Skip to main content
Log in

Using Choice Experiments to Value the Environment

  • Published:
Environmental and Resource Economics Aims and scope Submit manuscript

Abstract

This paper we outline the “choice experiment” approach to environmental valuation. This approach has its roots in Lancaster's characteristics theory of value, in random utility theory and in experimental design. We show how marginal values for the attributes of environmental assets, such as forests and rivers, can be estimated from pair-wise choices, as well as the value of the environmental asset as a whole. These choice pairs are designed so as to allow efficient statistical estimation of the underlying utility function, and to minimise required sample size. Choice experiments have important advantages over other environmental valuation methods, such as contingent valuation and travel cost-type models, although many design issues remain unresolved. Applications to environmental issues have so far been relatively limited. We illustrate the use of choice experiments with reference to a recent UK study on public preferences for alternative forest landscapes. This study allows us to perform a convergent validity test on the choice experiment estimates of willingness to pay.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Similar content being viewed by others

References

  • Adamowicz, W. (1995), ‘Alternative Valuation Techniques: A Comparison and Movement Towards A Synthesis’, in K. Willis and J. Corkindale, eds., Environmental Valuation: New Persectives. Oxford: CAB International.

    Google Scholar 

  • Adamowicz, W., J. Louviere and M. Williams (1994), ‘Combining Revealed and Stated Preference Methods for Valuing Environmental Amenities’, Journal of Environmental Economics and Management 26(3), 271–292.

    Article  Google Scholar 

  • Adamowicz, W., J. Swait, P. Boxall, J. Louviere and M. Williams (1997), ‘Perceptions Versus Objective Measures of Environmental Quality in Combined Revealed and Stated Preference Models of Environmental Valuation’, Journal of Environmental Economics and Management 32, 65–84.

    Article  Google Scholar 

  • Adamowicz, W., J. Louviere and J. Swait (1998a), ‘Introduction to attribute-based stated choice methods’, report to NOAA Resource Valuation Brach, Damage Assessment Centre, January.

  • Adamowicz, W., P. Boxall, M. Williams and J. Louviere (1998b), ‘Stated Preference Approaches to Measuring Passive Use Values: Choice Experiments Versus Contingent Valuation’, American Journal of Agricultural Economics, forthcoming.

  • Anderson, D. (1990), The Forestry Industry and the Greenhouse Effect. Edinburgh: Forestry Commission.

    Google Scholar 

  • Bateman, I., I. Langford, R. K. Turner, K. Willis and G. Garrod (1995), ‘Elicitation and Truncation Effects in Contingent Valuation Studies’, Ecological Economics 12(2), 161–179.

    Article  Google Scholar 

  • Beggs, S., S. Cardell and J. Hausman (1981), ‘Assessing the Potential Demand for Electric Cars, Journal of Econometrics 16, 1–19.

    Article  Google Scholar 

  • Ben-Akiva, M. and S. Lerman (1985), Discrete Choice Analysis: Theory and Application to Travel Demand. Cambridge, MA: MIT Press.

    Google Scholar 

  • Bergland, O. (1997), ‘Valuation of Landscape Elements Using A Contingent Choice Method’, paper to 1997 EAERE conference, Tilburg, June.

  • Bockstael, N., K. McConnell and I. Strand (1991), ‘Recreation’, in J. Braden and C. Kolstad, eds., Measuring the Demand for Environmental Quality. Amsterdam: North-Holland.

    Google Scholar 

  • Boxall, P., W. Adamowicz, J. Swait, M. Williams and J. Louviere (1996), ‘A Comparison of Stated Preference Methods for Environmental Valuation’, Ecological Economics 18, 243–253.

    Article  Google Scholar 

  • Brown, T., P. Champ, R. Bishop and D. McCollum (1996), ‘Response Formats and Public Good Donations’, Land Economics 72(2), 152–166.

    Article  Google Scholar 

  • Entec (1997), Valuing Landscape Improvements in British Forests. Edinburgh: Forestry Commission.

    Google Scholar 

  • Environmental Resources Management (1995), The Value of Biodiversity in UK forests. Edinburgh: Forestry Commission.

    Google Scholar 

  • Foster, V. and S. Mourato (1997), ‘Behavioural Consistency, Statistical Specification and Validity in the Contingent Ranking Method: Evidence from a Survey of the Impacts of Pesticide Use in the UK’, CSERGE working paper 97-09, University of London.

