The%20Economic%20Value%20of%20Ecosystem%20Conservation%20in%20Japan:

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The Economic Value of Ecosystem Conservation in
Japan

• Reduction of elicitation effect by Bid Effect
  Function
• Mitsuyasu YABE
• Kyushu University

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Contents

1. Background and Purpose
2. Analytical Model
3. Survey Design and Explanatory Variables
4. Estimation Results
5. Conclusion

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Background of the Study

• National Park Aso
• Over 18 million people visit and enjoy the view
  of Aso grassland.
• Many valuable flora and fauna were maintained by
  traditional human activities.
• With decline of farmer and the change of farming
  pattern, the Aso grassland verge to crisis of
  maintaining

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Photo by Miura
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Photo by Miura
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Photo by Miura
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Photo by Miura
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Photo by Miura
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Photo by Miura
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Photo by Miura
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Endangered Species in Aso Grassland
Photo by Miura
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Photo by Miura
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Photo by Miura
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Photo by Miura
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Photo by Miura
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Photo by Miura
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Photo by Miura
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Photo by Miura
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Purpose of the Study

• Estimating the conservation value of Aso Glass
  Land
• Improving the Contingent Valuation Method (CVM)
• Deceasing Elicitation Effects
• 1) Starting Point Effects
• 2) Yea-saying

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Elicitation Effects in CV

• Dichotomous choice CV is most commonly applied
  since respondents only need to select accept or
  not accept
• However, even when the bid is higher than the
  latent willingness to pay, the respondents tend
  to accept the bid.

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Characteristics of the Model

• To decrease Elicitation Effects on the WTP
• ?Introducing Bid Effect Function
• ?Applying DC Approach for Five choice

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Formulation of Bid Effects

• Latent WTP for the i respondent
• The gap between the bid ti and latent WTP
• Bid effect function

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Stated WTP

• the stated WTP can be expressed
• The probability that the stated WTP yi is larger
  than the bid ti

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The Hypothetical Question(1)

• suppose that grassland could be converted to
  forest and grassland could be lost as grazing and
  open burning are discontinued in Aso region.
• In order to prevent that happens, we set up the
  Aso Grassland World Heritage Fund to register
  and conserve the grassland
• The activity cost of Aso Grassland World
  Heritage Fund is supported by the public
  contribution.

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The hypothetical question(2)

• If the fund costs () per household per annum,
  you may pay the amount of money? (Select only
  one)
• 1. will pay gt YES in Model 1 2
• 2. probably will pay gt YES in Model 3 4
• 3. probably will not pay
• 4. will not pay
• 5. dont know

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The Log-likelihood Function in DC-CVM

• Where di1 and di2 are coded 1 when respondent
  chose the option and otherwise 0.

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Form of Bid Effect Function

• If bid effect function is liner function
• We have a relation as follows

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Bid Effect function based on logistic function

• Hypotheses
• gtgt

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Summary of Survey Questionnaire

• Survey Period
• December 1998
• RespondentsResidents of Kumamoto Prefecture
• Samples1000
• Samples used for Analysis418

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Attributes of Survey Respondents

• Average Age 59 years old
• Average Income 5,740,000 yen per ann.
• (Approx. 52,000
  US)
• Conservation Activities of Aso Glass land
• Highly
  Appreciated

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Explanatory Variables and Means
Variables Description Mean S.E.
INCOME Income (million yen) 5.748 3.422
LAGE Logarithm of age 4.070 2.773
BEAUTY Beauty of Aso grassland (Log(1not good, , 5very good) 1.556 0.126
TRIP 1/0, 1visit within 5 years 0.765 4.124
ACT 1/0, 1conservation should be expanded 0.394 0.490
BEEF 1/0, 1would buy meet of cows fed grass at more than 20 higher price 0.196 0.397
POSSIBILITY 1/0, 1possibility that grassland is conserved by fund is more than 70 0.539 0.499
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Comparison of Estimated Results
Model 1 Model 2 Model 3 Model 4
Constant 0.766 0.512 5.391 5.701
INCOME 0.044 0.081 0.028 0.037
LAGE 0.812 1.013 0.326 0.107
BEAUTY 0.739 0.309 1.136 1.412
TRIP 0.652 0.624 0.026 0.258
ACT 0.833 0.800 0.636 0.646
BEEF 1.279 0.747 0.806 0.922
POSSIBILITY 0.662 0.652 0.022 -0.058
BID EFFECT 3.683 3.647
ERROR 1.682 0.494 1.079 0.252
Log Likelihood -148.300 -145.321 -96.110 -94.204
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Comparison of Latent WTPs Definitely Pay
(Unite Yen)
Model 1 Without Bid effect Func. Model 2 With Bid effect Func.
Mean 3,904 1,028
95 CI 2,055 to 8,884 799 to 1,374
Median 948 909
95 CI 714 to 1,252 715 to 1,163
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Comparison of Latent WTPs Probably Pay
(Unite Yen)
Model 3 Without Bid effect Func. Model 4 With Bid effect Func.
Mean 15,875 9,633
95 CI 10,144 to 27,461 7,274 to 12,415
Median 8,871 9,333
95 CI 6,867 to 11,345 7,096 to 12,415
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Results of Bid Effect Function

• Bid effect coefficient was statistically
  significant
• The error term was reduced by more than 70
• Difference between Mean and Median was also
  reduced

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Conservation Value of Aso Grassland

• Estimated Value who definitely pay Mean 1,028
  Yen ( US 9.3)
• Return rate of this survey 41.8
• Number of households of Kumamoto prefecture
  594,197
• Total Conservation Value per Year
• 1,028 x 0.418 x 594197
• 255 Million Yen/Year
• US 2.3 Million/Year

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Conclusion

• Removal of influence from the bid effect bias
  enabled a more appropriate WTP estimation
• Price Oriented Attribute affected the WTP more
  than income
• The estimated total environmental value was more
  than the amount of the environmental gross
  investment at HTB

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Thank you very much for your attention