IDEAS home Printed from https://ideas.repec.org/a/gam/jlands/v13y2024i2p159-d1329566.html
   My bibliography  Save this article

Preferences and Willingness to Pay for Preservation: The Case of a Proposed Hydropower Project in Southern Iceland

Author

Listed:
  • Clint Cook

    (Faculty of Life and Environmental Sciences, University of Iceland, 102 Reykjavik, Iceland)

  • Anna Dóra Sæþórsdóttir

    (Faculty of Life and Environmental Sciences, University of Iceland, 102 Reykjavik, Iceland)

  • David Cook

    (Faculty of Life and Environmental Sciences, University of Iceland, 102 Reykjavik, Iceland)

Abstract

When decision makers use a financial approach to review the costs and benefits of new renewable energy projects, the economic value of changes in social welfare resulting from impacts on natural resources is not included in the analysis. Iceland’s policy objective for carbon neutrality by 2040 will require constructing new power plants. This study aimed to estimate the economic preservation value for the Hólmsá and Tungufljót river basins in southern Iceland using the contingent valuation method. A web-based survey of Icelandic residents was conducted between 13 November 2022 and 19 December 2022 using a stratified random sample of 2909 adults. The response rate was 46.6%, with 35.1% of respondents indicating a willingness to pay (WTP) to protect the area from hydropower development. After excluding protest voters and accounting for those with and without WTP, the estimated mean WTP equaled ISK 5515. When scaled to the adult population of Icelandic residents, that equates to a total environmental and social cost of between ISK 1.52 and 1.70 billion. Compared to the estimated levelized cost of energy for the Hólmsárvirkjun at Atley hydropower project, this aggregation equates to an estimated 5.6% markup in total project costs, excluding transmission lines. Accounting for these economic costs in decision making allows for a more holistic understanding of new energy project costs and net present benefits.

