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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

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