Valuation of Ecosystem Services: Contingent Valuation

by: Conservation Strategy Fund

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Oh you this is a method for valuing ecosystem services by surveying people about how much they value the ecosystem service basically ask what's the most you would pay to ensure that this remains like this or goes from this to this or would you be willing to pay this amount yes or no or take all the numbers that you would be willing to pay or likewise what's the most you would accept in compensation to have this go from this to this this could be an easy way to find out how people feel about an upcoming policy or we can analyze this stated willingness to pay to find out how much value the ecosystem service gives the obvious rejection to the method is how can we know that what they say they would pay is going to match how much they actually value it watching what people are willing to give up for something is how we determine the value equivalent if they're just saying how much they would give up how can we be sure we've gotten it right how do we know they're not wrong or lying and this problem is probably why people in policymakers respect revealed preferences methods over the stated methods don't have to worry about if this is going to match the real world we are watching it in the real world but it is the go-to method for measuring these other values that aren't typically revealed in behavior the non-use or option values and it's really the only method that can easily get the total economic value capture people's willingness to pay for the whole area and everything about it it can be hard to get it accurate and there's a lot of things to consider for example the way people respond to hypothetical problems has a lot to do with how its framed for example there was this one study that looked at PhD students and found that 93% of them registered early for a conference when they were told there was going to be a fee for late registration but only 67% registered early when they were presented the situation as a discount for early registration same prices but the responses to the situation's was different depending on how it was framed also if respondents don't genuinely think their stated willingness to pay will lead to a required pay in taxes or something they may state a higher amount than they're actually willing to pay strategically to try to up the stated value of the area to overcome this we can tell them they will be expected to pay the amount they state or ask their income to make sure they're able to pay the amount and otherwise try to put them into a state of mind where they consider the choice realistically but if respondents do think they will be expected to pay they may answer with free-riding in mind even though they do value it they will state a value of zero with the hopes that others will pay enough other people may be using the number field to communicate something else what do you mean pay for it it's priceless or this is a public good it should be free to everyone forever or yes I want to protect this forest all forests should be saved other people maybe wouldn't mind paying money for a thing but if it involves a raise in taxes suddenly they're against it you know basically out of protests the question they are putting in a very small or very large amount in that field or even a realistic amount but it's an expression of a different idea than the willingness to pay another idea is something called the warm glow effect a person's willingness to pay may have almost nothing to do with the service they just feel a value in giving fixing this might involve surveying people the reasons behind their answers and sort through which reasons should be discarded because they don't reflect the willingness to pay finally respondents may not have a precise insight into their own willingness to pay for this begin instead ask a range of willingness to pays or choosing options from a list that can capture that uncertainty and there's lots more considerations but the goal is we really want to design a questionnaire that when given to people we are teasing out the most realistic willingness to pay that they can know about and get good data coming in this is a survey that was given out by male in the state of Oregon in the United States actually asking the willingness to pay doesn't happen until the bottom of page four all this stuff before is to try to describe the situation and put the respondent into a state of mind where they are thinking about what they value about the area to start off they introduced by saying that they want the public's input on old-growth forests responses are confidential they define what an old-growth forest is looks like they describe it as forest that's been growing so long that it's old then they ask the respondent to reflect on what they may care about the old-growth forest this is to help the respondents start to reflect on the characteristics about the forest that they like and what they value and the researchers can later compare this to the amount the respondents say they are willing to pay now they introduce the issue of fire management in these forests some people think is beneficial others think it's harmful how do you feel about this effect on beauty good bad or neither and they start to introduce these non-use or difficult to measure values like the existence of the spotted owl habitat and diversity and again the researchers can compare this to the respondents stated value this describes the state of the spotted owl endangered and here are the critical habitat units that have been set aside from logging this is Oregon this is about one third of Oregon this talks about forest fires in old-growth forests in Oregon several million dollars are spent in fire prevention and control but still about 7,000 acres of publicly owned critical owl habitat gets burned each year around half natural half caused by and they say these fires can harm the forest benefits so this talks about their proposed plan that will reduce by half the amount of owl habitat burned each year it doesn't really communicate how it's going to work very well though and this is probably what made a lot of the respondents give protest votes maybe they couldn't see a connection between the money they're giving and the results promised describes the payment vehicle then the question if this plan was voted in would you be willing to pay this amount yes or no so here it says $35 but there were 20 different amounts given on these surveys ranging between two and three hundred dollars the idea is that there's a number of people answering whether they would pay at each price level kind of like what you would get if you were using a traditional market-based approach different amounts being purchased at different prices it's just that here it's stated and then they calculated the average willingness to pay based on this and their answers to some previous questions using this equation I mean I don't understand it they also went on to ask what their maximum willingness to pay would be they didn't use this number in their main analysis but they could use it to catch when the person would say zero next page asks why they answered what they answered why they wouldn't program not worth anything to me that's valid can't afford to pay less valid I don't think the program would work this idea isn't really capturing their value of the area but rather their distrust of the program it may be a valid point but it's considered a protest vote it's unfair to expect me to pay this or I'm opposed to government stuff again may be valid points but it's not capturing what the researchers are trying to measure and they're considered protest votes reasons for saying they would pay this program is worth at least this much to me we have a duty to protect I like good causes I want to pay my fair share they mentioned that these three may capture the warm glow effect but I said that there was some debate about whether they should be excluded and then they just kept them in perhaps because that warm glow feeling might actually refer to some of the non use values that they're trying to capture but in my opinion this one giving to a good cause doesn't really have anything to do with their value of the area this is just them wanting to throw money at something and I think you've answered that it should be discarded but what do I know anyways do you do stuff in the forest various demographics then they thank them so they would know that their input was appreciated and asks for further comments to give the illusion they care okay so they drop the protest votes and calculated the average willingness to pay from the rest they found an average willingness to pay in their sample of 90 dollars per year per household they use this as the upper estimate for the willingness to pay for a lower estimate they assumed that all people that didn't respond didn't respond because their willingness to pay was zero so their mean willingness to pay with this assumption was $45 per year per household they noticed that there was a correlation between education level and the amount respondents stated they would pay if they adjusted the average willingness to pay to match the education levels of the state they get an average stated value of $77 per household per year and they use this as a middle estimate multiplied by the number of households in Oregon gives these estimates for the value of the protected critical owl habitat from fire each year they also calculated confidence intervals and other statistical stuff but we're not going to get into it this was a simple example but it's the general idea in the next video we're going to look at another

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This video is a part of Conservation Strategy Fund's collection of environmental economics lessons and was made possible thanks to the support of Jon Mellberg and family. This series is for people who want to learn - or review - the economics of conservation. The Valuation series will look at the process of estimating the value of an ecosystem. This video takes a closer look at the method of valuing ecosystem services through surveying individuals about how much they value the service; asking what the most one would pay to ensure a service remains the same. To follow this series, subscribe to our YouTube channel. For more information on these and other trainings from Conservation Strategy Fund, check out:

. Previous videos in this series were made possible by the Gordon and Betty Moore Foundation and the Marcia Brady Tucker Foundation.
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