Environmental and Resource Economics

, Volume 60, Issue 3, pp 471–495 | Cite as

Does Public Funding Affect Preferred Tradeoffs and Crowd-In or Crowd-Out Willingness to Pay? A Watershed Management Case

  • Achyut Kafle
  • Stephen K. Swallow
  • Elizabeth C. Smith


In discrete choice experiments, survey participants are often asked to consider stated cost, to themselves, as a source of funding of an environmental project. An open question remains whether participants would consider an additional source of funding, such as public or federal support. We examine the impact of federal funding availability on the marginal utility of management attributes and on respondents’ private willingness to pay (WTP) for watershed management plans. Our results suggest that availability of public funding does not significantly alter the preferred tradeoffs among management attributes for active management plans, but alters the utility difference, and therefore the WTP, between an active plan and the status quo alternative. A latent class model further suggests that classes with relatively similar preferences may nonetheless show heterogeneity in how availability of public funds affects WTP for management plans against the status quo, depending on individuals’ sociodemographic profiles and environmental attitudes. Public funding affects WTP through both crowding-in and crowding-out effects. Our results suggest that private responses to public funds may be more complex than previous studies on public goods have suggested, as public funds may neither attract contributions nor crowd out private support uniformly.


Choice experiment Donations Latent class model Matching grant Public goods Voluntary contributions 



The U.S. Department of Agriculture (USDA) Natural Resources Conservation Service (NRCS) provided partial funding, with additional funding from the Agricultural Experiment Station at the University of Rhode Island, the DelFavero Faculty Fellowship at University of Connecticut, and the UConn-Storrs Agricultural Experiment Station. The authors are grateful to Christian Vossler and anonymous referees for their invaluable critiques of the paper.


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Copyright information

© Springer Science+Business Media Dordrecht 2014

Authors and Affiliations

  • Achyut Kafle
    • 1
  • Stephen K. Swallow
    • 2
  • Elizabeth C. Smith
    • 3
  1. 1.Department of Environmental and Natural Resource Economics (ENRE)University of Rhode IslandKingstonUSA
  2. 2.Department of Agricultural and Resource Economics and Center for Environmental Sciences and EngineeringUniversity of ConnecticutStorrsUSA
  3. 3.The Nature Conservancy on Long IslandUplands FarmHarborUSA

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