IDEAS home Printed from https://ideas.repec.org/p/ags/saea16/230001.html
   My bibliography  Save this paper

Valuing Groundwater Quality: Does Averting Behavior Matter?

Author

Listed:
  • Melo, Grace

Abstract

Contingent valuation (CV) or defensive behavior data is often used to estimate the economic value of water quality. Although combining these data (i.e., stated and revealed preferences) mitigates the potential bias from using either type of information, the costs of collecting both could overwhelm the benefits. We attempt to find a convenient estimation method by using a proxy indicator for revealed preferences in the analysis of stated preference data. Specifically, this study explores the effect of individuals’ reported defensive behavior on their stated preferences for groundwater quality. Logit models based on random utility theory were estimated using referendum CV data at household level collected in Maine, US. The results suggest that failure in accounting for defensive behavior in the valuation could result in a bias willingness to pay estimate for groundwater quality. We also found that the monetary value for groundwater quality was small, even though subsoil water constituted an important drinking water supply in the survey period. The results also revealed that respondents’ averting behavior were mainly influenced by their perception of groundwater quality. Implications of our findings for welfare analysis are discussed.

Suggested Citation

  • Melo, Grace, 2016. "Valuing Groundwater Quality: Does Averting Behavior Matter?," 2016 Annual Meeting, February 6-9, 2016, San Antonio, Texas 230001, Southern Agricultural Economics Association.
  • Handle: RePEc:ags:saea16:230001
    DOI: 10.22004/ag.econ.230001
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/230001/files/Valuing%20Groundwater%20Quality%20.pdf
    Download Restriction: no

