Contingent valuation and beyond: public attitudes to the uplands

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Contingent valuation and beyond public attitudes
to the uplands

• Dominic Moran
• Alistair McVittie
• Scottish Agricultural College

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Outline

• Multi-functional agriculture
• Valuation methods
• Why do we value?
• Contingent valuation
• Alternative methods
• Alternatives to valuation
• Uplands example

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Multi-functional agriculture

• Past agricultural policy has concentrated on
  productivist agriculture with little emphasis on
  the environment and broader rural issues
• Policy increasing recognises multi-functional
  objectives for agriculture
• Many multi-functional outputs are public goods -
  market failure in provision may require policy
  intervention to ensure supply

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Outputs from agriculture
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Why do we value?

• Values represent preferences
• What public goods should be supplied?
• How much should be provided?
• Where should they be provided?
• Values allow policy assessment
• Are we (society) getting value for money?
• Input into CBA

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Valuation approaches

• Revealed preference approaches use actual
  behaviour to infer values for good of interest
• e.g. hedonic pricing, travel cost
• limited range of values can be determined, ex
  post valuation
• Stated preference approaches value policy
  scenarios using hypothetical markets
• wider range of values, ex ante and ex post

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Contingent valuation

• Widely used to value public goods - esp.
  environmental
• Contingent market used to elicit willingness to
  pay (WTP) or accept (WTA) from target population
• Complex issue is how to specify the good or
  policy to be valued (what) and the payment
  vehicle (how)
• Extensive literature developed that can guide
  best practice

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Contingent valuation some issues

• CV can be inflexible to different elements of
  good/policy
• i.e. multi-functional outputs
• Does not indicate the relative preferences and
  values for these elements
• there may be trade-offs in policy delivery
• So called black box syndrome

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Alternative methods

• Choice experiments increasingly used in
  non-market valuation
• recognise multi-attribute nature of policy/public
  goods
• elicits relative preferences and values
• estimation of marginal values
• Complex statistical design and sampling
  requirements

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Choice experiment
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Alternatives to valuation

• Valuation can be costly and time consuming to
  undertake
• Often political problems with putting a money
  value on some non-market goods
• Still need to understand public preferences
• Increasing interest in use of methods such as
  multicriteria analysis (MCA)
• policy trade-offs can be made although not
  tempered by cost implications

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Example Public preferences for the uplands

• Study funded by the International Centre for the
  Uplands
• Postal survey of residents of Cumbria and
  Manchester - December 2004
• CVM valuation
• MCA - Analytical Hierarchy Process

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Analytical Hierarchy Process

• AHP asks respondents to make pairwise comparisons
  between attributes and within attributes between
  their levels (qualities)
• e.g. Environmental vs. Social
• Produces within attribute weights and between
  attribute weights
• From these overall weights can be derived

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AHP attributes

• Upland landscapes
• Upland landscapes can be characterised as
  providing scenic views over the fells and moors.
• The lower lying landscape is characterised by
  traditional farm buildings and dry stone walls.
• The less intensive form of agriculture in upland
  areas results in greater peace and tranquillity
• and offers greater opportunities for wild plants,
  birds and animals.

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AHP attributes

• Traditional farm management
• Hill farming has not seen the large changes
  experienced by lowland farming in recent decades,
  which has involved more intensive farming
  practices and specialisation.
• Hill farms are typically small family farms, with
  close links to the local community.
• This form of farming involves a number of
  traditional skills such as shepherding,
  maintaining dry stone walls, and common land
  management.

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AHP attributes

• Community culture
• Local communities are closely linked with hill
  farming through activities such as local shows
  and other community activities resulting in a
  strong local culture.
• These close links also mean that there are strong
  social networks within upland communities.

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Example pairwise comparison
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AHP results attribute weights
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AHP results attribute weights
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AHP results overall weights
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AHP results overall weights
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CVM results

• Double bounded referendum format
• Mean WTP 48.05 per household/annum
• 95 confidence interval 36.96 - 64.23
• Aggregated to UK population (24.5m households)
  using lower bound 907m p.a.