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Generalized Additive Models for Nonmarket Valuation via Revealed or Stated Preference Methods

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  • Silvia Ferrini
  • Carlo Fezzi

Abstract

Single-site recreation demand and dichotomous choice contingent valuation analyses are typically conducted by implementing models containing strong parametric assumptions, which are rarely underpinned by theoretical arguments. This work illustrates how these assumptions can be relaxed and the estimation conducted semiparametrically by using generalized additive models (GAMs). This approach directly estimates the degree of the variables’ nonlinearities from the data, thereby avoiding subjective choices on the smoothing parameters and offering many advantages when compared to the conventional modeling techniques that dominate the environmental economics literature. Additionally, this paper illustrates how GAMs can be specified to construct theoretically consistent willingness-to-pay measures.

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  • Silvia Ferrini & Carlo Fezzi, 2012. "Generalized Additive Models for Nonmarket Valuation via Revealed or Stated Preference Methods," Land Economics, University of Wisconsin Press, vol. 88(4), pages 782-802.
    • Handle: RePEc:uwp:landec:v:88:y:2012:iv:1:p:782-802
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    1. Czajkowski, Mikołaj & Ahtiainen, Heini & Artell, Janne & Meyerhoff, Jürgen, 2017. "Choosing a Functional Form for an International Benefit Transfer: Evidence from a Nine-country Valuation Experiment," Ecological Economics, Elsevier, vol. 134(C), pages 104-113.
    2. Søren B. Olsen & Cathrine U. Jensen & Toke E. Panduro, 2020. "Modelling Strategies for Discontinuous Distance Decay in Willingness to Pay for Ecosystem Services," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 75(2), pages 351-386, February.
    3. Fezzi, Carlo & Ford, Derek J. & Oleson, Kirsten L.L., 2023. "The economic value of coral reefs: Climate change impacts and spatial targeting of restoration measures," Ecological Economics, Elsevier, vol. 203(C).

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    JEL classification:

    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects

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