Economic Valuation of Environmental Goods and Services Using Discrete Choice Experiments


Abstract views: 162 / PDF downloads: 52

Authors

Keywords:

Discrete Choice Experiments, Environmental Valuation , Random Utility Theory, Econometric Models , Environmental Policies

Abstract

This study focuses on Discrete Choice Experiments (DCEs), which are increasingly gaining importance in the field of environmental valuation. DCEs are highlighted as a powerful method for revealing individuals' preferences for non-market environmental goods and services. The study delves into the theoretical foundations of DCEs, particularly Random Utility Theory, and its role in modeling environmental preferences. Additionally, it comprehensively addresses the steps involved in the selection of attributes and levels, experimental design, and data collection processes that must be considered in DCE design. While providing practical guidance on the application of DCEs in environmental valuation, the study also compares this method with other environmental valuation techniques. Furthermore, it emphasizes the econometric models used in DCEs and the advantages they offer. Finally, the study discusses the impact of DCEs on environmental policies and highlights how these methods can serve as valuable tools for decision-makers.

References

Adamowicz, W., Louviere, J., & Swait, J. (1998). Introduction to Attribute-Based Stated Choice Methods. National Oceanic and Atmospheric Administration (NOAA) için hazırlanan rapor.

Arrow, K., Solow, R., Portney, P. R., Leamer, E. E., Radner, R., & Schuman, H. (1993). NOAA Panel on Contingent Valuation Raporu. Federal Register, 58(10), 4601-4614.

Bateman, I. J., Carson, R. T., Day, B., Hanemann, W. M., Hanley, N., Hett, T., ... & Swanson, J. (2002). Economic Valuation with Stated Preference Techniques: A Manual. Edward Elgar Publishing.

Buckell, J., White, J. S., & Shang, C. (2020). Can incentive-compatibility reduce hypothetical bias in smokers’ experimental choice behavior? A randomized discrete choice experiment. Journal of choice modelling, 37, 100255.

Callegaro, M., Lozar Manfreda, K., & Vehovar, V. (2015). Web Survey Methodology. Sage Publications.

Carlsson, F., & Martinsson, P. (2001). Do Hypothetical and Actual Willingness to Pay Differ in Choice Experiments? Journal of Environmental Economics and Management, 41(2), 179-192. https://doi.org/10.1006/jeem.2000.1138

Carson, R. T. (2012). Contingent Valuation: A Comprehensive Bibliography and History. Edward Elgar Publishing.

Carson, R., & Louviere, J. J. (2010). Experimental design and the estimation of willingness to pay in choice experiments for health policy evaluation (Doctoral dissertation, Oxford University Press).

Chen, W. Y., & Cho, F. H. T. (2021). Understanding China’s transition to environmental information transparency: citizens’ protest attitudes and choice behaviours. Journal of Environmental Policy & Planning, 23(3), 275-301.

Clawson, M., & Knetsch, J. L. (1966). Economics of Outdoor Recreation. Johns Hopkins University Press.

Costanza, R., d'Arge, R., de Groot, R., Farber, S., Grasso, M., Hannon, B., ... & van den Belt, M. (1997). The value of the world's ecosystem services and natural capital. Nature, 387(6630), 253-260.

De Bekker-Grob, E. W., Ryan, M., & Gerard, K. (2012). Discrete Choice Experiments in Health Economics: A Review of the Literature. Health Economics, 21(2), 145-172.

De Leeuw, E. D. (2005). To Mix or Not to Mix Data Collection Modes in Surveys. Journal of Official Statistics, 21(2), 233.

Everard, M. (2021). Ecosystem services: key issues. Routledge.

Fiebig, D. G., Keane, M. P., Louviere, J., & Wasi, N. (2010). The Generalized Multinomial Logit Model: Accounting for Scale and Coefficient Heterogeneity. Marketing Science, 29(3), 393-421.

Freeman, A. M., Herriges, J. A., & Kling, C. L. (2014). The measurement of environmental and resource values: theory and methods. Routledge.

Greene, W. H., & Hensher, D. A. (2003). A Latent Class Model for Discrete Choice Analysis: Contrasts with Mixed Logit. Transportation Research Part B: Methodological, 37(8), 681-698.

Hanemann, W. M. (1984). Welfare Evaluations in Contingent Valuation Experiments with Discrete Responses. American Journal of Agricultural Economics, 66(3), 332-341.

Hanley, N., & Czajkowski, M. (2019). The role of stated preference valuation methods in understanding choices and informing policy. Review of Environmental Economics and Policy. 13(2),

Hanley, N., Wright, R. E., & Adamowicz, V. (2001). Using Choice Experiments to Value the Environment: Design Issues, Current Experience and Future Prospects. Environmental and Resource Economics, 11(3-4), 413-428.

Hensher, D. A., Rose, J. M., & Greene, W. H. (2015). Applied Choice Analysis. Cambridge University Press.

Hess, S., Hensher, D. A., & Daly, A. (2012). Not bored yet–revisiting respondent fatigue in stated choice experiments. Transportation research part A: policy and practice, 46(3), 626-644.

Hoyos, D. (2010). The state of the art of environmental valuation with discrete choice experiments. Ecological economics, 69(8), 1595-1603.

Johnston, R. J., Boyle, K. J., Adamowicz, W., Bennett, J., Brouwer, R., Cameron, T. A., ... & Vossler, C. A. (2017). Contemporary Guidance for Stated Preference Studies. Journal of the Association of Environmental and Resource Economists, 4(2), 319-405.