  • Hanley, N. and R. Ruffell (1993), ‘The Contingent Valuation of Forest Characteristics: Two Approaches, Journal of Agricultural Economics 44(2), 218–229.

    Article  Google Scholar 

  • Hanley, N., D. MacMillan, R. E. Wright, C. Bullock, I. Simpson, D. Parsisson and B. Crabtree (1988), ”Contingent Valuation versus Choice Experiments: Estimating the Benefits of Environmentally Sensitive Areas in Scotland’, Journal of Agricultural Economics, 1–15.

  • Johnson, F. R., K. Mathews and J. Friesen (1996), ‘Using Stated Preference Experiments to Resolve Environmental Mitigation, Restoration and Remediation Conflicts’, Workshop on Environmental Policy Targets, Oslo, Norway, September.

  • Lancaster, K. (1966), ‘A New Approach to Consumer Theory’, Journal of Political Economy 74, 132–157.

    Article  Google Scholar 

  • Louviere, J. (1988a), Analyzing Individual Decision Making: Metric Conjoint Analysis, Sage university series on quantitative applications in the social sciences No. 67. Newbury Park, CA: Sage Publications, Inc.

    Google Scholar 

  • Louviere, J. (1988b), ‘Conjoint Analysis Modelling of Stated Preferences’, Journal of Transport Economics and Policy 10, 93–119.

    Google Scholar 

  • Louviere, J. (1992), ‘Experimental Choice Analysis: Introduction and Overview’, Journal of Business Research 24, 89–96.

    Article  Google Scholar 

  • Louviere, J. (1996), ‘Relating Stated Preference Measures and Models to Choices’, in D. Bjornstad and J. Kahn, eds., The Contingent Valuation of Environmental Resources. Cheltenham: Edward Elgar.

    Google Scholar 

  • Louviere, J. and G. Woodworth (1983), ‘Design and Analysis of Simulated Consumer Choice’, Journal of Marketing Research 20, 350–367.

    Article  Google Scholar 

  • MacKenzie, J. (1993), ‘A Comparison of Contingent Preference Models’, American Journal of Agricultural Economics 75, 593–603.

    Article  Google Scholar 

  • Manski, C. (1977), ‘The Structure of Random Utility Models’, Theory and Decision 8, 229–254.

    Article  Google Scholar 

  • McFadden, D. (1974), ‘Conditional Logit Analysis of Qualitative Choice Behaviour’, in P. Zarembka, ed., Frontiers in Econometrics. New York: Academic Press.

    Google Scholar 

  • Ready, R., J. Buzby and D. Hu (1996), ‘Differences between Continuous and Discrete Contingent Valuation Estimates’, Land Economics 72(3), 397–411.

    Article  Google Scholar 

  • Roe, B., K. Boyle and M. Teisl (1996), ‘Using Conjoint Analysis to Derive Estimates of Compensating Variation’, Journal of Environmental Economics and Management 31, 145–159.

    Article  Google Scholar 

  • Swait, J. (1994), ‘A Structural Equation Model of Latent Segmentation and Product Choice for Cross Sectional, Revealed Preference Data’, Journal of Retailing and Consumer Services 1(2), 77–89.

    Article  Google Scholar 

  • Swait, J. and W. Adamowicz (1997), ‘The Effect of Choice Environment and Task Demands on Consumer Behaviour: Discriminating between Contribution and Confusion’, working paper, Dept. of Rural Economy, University of Alberta.

  • Thurstone, L. (1927), ‘A Law of Comparative Judgement’, Psychological Review 4, 273–286.

    Article  Google Scholar 

  • Willis, K. and J. Benson (1989), ‘Recreation Value of Forests’, Forestry 62(3), 93–110.

    Google Scholar 

Download references

Author information

Authors and Affiliations

Authors

Rights and permissions

Reprints and permissions

About this article

Cite this article

Hanley, N., Wright, R.E. & Adamowicz, V. Using Choice Experiments to Value the Environment. Environ Resource Econ 11, 413–428 (1998). https://doi.org/10.1023/A:1008287310583

Download citation

  • Issue Date:

  • DOI: https://doi.org/10.1023/A:1008287310583

Navigation