Valuing Australia's protected areas: A life satisfaction approach

Abstract

This paper uses the life satisfaction approach to value Australia's protected areas, grouped by International Union for Conservation of Nature (IUCN) categories. We find significant positive life satisfaction effects of living in close proximity to protected areas in three of the seven categories. These life satisfaction effects correspond to implicit willingness-to-pays, in terms of annual household income, ranging from AUD$2950 to AUD$9650 for a 1% increase in the extent of that category of protected area within an individual's local area. This study therefore provides insights for policy makers in estimating the benefits of non-market goods provision.

Keywords:

• happiness
• Household, Income and Labour Dynamics in Australia (HILDA)
• protected areas
• life satisfaction
• non-market valuation

Acknowledgements

The authors thank Griffith University for the Griffith University Postgraduate Research Scholarship and the Griffith Business School for the Griffith University Business School Top-up Scholarship Funding, which was instrumental in facilitating this research. This research would not have been possible without data provided by the Australian Government Department of Families, Housing, Community Services and Indigenous Affairs (FaHCSIA), the Australian Government Department of Sustainability, Environment, Water, Population and Communities, NAVIGATE Pty Ltd. and the Australian Bureau of Statistics.

This paper uses unit record data from the Household, Income and Labour Dynamics in Australia (HILDA) survey. The HILDA project was initiated and is funded by FaHCSIA and is managed by the Melbourne Institute of Applied Economic and Social Research (Melbourne Institute). The findings and views reported in this paper, however, are those of the authors and should not be attributed to either FaHCSIA or the Melbourne Institute.

Notes

1. Using Pischke's (2010) rationale for industry wage differentials an attempt was made to instrument household income using the proportion of individuals in the household in a particular industry for each different industry. Specifically, we included alongside other usual covariates in the life satisfaction function: the proportion of household members not in the work force; the proportion of household members unemployed; and the individual's job satisfaction and occupation controls. However, the instrument proved quite weak and hence was not proceeded with.

2. The Statistical Local Area (SLA) is defined as an area that consists of one or more Census Collection Districts. SLAs are Local Government Areas, or parts thereof. Where there is no incorporated body of local government, SLAs are defined to cover the unincorporated areas. SLAs cover, in aggregate, the whole of Australia without gaps or overlaps (Australian Bureau of Statistics, 2010).

3. Wave 5 is employed as it closely matches the date of collection of the spatial data. Further, Wave 5 includes a range of personality trait questions, thus allowing the Big Five personality traits to be controlled for in model estimation.

4. This definition has subsequently changed (Dudley, 2008); the 1994 definition was in use at the time of spatial data collection.

5. Unless otherwise stated, all figures are in AUD. As at 15 May 2012 1 AUD=1.283 NZD; 1 AUD=0.998 USD; 1 AUD=0.778 EUR.