This study estimates the social benefits of wetland conservation in the Credit River watershed, located in an urban/peri urban area in Southern Ontario, Canada. A stated preference approach was employed to value wetland conservation programs which ranged from retaining the existing wetlands to restoring various levels of acres of wetlands over the 2009–2020 period. A total of 1,407 households completed an internet-based survey which presented trade-offs in binary choice scenarios framed as referenda. Responses were analyzed using various models, one of which was a latent class analysis which segmented respondents into three classes. This econometric approach uncovered significant preference heterogeneity for wetland conservation. Assignment of respondents to the classes suggested that about one-third of the sample was willing to pay small amounts to retain the existing wetlands. An additional third was willing to pay several hundred dollars a year for retention and small positive amounts for additional restoration. The final third were apparently willing to pay considerable sums for retention, but lesser amounts for additional restoration. However, further analysis revealed that respondents in this third class largely constituted yea-sayers. These results suggest caution in interpreting associated economic valuation estimates and highlight the importance of attempting to understand hypothetical bias in wetland and other such valuation studies.
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The referendum format is generally favored over other formats in the literature as it is thought to be incentive compatible, where respondents have an incentive to report their true WTP (Arrow et al. 1993).
In the survey, a distinction was not made between the ecological functioning of natural versus restored wetlands. While differences do exist, we believed that the required explanation would introduce information overload to survey respondents.
In some CVM application, multiple votes are employed but the level of the environmental quality change is held constant, and the tax level is varied depending on whether the respondent agreed to pay some original level or not. This is called double-bounded CVM. This provides a great level of detail on the marginal utility of income. However, in this study, we varied the wetland level which provides more detail on preferences over the environmental quality change of interest.
Ipsos Reid maintains a panel of approximately 7,620 residents within municipalities located in the Credit River watershed region for survey purposes. Panel members are selected through a rigorous screening process with the intent to ensure representation of all demographic and market segments, and panel members receive various coupons and perks as an incentive to respond to various surveys that are sent to them. It is also important to note that the Ipsos Reid panel is frequently “refreshed” (new members added and old ones excused) to ensure accurate representation of the changing demographics of the current population of interest.
Note that this estimate is smaller because the identified yea-sayers excluded from the estimation were more likely to vote in support of any wetland improvement program regardless of its cost.
For example, moving from the 3-class to the 4-class solution improved the log likelihood value by 48 points and the rho squared by about 1 %. The 4-class solution also did not reveal classes that were markedly different from the 3-class model, except one in which all of the coefficients were not statistically significant and included a very small part of the sample (6 %). As discussed by Swait (1994), the final selection of classes in these models should be parsimonious and involves judgment rather than the formal use of specific criteria.
This observation is not as puzzling as it may seem due to the fact that the large positive constant in the choice parameter vector would dominate the calculation of welfare measures for the size of wetland restoration, effectively turning the negative effect of the wetland acre parameter into an overall positive WTP for restoration. The negative sign on the restoration variable signifies declining WTP as acres restored increase.
Unfortunately, we did not include a question related to where respondents grew up and therefore cannot confirm this conjecture. Future research on valuing urban and peri urban wetlands should likely include such a variable.
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Funding and administrative assistance for this research was provided by Credit Valley Conservation, in Mississauga, Ontario, Canada.
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Lantz, V., Boxall, P.C., Kennedy, M. et al. The valuation of wetland conservation in an urban/peri urban watershed. Reg Environ Change 13, 939–953 (2013). https://doi.org/10.1007/s10113-012-0393-3
- Contingent valuation method
- Yea-saying bias
- Respondent heterogeneity