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Willingness to Pay for Forest Preservation by Nonresidents Significant
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Newsletter: | Volume: III # 11 November, 1996 |
Source Reports: | Loomis. John B., and Armando Gonzalez-Caban "The Importance of the Market Area Determination for Estimating Aggregate Benefits of Public Goods: Testing Differences in Resident and Nonresident Willingness to Pay" Agricultural and Resource Economics Review Volume 25 Number 2 October 1996 pages 161-170 |
Subject: | 1. Benefits Analysis 1. Benefits Analysis - Valuation 1. Benefits Analysis - Valuation - Stated Preference 1. Benefits Analysis - Valuation - Stated Preference - Contingent Valuation |
Environmental Media/Problem: | e. Ecosystems |
| Newsletter Article Text: |
| Loomis and Gonzalez-Caban use a combined telephone contact-mail booklet-telephone interview of California and New England households to test the spatial extent of the public goods market. Respondents are asked questions regarding willingness to pay for fire management in California and Oregon's old-growth forests. Using a multiple-bounded contingent valuation question the study found that the annual willingness to pay for the California and Oregon programs in New England households was statistically different from zero. The model is multi-bounded because each respondent was asked about at least two different dollar amounts, and the probability density function was estimated only over the bracketed interval. Mean willingness to pay for a 20% reduction in acreage of Oregon old-growth forests that would burn each year is $45.83 in California and $36.34 in New England. New Englanders are willing to pay $36.60 for California forests, while Californians are willing to pay $70.33. The authors estimate that limiting the survey sample to state residents would account for about 17% of the national benefits. Applying the New England estimate to the 87 million households outside California results in aggregate benefits of $3.9 billion for the rest of the nation. However, using resident values as a proxy for nonresidents would overstate national benefits by 75%. |