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The distance decay of willingness to pay and the spatial distribution of benefits and costs for the ecological restoration of an urban branch stream in Ulsan, South Korea

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Abstract

This study investigates the spatial distribution of economic benefits and costs of an ecological restoration project for an urban branch stream, namely Yeocheon-Cheon in Nam-Gu, Ulsan metropolitan city, South Korea. A contingent valuation method with the one and one-half bounded dichotomous choice model was applied, and a spike model was employed to address zero-WTP responses. First, benefits of the project were not limited to the project site jurisdiction (Nam-Gu) but extended to the whole metropolitan city. Second, the significant negative coefficient of the distance variable indicates the distance decay of WTP for the project. Third, respondents who visited the site showed a significantly higher willingness to pay for the project. Finally, the project was economically profitable and socially desirable from the benefit–cost perspective. However, the cost allocation between jurisdictions was fiscally nonequivalent in terms of the spatial benefit distribution.

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Notes

  1. Local governments in South Korea have a two-tier system. Upper-tier authorities are metropolitan cities (Gwangyeok-Si) and provinces (Do). Lower-tier authorities are boroughs (Gu) and counties (Gun) of a metropolitan city, and cities (Si) and counties (Gun) of a province. National rivers are managed by upper-tier local governments, whereas local rivers are managed by lower-tier local governments.

  2. According to Bateman et al. (2006), there are equivalent loss studies examining the value of preserving water quality, conservation areas, endangered species, wetlands, and remote mountain lakes. Such studies verify expectations of significant distance decay in the overall WTP value but not in present nonuser values.

  3. According to Bateman et al. (2006), compensating surplus studies valuing increases in wetlands, bird life, and forest/river water quality demonstrate that “distance decay not only in overall sample values but also in the values stated by present nonusers” (Bateman et al. 2006: 453).

  4. Biases associated with the double-bounded dichotomous choice (DBDC) model have been tested using various hypotheses such as the persistent hypothesis, the anchoring hypothesis, the cost expectation hypothesis, the yes-saying hypothesis, and the framing hypothesis (Chien et al. 2005).

  5. To prevent a negative or insignificant WTP value, protest zero bidders are generally dropped from the sample. However, this can bring about the loss of a valid number of observations. Therefore, Carson and Hanemann (2005) asserted that this practice of dropping is being gradually abandoned because of growing evidence that most protest zeros tend to resemble a “no” response.

  6. KRW indicates the monetary unit in Korea, and one US dollar ($1) was about KRW 1100 during the analysis period.

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Acknowledgments

This study was supported by the UOU Research Fund in 2014, and we are grateful to the two anonymous referees for their valuable comments.

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Authors and Affiliations

  1. College of Social Sciences, University of Ulsan, P.O. Box 18, Ulsan, 680-749, South Korea

    Jae Hong Kim

  2. Architecture and Urban Research Institute, B-301, Acrotower Office, 230 Simin-daero, Dongan-gu, Anyang-si, Gyeonggi-do, 431-908, South Korea

    Seung-Nam Kim

  3. Department of Public Administration, Catholic University of Daegu, 330 Geumrak-ri, Hayang-eup, Gyeongsan-si, Gyeongbuk, 712-702, South Korea

    Soogwan Doh

Authors
  1. Jae Hong Kim
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  2. Seung-Nam Kim
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Correspondence to Soogwan Doh.

Additional information

Jae Hong Kim is first author.

Appendix

Appendix

See Table 10.

Table 10 Estimation results for models with the user-distance interaction term
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Kim, J.H., Kim, SN. & Doh, S. The distance decay of willingness to pay and the spatial distribution of benefits and costs for the ecological restoration of an urban branch stream in Ulsan, South Korea. Ann Reg Sci 54, 835–853 (2015). https://doi.org/10.1007/s00168-015-0688-7

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  • DOI: https://doi.org/10.1007/s00168-015-0688-7

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