Phi Phi Islands vs. SardiniaApplications of CVM at Comparison
Economic Valuation of Environmental and Natural Resources
Giampaolo Buchicchio 501 00963 29
Economic Valuation of Environmental and Natural Resources
AGENDA
• Environment Valuation– Contingent Valuation Method
• Papers Comparison– Phi Phi Islands– Geopark– La Maddalena– Gennargentu
• Main results
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Economic Valuation of Environmental and Natural Resources
ENVIRONMENT VALUATION
• Environmental Amenities Public Goods– Non-excludability– Non-rivalry
• Cost-Benefit Analysis:– People often undervalue environmental services– Public authorities face limited budgets
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Market failure; Need for government intervention
Economic Valuation of Environmental and Natural Resources
ENVIRONMENT VALUATION (cont.)
• Total Economic Value:– UV = Use Value (direct + indirect) – OV = Option Value– NUV = Non-use Value (bequest + existence)
• Indirect or Revealed Preference Method– Travel Cost Method; Hedonic Pricing– Observing the individual’s economic behaviour in a related market
• Direct or Stated Preference Method– CVM, Attribute-based Method– Surveying the individual on his/her WTP
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TEV = UV + OV + NUV
Economic Valuation of Environmental and Natural Resources
Contingent Valuation Method
• History– 1947: proposed by Ciriacy-Wantrup– 1963: used by Davis to estimate wilderness area value – 1989: Ohio vs. Department of the Interior
• US government agencies allowed to recover damages including non-use values
– 1989: Exxon Valdez oil spill in Alaska– 1993: NOAA panel recommendations– Today:
• Real estate appraisal technique; • CBA for projects impacting environment
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Economic Valuation of Environmental and Natural Resources
Contingent Valuation Method (cont.)
• Elicitation Format– Open-ended– Bidding game– Close-ended (dichotomous
choice)• Single-bounded• Double-bounded
• Advantages– Estimate non-use values– Estimate good not yet
available in definite form– Applicable at varying degrees
of complexityGiampaolo Buchicchio 501 00963 29
• Biases– Incentive:
• Strategic• Compliance
– Implied value• Starting point• Range• Relational• Importance• Position
– Scenario Misspecification• Theoretical• Amenity• Context
Economic Valuation of Environmental and Natural Resources
PAPERS COMPARISON
• Udomsak Seenprachawong (2004), “An Economic Analysis of Coral Reefs in the Andaman Sea of Thailand”: PHI PHI ISLANDS
• Strazzera, Brau, Balia and Atzeni (2002), “La disponibilità a pagare e le preferenze dei turisti per i siti del Parco Geominerario della Sardegna: il caso di Porto Flavia”: GEOPARK
• Strazzera (2001), "Stima della domanda turistica nel Parco Marino. della Maddalena: un'applicazione del metodo della valutazione contingente“: LA MADDALENA
• Brau and Strazzera (1998), “Studio di valutazione monetaria per il parco nazionale del Gennargentu. Indagine preliminare”: GENNARGENTU
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Economic Valuation of Environmental and Natural Resources
Phi Phi Islands
• Located off the west coast of Southern Thailand, between the large island of Phuket and the mainland
• Main islands: – Phi Phi Don – Phi Phi Leh
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Economic Valuation of Environmental and Natural Resources
Phi Phi Islands (cont.)
• Objectives– Estimate recreational benefits – Estimate the consumers’ WTP for improved coral reef
quality• Methodology– TCM + CVM; personal interviews
• Payment vehicle– Contribution to a trust fund
• Elicitation format– Single-bounded dichotomous choice
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Economic Valuation of Environmental and Natural Resources
Coral Reef Functions
• Direct use values (extractive)– Food/other resources (fishery, mariculture, jewellery, aquarium
items)– Construction material (sand, rocks)– Pharmaceuticals and other industrial chemicals
• Direct use values (non-extractive)– Tourism and recreation (diving, snorkelling)– Education and scientific interest
• Indirect use values– Biological support (breeding and feeding for offshore fish)– Coastal protection (to prevent sand erosion)– Fall-back life support system (during agricultural crises)
• Non-use values– Genetic resources– Global heritage– Known and unknown future uses of the functions above
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Economic Valuation of Environmental and Natural Resources
Phi Phi Islands (cont.)