    File URL: https://libkey.io/10.22004/ag.econ.230001?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Charles W. Abdalla, 1994. "Groundwater Values from Avoidance Cost Studies: Implications for Policy and Future Research," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 76(5), pages 1062-1067.
    2. Greene,William H. & Hensher,David A., 2010. "Modeling Ordered Choices," Cambridge Books, Cambridge University Press, number 9780521142373.
    3. Nunes, Paulo A. L. D. & van den Bergh, Jeroen C. J. M., 2001. "Economic valuation of biodiversity: sense or nonsense?," Ecological Economics, Elsevier, vol. 39(2), pages 203-222, November.
    4. Richard T. Carson & Nicholas E. Flores & Kerry M. Martin & Jennifer L. Wright, 1996. "Contingent Valuation and Revealed Preference Methodologies: Comparing the Estimates for Quasi-Public Goods," Land Economics, University of Wisconsin Press, vol. 72(1), pages 80-99.
    5. Tami L. Mark & Joffre Swait, 2004. "Using stated preference and revealed preference modeling to evaluate prescribing decisions," Health Economics, John Wiley & Sons, Ltd., vol. 13(6), pages 563-573, June.
    6. John Bergstrom & Kevin Boyle & Mitsuyasu Yabe, 2004. "Trading Taxes vs. Paying Taxes to Value and Finance Public Environmental Goods," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 28(4), pages 533-549, August.
    7. Charles W. Abdalla & Brian A. Roach & Donald J. Epp, 1992. "Valuing Environmental Quality Changes Using Averting Expenditures: An Application to Groundwater Contamination," Land Economics, University of Wisconsin Press, vol. 68(2), pages 163-169.
    8. Greene,William H. & Hensher,David A., 2010. "Modeling Ordered Choices," Cambridge Books, Cambridge University Press, number 9780521194204.
    9. Ekin Birol & Katia Karousakis & Phoebe Koundouri, 2006. "Using economic valuation techniques to inform water resources management: A survey and critical appraisal of available techniques and an application," DEOS Working Papers 0607, Athens University of Economics and Business.
    10. Bryan J. Hubbell & Jeffrey L. Jordan, 2000. "Joint Production and Averting Expenditure Measures of Willingness to Pay: Do Water Expenditures Really Measure Avoidance Costs?," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 82(2), pages 427-437.
    11. Gregory Poe & Richard Bishop, 1999. "Valuing the Incremental Benefits of Groundwater Protection when Exposure Levels are Known," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 13(3), pages 341-367, April.
    12. Michael Hanemann & John Loomis & Barbara Kanninen, 1991. "Statistical Efficiency of Double-Bounded Dichotomous Choice Contingent Valuation," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 73(4), pages 1255-1263.
    13. Kevin J. Boyle & Richard C. Bishop, 1988. "Welfare Measurements Using Contingent Valuation: A Comparison of Techniques," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 70(1), pages 20-28.
    14. Mi-Jung Um & Seung-Jun Kwak & Tai-Yoo Kim, 2002. "Estimating Willingness to Pay for Improved Drinking Water Quality Using Averting Behavior Method with Perception Measure," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 21(3), pages 285-300, March.
    15. Cameron, Trudy Ann, 1988. "A new paradigm for valuing non-market goods using referendum data: Maximum likelihood estimation by censored logistic regression," Journal of Environmental Economics and Management, Elsevier, vol. 15(3), pages 355-379, September.
    16. Paul R. Portney, 1994. "The Contingent Valuation Debate: Why Economists Should Care," Journal of Economic Perspectives, American Economic Association, vol. 8(4), pages 3-17, Fall.
    17. John Whitehead, 2005. "Environmental Risk and Averting Behavior: Predictive Validity of Jointly Estimated Revealed and Stated Behavior Data," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 32(3), pages 301-316, November.
    18. John C. Bergstrom & Kevin J. Boyle & Gregory L. Poe (ed.), 2001. "The Economic Value of Water Quality," Books, Edward Elgar Publishing, number 1723.
    19. Adamowicz W. & Louviere J. & Williams M., 1994. "Combining Revealed and Stated Preference Methods for Valuing Environmental Amenities," Journal of Environmental Economics and Management, Elsevier, vol. 26(3), pages 271-292, May.
    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. Olivier Beaumais & Anne Briand & Katrin Millock & Céline Nauges, 2010. "What are Households Willing to Pay for Better Tap Water Quality? A Cross-Country Valuation Study," Documents de travail du Centre d'Economie de la Sorbonne 10051, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
    2. Bruno Lanz, 2015. "Avertive expenditures, endogenous quality perception, and the demand for public goods: An instrumental variable approach," CIES Research Paper series 36-2015, Centre for International Environmental Studies, The Graduate Institute.
    3. John C. Whitehead & Subhrendu K. Pattanayak & George L. Van Houtven & Brett R. Gelso, 2008. "Combining Revealed And Stated Preference Data To Estimate The Nonmarket Value Of Ecological Services: An Assessment Of The State Of The Science," Journal of Economic Surveys, Wiley Blackwell, vol. 22(5), pages 872-908, December.
    4. Lanz, Bruno & Provins, Allan, 2017. "Using averting expenditures to estimate the demand for public goods: Combining objective and perceived quality," Resource and Energy Economics, Elsevier, vol. 47(C), pages 20-35.
    5. Richard T. Carson, 2011. "Contingent Valuation," Books, Edward Elgar Publishing, number 2489.
    6. Bruno Lanz & Allan Provins, 2014. "The demand for tap water quality: Survey evidence on water hardness and aesthetic quality," CIES Research Paper series 23-2014, Centre for International Environmental Studies, The Graduate Institute.
    7. Hanemann, W. Michael & Kanninen, Barbara, 1996. "The Statistical Analysis Of Discrete-Response Cv Data," CUDARE Working Papers 25022, University of California, Berkeley, Department of Agricultural and Resource Economics.
    8. repec:gii:ciesrp:cies_rp_36rev is not listed on IDEAS
    9. Konishi, Yoshifumi & Adachi, Kenji, 2011. "A framework for estimating willingness-to-pay to avoid endogenous environmental risks," Resource and Energy Economics, Elsevier, vol. 33(1), pages 130-154, January.
    10. 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.
    11. Alhassan, Mustapha & Gustafson, Christopher R. & Schoengold, Karina, 2017. "Effects of Information Framing on Smallholder Irrigation Farmers’ Willingness to Pay for Groundwater Protection: The Case of Vea Irrigation Scheme in Ghana," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 258432, Agricultural and Applied Economics Association.
    12. W. Michael Hanemann, 1994. "Valuing the Environment through Contingent Valuation," Journal of Economic Perspectives, American Economic Association, vol. 8(4), pages 19-43, Fall.
    13. 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.
    14. Bergstrom, John C. & Taylor, Laura O., 2006. "Using meta-analysis for benefits transfer: Theory and practice," Ecological Economics, Elsevier, vol. 60(2), pages 351-360, December.
    15. Tenwalde, Tracy & Jones, Eugene & Hitzhusen, Frederick J., 2005. "An Economic Analysis of Consumer Expenditures for Safe Drinking Water: Addressing Nitrogen Risk with an Averting Cost Approach," 2005 Annual meeting, July 24-27, Providence, RI 19431, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    16. Ndebele, Tom & Forgie, Vicky, 2017. "Estimating the economic benefits of a wetland restoration programme in New Zealand: A contingent valuation approach," Economic Analysis and Policy, Elsevier, vol. 55(C), pages 75-89.
    17. Haghani, Milad & Bliemer, Michiel C.J. & Rose, John M. & Oppewal, Harmen & Lancsar, Emily, 2021. "Hypothetical bias in stated choice experiments: Part I. Macro-scale analysis of literature and integrative synthesis of empirical evidence from applied economics, experimental psychology and neuroimag," Journal of choice modelling, Elsevier, vol. 41(C).
    18. Aadland, David & Caplan, Arthur J., 2003. "Cheap Talk Revisited: New Evidence From Cvm," 2003 Annual meeting, July 27-30, Montreal, Canada 22112, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    19. Gebreegziabher, Z. & Mekonnen, A. & Beyene, A.D. & Hagos, F., 2018. "Valuation of access to irrigation water in rural Ethiopia: application of choice experiment and contingent valuation methods," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 277168, International Association of Agricultural Economists.
    20. repec:ken:wpaper:0805 is not listed on IDEAS
    21. Dan SHI & Junjie WANG, 2016. "Methods and Application of Evaluating the Economic Value of the Ecological Environment," Chinese Journal of Urban and Environmental Studies (CJUES), World Scientific Publishing Co. Pte. Ltd., vol. 4(04), pages 1-16, December.
    22. Loomis, John B., 2010. "Testing Construct Validity of River Recreation Use Values: A Comparison of Direct Elicitation of Use Values to Use Values Inferred Indirectly from WTP for Total Economic Value," 2010 Annual Meeting, July 25-27, 2010, Denver, Colorado 60410, Agricultural and Applied Economics Association.

    More about this item

    Keywords

    Environmental Economics and Policy; Research Methods/ Statistical Methods;

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    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:ags:saea16:230001. 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: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/saeaaea.html .

    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.