mean WTP for the group Detailed information is 102.29 (41.48–163.18) SEK per month and for the group Fuzzy information 97.56 (62.05–132.87) per month.

9. For example, one respondent might state a WTP 20–100 SEK per month while another might state a WTP 200–500 SEK per month. This would represent two different intervals.