Aggregating the benefits of environmental improvements: distance-decay functions for use and non-use values

Abstract

One of the main problems in using environmental cost -benefit analysis is deciding on the relevant population: whose benefits should we count? This is important since aggregate benefits depend on both per-person benefit and the number of beneficiaries. Yet this latter term is often hard to evaluate. Distance-decay functions are one way of addressing this problem. In this paper, we present estimates of distancedecay functions for a particular environmental improvement, namely a reduction in low flow problems on the River Mimram in Southern England. We do this both for users and non-users, in the context of a contingent valuation study of the benefits of improving low flow conditions. We test whether distance-decay effects for mean Willingness to Pay are stronger for a single environmental good (the River Mimram, in this case) than for a more inclusive set (here, all rivers in Thames region which suffer from low flow problems). Finally, we explore the impact on part -whole bias, in terms of the relationship between WTP for an individual site and WTP for a more inclusive group of sites, of allowing for distance-decay effects. q

The effect of risk perception on public preferences and willingness to pay for reductions in the health risks posed by toxic cyanobacterial blooms

“…If we aggregate the estimates over the total population of Perth and Kinross (134 949), the welfare benefits would approximate some £1.1-1.3 million per annum. This is, conversely, likely to be a slight overestimate of the aggregated benefits because of the likelihood of distance-decay effects (Hanley et al, 2003b), and realistically the true figure is likely to lie somewhere between the estimates for the local population and that for the wider region.…”

Exploring the Spatial Heterogeneity of Individual Preferences for Ambient Heating Systems

“…Spatial effects on WTP estimates have been also investigated including spatial variables in discrete choice models. Thus, Hanley et al [27] included a distance parameter in a CV study to estimate distance-decay functions for a reduction in low flow problems on the River Mimram, England, while [28] included in discrete choice models spatial variables aimed at investigating directional effects on distance decay of WTP values, related to the availability of substitute sites across the region and [29] included spatial variables as covariates in Other studies investigated spatial effects including spatial attributes in stated preferences scenarios. The authors of [30] examined visitors' preferences for forest management at five adjacent municipal recreation sites in Finland, using a spatially explicit choice experiment.…”

Public preferences for endangered species recovery: an examination of geospatial scale and non-market values

“…For example Georgiou et al (2000) found that willingness-to-pay (WTP), an economic measure of value, for a large improvement in river water quality declined to zero at a distance of about 36 miles from the river site. The distancedecay effect has been observed for use values (e.g., values for non-market goods that people use, such as parks or recreation sites) and non-use values (e.g., values for goods that people may never see or use but are nonetheless willing to pay to preserve, Bateman et al, 2002;Hanley et al, 2003).…”