Non-market valuation: case of a Saskatchewan wetland
Date
2002-11-01
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Degree Level
Masters
Abstract
There is widespread concern amongst economists and non-economists alike about the
state of our natural resources endowment both in the local environment (in this case,
Canada) and in the global environment. The imperative to manage these resources
such as to optimise the benefits thereof has created the need for an effective method
for cost and benefit comparisons. Since some of these resources are non-market goods,
economists are faced with the unique challenge of ascribing full value to them.
Contingent valuation emerged as a viable valuation option in situations in which
market failure prevails.
With the advent of contingent valuation, however, comes a barrage of issues
regarding its reliability as a tool for economic valuation. This debate became more
intense as the CV process was deployed as a valuation authority in litigations and
situations involving compensation awards. Subsequently, there was a clear recognition
amongst proponents and antagonists alike that further research is needed in order to
tighten some of the loose ends creating this controversy. The ability to effectively
achieve this end requires that rigorous studies aimed at further understanding the
intricacies of the CV process be carried out, with the objective to further understand its
workings and ultimately perfect it as a universally acceptable tool. However, the
ability to conduct as many CV studies as is necessary is limited by logistics and cost
constraints, since the CV process is high on these requirements.
This study sets out to demonstrate the feasibility of running an internet-based
survey as an alternative technique for deploying a contingent valuation study. In order
to achieve this, a web-based contingent valuation survey was designed, developed and implemented, prompting respondents for their willingness to pay (WTP) for a
hypothetical project designed to protect a designated natural resource area in
Saskatchewan, the Cumberland Marshes. The survey also obtained information on
respondents' socio-economic characteristics, as well as their knowledge of and
attitudes towards nature and environmental issues. Using information so obtained, the
WTP for the conservation of the Cumberland Marshes was estimated and also, the
socio-economic factors that influence respondents' decisions one way or the other
were determined.
Based on a predefined index of greenness, 29% of all respondents were
categorized as green. Also, using a similar index for nature-related activeness, 34% of
the respondents professed themselves as active. Results show that the survey sample is
more active than both the Saskatchewan and Canadian samples in a similar
Environment Canada survey, perhaps due to the relative "youthfulness" of our sample
(average age is 25 years as compared with 39 and 37 for Saskatchewan and Canada
respectively). The mean WTP stood at $62.4 per annum for an extended period of 25
years. Both the mode and median were $20 respectively, with the mode reoccurring 38
out of 196 times (19%). "Income" is the variable with the highest influence on
respondents' WTP decisions i.e. the more income an individual earns, the more she is
WTP for the conservation of the Cumberland Marshes.
Another noteworthy and unique outcome is the observed negative correlation
between "miles" (as the geographic distance between respondents' residence and the
Cumberland Marshes was defined) and WTP. This implies that in general, the further away a respondent lives from the Cumberland Marshes, the less value she is likely to
assign to it.
Respondents' expressed WTP estimates lead us to conclude that a high
premium is placed on programs designed to preserve natural resources areas in
Saskatchewan. Based on these estimates, the capitalized value of the Cumberland
Marshes over a 25-year period stands between $87 and $270 million.
Note:Page 21 was not included in the original thesis. The digitized version is also missing this page.
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Degree
Master of Arts (M.A.)
Department
Economics
Program
Economics