Forskning ved Københavns Universitet - Københavns Universitet

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Revisiting money and labor for valuing environmental goods and services in developing countries

Publikation: Working paperForskning

Many Stated Preference (SP) studies conducted in developing countries exhibit a low willingness to pay (WTP) for a wide range of goods and services. However, recent studies in these countries indicate that this may be a result of the choice of payment vehicle, not the preference for the good. Thus, low WTP may not indicate a low welfare effect for public projects in developing countries. We argue that in a setting where there is imperfect substitutability between money and other measures of wealth (e.g. labor), including two or more payment vehicles may be needed to obtain valid welfare estimates. Otherwise, we risk underestimating the welfare benefit of projects. We demonstrate this through a rural household contingent valuation (CV) survey designed to elicit the value of access to reliable irrigation water in Ethiopia. Our result shows that both absolute and relative endowment of labor and income highly influence respondents’ choices. Of the total average annual WTP for access to reliable irrigation service, cash contribution comprises only 24.41%. Our findings highlight the importance of accounting for cross payment vehicle correlation and potential endogeneity biases that arise in the sequence of WTP and Willingness to contribute (WTC) valuation questions.
OriginalsprogEngelsk
Antal sider24
StatusUdgivet - jun. 2020

ID: 243009946