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Does Respondent Perception of the Status Quo Matter in Non-Market Valuation with Choice Experiments? An Application to New Zealand Freshwater Streams

Author

Listed:
  • Dan Marsh

    (University of Waikato)

  • Lena Mkwara

    (University of Waikato)

  • Riccardo Scarpa

    (University of Waikato)

Abstract

In environmental valuation studies with stated preference methods, researchers often provide descriptions of status quo conditions which may differ from those perceived by respondents. Ignoring this difference in utility baselines may affect the magnitude of utility changes and hence bias the implied estimates of benefits from the proposed environmental policies. We investigate this issue using data from a choice experiment on a community’s willingness to pay for water quality improvements in streams. More than 60 percent of respondents perceived the description of the quality of water in streams to be better than the one we provided in our scenario. Our results show that respondents who could provide details of their perception of the status quo displayed stronger preferences for water quality improvements - hence a higher marginal willingness to pay - than their counterparts. Respondents who opted for their own status quo description displayed a higher inclination to remain in the status quo, while their counterparts displayed the contrary. We argue this might be linked to the amount of knowledge each group displayed about the status quo: a kind of reluctance to leave what one knows well.

Suggested Citation

  • Dan Marsh & Lena Mkwara & Riccardo Scarpa, 2010. "Does Respondent Perception of the Status Quo Matter in Non-Market Valuation with Choice Experiments? An Application to New Zealand Freshwater Streams," Working Papers in Economics 10/04, University of Waikato.
    • Handle: RePEc:wai:econwp:10/04
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    File URL: https://repec.its.waikato.ac.nz/wai/econwp/1004.pdf
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    References listed on IDEAS

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    1. Gregory L. Poe & Eric K. Severance-Lossin & Michael P. Welsh, 1994. "Measuring the Difference (X — Y) of Simulated Distributions: A Convolutions Approach," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 76(4), pages 904-915.
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    Cited by:

    1. Domínguez-Torreiro, Marcos & Soliño, Mario, 2011. "Provided and perceived status quo in choice experiments: Implications for valuing the outputs of multifunctional rural areas," Ecological Economics, Elsevier, vol. 70(12), pages 2523-2531.
    2. Marsh, Dan & Mkwara, Lena Asimenye & Scarpa, Riccardo, 2010. "Does respondent’s perceived knowledge of the status quo affect attribute attendance and WTP in choice experiments? Evidence from the Karapiro Catchment Freshwater streams," 2010 Conference, August 26-27, 2010, Nelson, New Zealand 96809, New Zealand Agricultural and Resource Economics Society.

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    More about this item

    Keywords

    choice experiments; fixed status quo; people’s perceived status quo; status quo effect; willingness to pay.;
    All these keywords.

    JEL classification:

    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects

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