Johnston, R. J., Rolfe, J., Rosenberger, R. S., & Brouwer, R. (2015). Benefit Transfer of Environmental and Resource Values: A Guide for Researchers and Practitioners. Springer.

Louviere, J. J., Hensher, D. A., & Swait, J. D. (2000). Stated Choice Methods: Analysis and Applications. Cambridge University Press.

Louviere, J. J., Pihlens, D., & Carson, R. (2011). Design of discrete choice experiments: a discussion of issues that matter in future applied research. Journal of Choice Modelling, 4(1), 1-8.

Mariel, P., De Ayala, A., Hoyos, D., & Abdullah, S. (2013). Selecting random parameters in discrete choice experiment for environmental valuation: a simulation experiment. Journal of choice modelling, 7, 44-57.

Mariel, P., Hoyos, D., Meyerhoff, J., Czajkowski, M., Dekker, T., Glenk, K., ... & Thiene, M. (2021). Environmental valuation with discrete choice experiments: Guidance on design, implementation and data analysis (p. 129). Springer Nature.

McFadden, D. (1974). Conditional Logit Analysis of Qualitative Choice Behavior. UC Berkeley IURD Working Paper Series. https://escholarship.org/uc/item/61s3q2xr

McFadden, D., Tye, W. B., & Train, K. (1977). An application of diagnostic tests for the independence from irrelevant alternatives property of the multinomial logit model (pp. 39-45). Berkeley: Institute of Transportation Studies, University of California.

Meginnis, K., Burton, M., Chan, R., & Rigby, D. (2021). Strategic bias in discrete choice experiments. Journal of Environmental Economics and Management, 109, 102163.

Meyerhoff, J., & Liebe, U. (2009). Status Quo Effect in Choice Experiments: Empirical Evidence on Attitudes and Choice Task Complexity. Land Economics, 85(3), 515-528.

Murphy, J. J., Allen, P. G., Stevens, T. H., & Weatherhead, D. (2005). A Meta-Analysis of Hypothetical Bias in Stated Preference Valuation. Environmental and Resource Economics, 30(3), 313-325.

Navrud, S., & Pruckner, G. J. (1997). Environmental valuation–to use or not to use? A comparative study of the United States and Europe. Environmental and resource economics, 10, 1-26.

Orme, B. K. (2010). Getting Started with Conjoint Analysis: Strategies for Product Design and Pricing Research (2nd ed.). Research Publishers LLC.

Pearce, A., Harrison, M., Watson, V., Street, D. J., Howard, K., Bansback, N., & Bryan, S. (2021). Respondent understanding in discrete choice experiments: a scoping review. The Patient-Patient-Centered Outcomes Research, 14(1), 17-53.

Richter, M. K. (1966). Revealed preference theory. Econometrica: Journal of the Econometric Society, 635-645.

Rolfe, J., Bennett, J., & Louviere, J. (2000). Choice Modelling and its Potential Application to Tropical Rainforest Preservation. Ecological Economics, 35(2), 289-302.

Rose, J. M., & Bliemer, M. C. (2009). Constructing Efficient Stated Choice Experimental Designs. Transport Reviews, 29(5), 587-617.

Rosen, S. (1974). Hedonic Prices and Implicit Markets: Product Differentiation in Pure Competition. Journal of Political Economy, 82(1), 34-55.

Rosenberger, R. S., & Phipps, T. T. (2007). Correspondence and Convergence in Benefit Transfer Accuracy: Meta-Analytic Review of the Literature. In Navrud, S., & Ready, R. (Eds.), Environmental Value Transfer: Issues and Methods. Springer.

Schulze, C., Zagórska, K., Häfner, K., Markiewicz, O., Czajkowski, M., & Matzdorf, B. (2024). Using farmers' ex ante preferences to design agri‐environmental contracts: A systematic review. Journal of Agricultural Economics, 75(1), 44-83.

Shang, L., & Chandra, Y. (2023). Identifying DCE Attributes and Levels. In Discrete Choice Experiments Using R: A How-To Guide for Social and Managerial Sciences (pp. 69-89). Singapore: Springer Nature Singapore.

Thurstone, L. L. (1927). A Law of Comparative Judgment. Psychological Review, 34(4), 273-286.

Train, K. E. (2009). Discrete Choice Methods with Simulation. Cambridge University Press.

Vanniyasingam, Thuva, Caitlin Daly, Xuejing Jin, Yuan Zhang, Gary Foster, Charles Cunningham, and Lehana Thabane. "Investigating the impact of design characteristics on statistical efficiency within discrete choice experiments: A systematic survey." Contemporary clinical trials communications 10 (2018): 17-28.

Veldwijk, J., Lambooij, M. S., de Bekker-Grob, E. W., Smit, H. A., & de Wit, G. A. (2014). The effect of including an opt-out option in discrete choice experiments. PloS one, 9(11), e111805.

Yang, J. C., Johnson, F. R., Kilambi, V., & Mohamed, A. F. (2015). Sample size and utility-difference precision in discrete-choice experiments: a meta-simulation approach. Journal of Choice Modelling, 16, 50-57.

Published

2024-08-24

How to Cite

Ulucak, R. (2024). Economic Valuation of Environmental Goods and Services Using Discrete Choice Experiments. Journal of Recycling Economy & Sustainability Policy, 3(2), 13–22. Retrieved from https://respjournal.com/index.php/pub/article/view/42