Suggested Citation

  • Clint Cook & Anna Dóra Sæþórsdóttir & David Cook, 2024. "Preferences and Willingness to Pay for Preservation: The Case of a Proposed Hydropower Project in Southern Iceland," Land, MDPI, vol. 13(2), pages 1-29, January.
    • Handle: RePEc:gam:jlands:v:13:y:2024:i:2:p:159-:d:1329566
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2073-445X/13/2/159/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2073-445X/13/2/159/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Elisabetta Strazzera & Riccardo Scarpa & Pinuccia Calia & Guy Garrod & Kenneth Willis, 2003. "Modelling zero values and protest responses in contingent valuation surveys," Applied Economics, Taylor & Francis Journals, vol. 35(2), pages 133-138.
    2. Richard Carson & Nicholas Flores & Norman Meade, 2001. "Contingent Valuation: Controversies and Evidence," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 19(2), pages 173-210, June.
    3. Peter A. Diamond & Jerry A. Hausman, 1994. "Contingent Valuation: Is Some Number Better than No Number?," Journal of Economic Perspectives, American Economic Association, vol. 8(4), pages 45-64, Fall.
    4. David Popp, 2001. "Altruism and the Demand for Environmental Quality," Land Economics, University of Wisconsin Press, vol. 77(3), pages 339-349.
    5. McDonald, John F & Moffitt, Robert A, 1980. "The Uses of Tobit Analysis," The Review of Economics and Statistics, MIT Press, vol. 62(2), pages 318-321, May.
    6. Thomas P. Holmes, 1990. "Self-Interest, Altruism, and Health-Risk Reduction: An Economic Analysis of Voting Behavior," Land Economics, University of Wisconsin Press, vol. 66(2), pages 140-149.
    7. Carson, Richard T & Flores, Nicholas A, 2000. "Contingent Valuation: Controversies and Evidence," University of California at San Diego, Economics Working Paper Series qt75k752s7, Department of Economics, UC San Diego.
    8. Ronald G. Cummings & Laura Osborne Taylor, 1998. "Does Realism Matter in Contingent Valuation Surveys?," Land Economics, University of Wisconsin Press, vol. 74(2), pages 203-215.
    9. Timothy C. Haab & Matthew G. Interis & Daniel R. Petrolia & John C. Whitehead, 2013. "From Hopeless to Curious? Thoughts on Hausman's "Dubious to Hopeless" Critique of Contingent Valuation," Applied Economic Perspectives and Policy, Agricultural and Applied Economics Association, vol. 35(4), pages 593-612.
    10. Rowe, Robert D. & Schulze, William D. & Breffle, William S., 1996. "A Test for Payment Card Biases," Journal of Environmental Economics and Management, Elsevier, vol. 31(2), pages 178-185, September.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Richard T. Carson, 2011. "Contingent Valuation," Books, Edward Elgar Publishing, number 2489.
    2. Oerlemans, Leon A.G. & Chan, Kai-Ying & Volschenk, Jako, 2016. "Willingness to pay for green electricity: A review of the contingent valuation literature and its sources of error," Renewable and Sustainable Energy Reviews, Elsevier, vol. 66(C), pages 875-885.
    3. Robert J. Johnston & Kevin J. Boyle & Wiktor (Vic) Adamowicz & Jeff Bennett & Roy Brouwer & Trudy Ann Cameron & W. Michael Hanemann & Nick Hanley & Mandy Ryan & Riccardo Scarpa & Roger Tourangeau & Ch, 2017. "Contemporary Guidance for Stated Preference Studies," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 4(2), pages 319-405.
    4. Veisten, Knut, 2007. "Contingent valuation controversies: Philosophic debates about economic theory," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 36(2), pages 204-232, April.
    5. Anders Dugstad & Kristine Grimsrud & Gorm Kipperberg & Henrik Lindhjem & Ståle Navrud, 2020. "Scope elasticity and economic significance in discrete choice experiments," Discussion Papers 942, Statistics Norway, Research Department.
    6. Barrage, Lint & Lee, Min Sok, 2010. "A penny for your thoughts: Inducing truth-telling in stated preference elicitation," Economics Letters, Elsevier, vol. 106(2), pages 140-142, February.
    7. Paul Raschky & Reimund Schwarze & Manijeh Schwindt & Ferdinand Zahn, 2013. "Uncertainty of Governmental Relief and the Crowding out of Flood Insurance," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 54(2), pages 179-200, February.
    8. Diriba Abdeta, 2022. "Households' willingness to pay for forest conservation in Ethiopia: A review," Journal of Forest Science, Czech Academy of Agricultural Sciences, vol. 68(11), pages 437-451.
    9. Farr, Marina & Stoeckl, Natalie & Alam Beg, Rabiul, 2014. "The non-consumptive (tourism) ‘value’ of marine species in the Northern section of the Great Barrier Reef," Marine Policy, Elsevier, vol. 43(C), pages 89-103.
    10. David Hoyos & Petr Mariel, 2010. "Contingent Valuation: Past, Present and Future," Prague Economic Papers, Prague University of Economics and Business, vol. 2010(4), pages 329-343.
    11. Cook, David & Davíðsdóttir, Brynhildur & Kristófersson, Daði Már, 2018. "Willingness to pay for the preservation of geothermal areas in Iceland – The contingent valuation studies of Eldvörp and Hverahlíð," Renewable Energy, Elsevier, vol. 116(PA), pages 97-108.
    12. Anders Dugstad & Kristine M. Grimsrud & Gorm Kipperberg & Henrik Lindhjem & Ståle Navrud, 2021. "Scope Elasticity of Willingness to pay in Discrete Choice Experiments," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 80(1), pages 21-57, September.
    13. Rodríguez, Elsa Mirta M. & Lacaze, María Victoria & Lupín, Beatriz, 2007. "Willingness to pay for organic food in Argentina: evidence from a consumer survey," Nülan. Deposited Documents 1300, Universidad Nacional de Mar del Plata, Facultad de Ciencias Económicas y Sociales, Centro de Documentación.
    14. Richard T. Carson & Miko_aj Czajkowski, 2014. "The discrete choice experiment approach to environmental contingent valuation," Chapters, in: Stephane Hess & Andrew Daly (ed.), Handbook of Choice Modelling, chapter 9, pages 202-235, Edward Elgar Publishing.
    15. Drichoutis, Andreas C. & Vassilopoulos, Achilleas & Lusk, Jayson L. & Nayga, Rodolfo M. Jr., 2015. "Reference dependence, consequentiality and social desirability in value elicitation: A study of fair labor labeling," 143rd Joint EAAE/AAEA Seminar, March 25-27, 2015, Naples, Italy 202705, European Association of Agricultural Economists.
    16. Daniel McFadden, 2009. "The human side of mechanism design: a tribute to Leo Hurwicz and Jean-Jacque Laffont," Review of Economic Design, Springer;Society for Economic Design, vol. 13(1), pages 77-100, April.
    17. Levan Elbakidze & Rodolfo M. Nayga Jr. & Hao Li & Chris McIntosh, 2014. "Value elicitation for multiple quantities of a quasi-public good using open ended choice experiments and uniform price auctions," Agricultural Economics, International Association of Agricultural Economists, vol. 45(2), pages 253-265, March.
    18. Jin, Jianjun & Wang, Zhishi & Ran, Shenghong, 2006. "Comparison of contingent valuation and choice experiment in solid waste management programs in Macao," Ecological Economics, Elsevier, vol. 57(3), pages 430-441, May.
    19. Catherine L. Kling & Daniel J. Phaneuf & Jinhua Zhao, 2012. "From Exxon to BP: Has Some Number Become Better Than No Number?," Journal of Economic Perspectives, American Economic Association, vol. 26(4), pages 3-26, Fall.
    20. Powe, N. A. & Bateman, I. J., 2003. "Ordering effects in nested 'top-down' and 'bottom-up' contingent valuation designs," Ecological Economics, Elsevier, vol. 45(2), pages 255-270, June.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jlands:v:13:y:2024:i:2:p:159-:d:1329566. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.