• Objectives– Estimate recreational benefits – Estimate the consumers’ WTP for improved coral reef
quality• Methodology– TCM + CVM; personal interviews
• Payment vehicle– Contribution to a trust fund
• Elicitation format– Single-bounded dichotomous choice
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Economic Valuation of Environmental and Natural Resources
Phi Phi Islands (cont.)
• Descriptive analysis– Not performed in the paper
• Econometric analysis– Random utility model– Error modelled as a logistic
variable– Parametric estimation of
coefficients– Mean WTP
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Economic Valuation of Environmental and Natural Resources
Sardinia
• Second-largest island in the Mediterranean Sea
• Special statute of autonomous region under the Italian Constitution
• Area 24,090 km² • Pop. 1,655,677
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Economic Valuation of Environmental and Natural Resources
Geopark
• Geominerary Historic and Environmental Park established by UNESCO in 1998– 8 sites, all over Sardinia– attractive mix of industrial mining
archeology and naturalistic landscapes• Porto Flavia– two-kilometer long visit,
both open-air and underground • Second alternative scenario
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Economic Valuation of Environmental and Natural Resources
Geopark (cont.)
• Objectives– Estimate direct use value– Identify main characteristics of tourists interested in
visiting the Geopark• Methodology– CVM; personal interviews
• Payment vehicle– Visit ticket
• Elicitation format– Single-bounded dichotomous choice + open-ended
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Economic Valuation of Environmental and Natural Resources
Geopark (cont.)
• Descriptive analysis– Large number of variables– Bivariate analysis
• Contingency tables
• Econometric analysis– Least squares method– Logarithmic specification
• Wald test• Adj.R2 comparisons
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Economic Valuation of Environmental and Natural Resources
La Maddalena
• Rocky granitic island in the North Sardinia• Marine Park created in 1994– Area 15,000 ha– Coastal perimeter 180 km
• Direct consumer demand– Quantity• days would spend in the area
– Price• daily expense during current holiday
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Economic Valuation of Environmental and Natural Resources
La Maddalena (cont.)
• Objectives– Estimate variation in touristic demand – Focus is on touristic-recreational use
value only• Methodology
– CVM; personal interviews• Payment vehicle
– None: vacation days, not WTP, are elicited• Elicitation format
– Open-ended
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Economic Valuation of Environmental and Natural Resources
La Maddalena (cont.)
• Descriptive analysis– Only for the significant
variables
• Econometric analysis– Tobit model
• Non-neg. censored variable
– Log-linear specification• Narrower confidence intervals• Likelihood ratio test
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Economic Valuation of Environmental and Natural Resources
Gennargentu
• Mountain range, in the district of Nuoro• Punta La Marmora: 1,834 m• National Park created in 1998
~ resistances from local populations• Heterogeneity of sample:3 sub-samples– Locals– Other Sardinians– Mainland tourists
• Pilot surveyGiampaolo Buchicchio 501 00963 29
Economic Valuation of Environmental and Natural Resources
Gennargentu (cont.)
• Objectives (Pilot Survey)– Test elicitation format– Gather information on WTP distribution– Focus is on total economic value
• Methodology– CVM; phone interviews
(sample unit: household)• Payment vehicle
– Regional contribution• Elicitation format
– Double-bounded dichotomous choiceGiampaolo Buchicchio 501 00963 29
Economic Valuation of Environmental and Natural Resources
Gennargentu (cont.)
• Descriptive analysis– Bivariate analysis
~ WTP not significantly related to any socio-economic characteristic
• Econometric analysis– Probit vs. Logit model• Negative log-likelihood
– Linear vs. Log-linear specification
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Economic Valuation of Environmental and Natural Resources
MAIN RESULTS
• Main object of analysis– Environmental amenity
with cultural features in the Geopark case
• Main objective– Estimate recreational direct use value
• Most popular elicitation format– Single-bounded dichotomous choice
• Descriptive analysis– Commonly performed in Sardinian studies
• Interest in tourists’ characteristicsGiampaolo Buchicchio 501 00963 29
Economic Valuation of Environmental and Natural Resources
Q & A
THANK YOU!
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