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Paying for a preserved nature…, but how much?

How much are we willing to pay for a preserved nature? Knowing the demand for "environmental goods", thence their value, is a necessity for the decision-makers; estimating it is a challenge for the economists.

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People implicitly give a value to the many immaterial goods they enjoy, particularly when it comes to environment: a clean beach, the biodiversity of a wetland area, a river full of fish, an open view over a site,… As these goods generally entail costs, the society has to make choices to allocate the limited resources available: to decide or not the implementation of an infrastructure, to give priority to a conservation project or to another, etc. This implies to be able to evaluate the demand for each of them. However, unlike most material goods, there is no market for environmental goods, thus no way to estimate their value through a market price. What is the value of a beach or a natural reserve, and how to measure it? The economists devised different methods based on individual preferences. One of the most widely used methods is contingent valuation, where surveys attempt to measure the "willingness to pay", i.e. the maximal amount people are ready to pay to benefit from the good in question: the higher the price, the higher the demand for the good.

The microeconomic theory of consumer behavior is based on the assumption that individuals have well-defined preferences for any choice they are faced with, and are able to express them in monetary terms. In the context of contingent valuation, this means that respondents can state an exact willingness to pay, without uncertainty. However people often feel uncertain about their answers, for various reasons: lack of experience or unfamiliarity with the good, inability to make a tradeoff between the commodity offered and their money, insufficient time to think about the valuation task, etc. This has consequences on the estimation of willingness to pay. Different approaches have been developed to address this issue, but they raise other problems. Based on field work conducted in the gulf of Morbihan (Brittany), the present work proposes another approach to capture respondent uncertainty and explore the underlying determinants.

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Satellite view of the gulf of Morbihan (source : Géoportail)

 

The gulf of Morbihan is a 20-km wide inner sea located south of Brittany (France) and dotted with islands and islets. The natural and economic stakes are very important on this territory which is both terrestrial (750 km²) and maritime (170 km²); many human activities (agriculture, shellfish farming, fishing, tourism, maritime transport, sailing) co-exist with natural areas of major ecological importance. But both are related as the success of tourism (1.2 million visitors/year) largely depends on landscapes and natural heritage. A survey showed that 96 % of tourists consider that natural sites are an asset for the gulf and that 33% have already visited at least one of them. This implies that they place a value on natural sites in the gulf, and are therefore concerned with any nature protection program.

A questionnaire survey exploring the attitude of tourists about a (hypothetical) project of creation of three new natural reserves was submitted to a sample of 498 tourists. After a few questions of general information and a detailed description of the project and its expected benefits, people were asked how much they would be willing to pay to access to the protected areas; the question was formulated as follows: " If you were to purchase the entrance fee, could you pick the maximum amount from those listed below that you would be willing to pay? If you cannot state a single amount, could you indicate a range that describes the amount you would be willing to pay?" Respondents thus could indicate a single value if they were sure about their choice, or an interval if this was not the case. Amounts proposed ranged from 0 to 60 € by steps of 5 €. This formulation has several advantages over the other techniques: people do not need to use verbal or numeric scales of uncertainty (whose perception can be highly subjective) and those who are sure about their choice have the possibility to give an exact answer.

The degree of uncertainty associated to the willingness to pays is computed from the answers to the questionnaire, and respondents are grouped in five categories according to their degree of uncertainty. Those who are completely certain of their answer do not have the same profile as the others. On the average, they are older and have a higher income, they mainly own an own second home in the gulf, and finally a greater proportion of them has already visited the only natural reserve presently existing of the gulf (in Séné) and to think that tourists should directly contribute to the financing of nature conservation initiatives.

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Distribution of the respondents according to the degree of uncertainty of their willingness to pay

How should the uncertainty of answers be taken into account when estimating the average willingness to pay, which is the indicator needed for decision-making? The (unknown) actual value for a given respondent lies within the interval stated, but it cannot be estimated by the maximum nor by the minimum. To compute an uncertainty adjusted mean willingness to pay, the approach proposed here considers the size of the interval and the computed degree of uncertainty: the narrower the interval, the lower the degree of uncertainty and the closer the estimated value to the maximum. With this new method, the average willingness to pay of the sample of tourists is 12.40 €. This estimate is close to that of another well-known method (11.00 €). Yet the method has some limits, which need to be addressed through research on the way the question is formulated and on the list of proposed choices, so as to be sure that a bias is not introduced by the survey itself

This work brought to decision-makers information on the demand for nature conservation in the gulf of Morbihan, but it also enabled to address several methodological aspects of the estimation of this demand through willingness to pay surveys.

 

The paper

Voltaire L., Pirrone C., Bailly D., 2013. Dealing with preference uncertainty in contingent willingness to pay for a nature protection program: A new approach. Ecological Economics 88 : 76–85.
See the first page

 

The authors

All three authors are members of the Amure laboratory of IUEM.

 

The journal

Ecological Economics was founded in 1989; it owes its existence and its title to the need to integrate the study and management of "nature's household" (ecology) and "humankind's household" (economics); this integration is necessary because to economic and environmental policies have been separated by conceptual and professional isolation. The journal is pluridisciplinary and open to all methods of investigation; its field is very wide and covers all thematic and methodological aspects of the relations between ecology and economics.

 

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