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Income and distance-decay effects on willingness to pay estimated by the contingent valuation method

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  • Jongyearn Lee

Abstract

This study suggests a methodology for enhancing accuracy in evaluating amenity by the contingent valuation method when household's willingness to pay (WTP) is dependent to its income and the distance between a respondent's residence and the location of a target facility. Using a linear city model, this study demonstrates the influences of income and distance-decay effects on WTP. Simulations are performed to check the validity of the model, as well as to predict consequences when income and distance-decay effects are not properly treated. Finally, the suggested methodology is applied to two real cases. The estimation results from a structural model show that the calculated total benefit varies largely when income and distance-decay effects exist and are ignored. Also, an ad hoc model generates significantly different estimates from the utility difference model this study adopted. The difference in estimates suggests that the total benefit has to be estimated by a structural model.

Suggested Citation

  • Jongyearn Lee, 2016. "Income and distance-decay effects on willingness to pay estimated by the contingent valuation method," Journal of Environmental Planning and Management, Taylor & Francis Journals, vol. 59(11), pages 1957-1981, November.
    • Handle: RePEc:taf:jenpmg:v:59:y:2016:i:11:p:1957-1981
    DOI: 10.1080/09640568.2015.1100984
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    Cited by:

    1. Victor Champonnois & Olivier Chanel, 2023. "Accounting for subsistence needs in non-market valuation: a simple proposal," Journal of Environmental Planning and Management, Taylor & Francis Journals, vol. 66(5), pages 1037-1060, April.
    2. Mei, Yingdan & Qiu, Jixiang & Wu, Jialu & Meng, Lina, 2021. "Do residents care about urban dumps? Evidence from individual housing transaction data," Land Use Policy, Elsevier, vol. 109(C).
    3. Bart Neuts, 2020. "Mixed pricing strategies in museums: Examining the potential of voluntary contributions for capturing consumer surplus," Tourism Economics, , vol. 26(1), pages 115-136, February.
    4. Alcon, Francisco & de-Miguel, María Dolores & Martínez-Paz, José Miguel, 2021. "Assessment of real and perceived cost-effectiveness to inform agricultural diffuse pollution mitigation policies," Land Use Policy, Elsevier, vol. 107(C).

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