[go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/p/arx/papers/2006.01290.html
   My bibliography  Save this paper

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

Author

Listed:
  • Habtamu Tilahun Kassahun
  • Jette Bredahl Jacobsen
  • Charles F. Nicholson
Abstract
Many Stated Preference studies conducted in developing countries provide a low willingness to pay (WTP) for a wide range of goods and services. However, recent studies in these countries indicate that this may partly 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 1) there is imperfect substitutability between money and other measures of wealth (e.g. labor), and 2) institutions are perceived to be corrupt, including payment vehicles that are currently available to the individual and less pron to corruption 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. Of the total average annual WTP for access to reliable irrigation service, cash contribution comprises only 24.41 %. The implication is that socially desirable projects might be rejected based on cost-benefit analysis as a result of welfare gain underestimation due to mismatch of payment vehicles choice in valuation study.

Suggested Citation

  • Habtamu Tilahun Kassahun & Jette Bredahl Jacobsen & Charles F. Nicholson, 2020. "Revisiting money and labor for valuing environmental goods and services in developing countries," Papers 2006.01290, arXiv.org, revised Aug 2020.
    • Handle: RePEc:arx:papers:2006.01290
    as

    Download full text from publisher

    File URL: http://arxiv.org/pdf/2006.01290
    File Function: Latest version
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Zemo, Kahsay Haile & Kassahun, Habtamu Tilahun & Olsen, Søren Bøye, 2019. "Determinants of willingness-to-pay for attributes of power outage - An empirical discrete choice experiment addressing implications for fuel switching in developing countries," Energy, Elsevier, vol. 174(C), pages 206-215.
    2. Echessah, Protase N. & Swallow, Brent M. & Kamara, Damaris W. & Curry, John J., 1997. "Willingness to contribute labor and money to tsetse control: Application of contingent valuation in Busia District, Kenya," World Development, Elsevier, vol. 25(2), pages 239-253, February.
    3. Habtamu Tilahun Kassahun & Bo Jellesmark Thorsen & Joffre Swait & Jette Bredahl Jacobsen, 2020. "Social Cooperation in the Context of Integrated Private and Common Land Management," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 75(1), pages 105-136, January.
    4. Boxall, Peter C. & Adamowicz, Wiktor L. & Moon, Amanda, 2009. "Complexity in choice experiments: choice of the status quo alternative and implications for welfare measurement," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 53(4), pages 1-17.
    5. Martínez-Espiñeira, Roberto & Lyssenko, Nikita, 2011. "Correcting for the endogeneity of pro-environment behavioral choices in contingent valuation," Ecological Economics, Elsevier, vol. 70(8), pages 1435-1439, June.
    6. W. Michael Hanemann, 1989. "Welfare Evaluations in Contingent Valuation Experiments with Discrete Response Data: Reply," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 71(4), pages 1057-1061.
    7. Shiferaw, Bekele & Holden, Stein T., 1998. "Resource degradation and adoption of land conservation technologies in the Ethiopian Highlands: A case study in Andit Tid, North Shewa," Agricultural Economics, Blackwell, vol. 18(3), pages 233-247, May.
    8. Flachaire, Emmanuel & Hollard, Guillaume, 2007. "Starting point bias and respondent uncertainty in dichotomous choice contingent valuation surveys," Resource and Energy Economics, Elsevier, vol. 29(3), pages 183-194, September.
    9. Robert J. Johnston & Kevin J. Boyle & Wiktor (Vic) Adamowicz & Jeff Bennett & Roy Brouwer & Trudy Ann Cameron & W. Michael Hanemann & Nick Hanley & Mandy Ryan & Riccardo Scarpa & Roger Tourangeau & Ch, 2017. "Contemporary Guidance for Stated Preference Studies," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 4(2), pages 319-405.
    10. Filippini, Massimo & Greene, William H. & Kumar, Nilkanth & Martinez-Cruz, Adan L., 2018. "A note on the different interpretation of the correlation parameters in the Bivariate Probit and the Recursive Bivariate Probit," Economics Letters, Elsevier, vol. 167(C), pages 104-107.
    11. Walker, Joan & Ben-Akiva, Moshe, 2002. "Generalized random utility model," Mathematical Social Sciences, