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Divergence between WTA and WTP Revisited: Livestock Grazing on Public Range

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  • Lili Sun
  • G. Cornelis van Kooten
  • Graham Voss

Abstract

The research reported here provides further empirical support for the contention that there is a divergence between WTA and WTP. The conclusion is based on results from a 2002 survey of Nevada ranchers that asked about willingness to pay for public forage and WTA compensation to part with grazing rights. WTP and WTA are estimated simultaneously, with the estimators used to demonstrate a statistically significant divergence between WTP and WTA. The simultaneous estimation allows us to identify ranch characteristics that influence the discrepancy in valuations. Ranch size, public grazing allotment, financial distress, and long term commitment to ranching are all significant influences on the disparity. We interpret these results both with respect to general differences in welfare measures and with respect to ranch policy.

Suggested Citation

  • Lili Sun & G. Cornelis van Kooten & Graham Voss, 2005. "Divergence between WTA and WTP Revisited: Livestock Grazing on Public Range," Working Papers 2005-06, University of Victoria, Department of Economics, Resource Economics and Policy Analysis Research Group.
    • Handle: RePEc:rep:wpaper:2005-06
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    More about this item

    Keywords

    contingent valuation methods; dichotomous choice surveys; WTA versus WTP; grazing rights and public forage;
    All these keywords.

    JEL classification:

    • Q15 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Land Ownership and Tenure; Land Reform; Land Use; Irrigation; Agriculture and Environment
    • Q24 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Land
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects

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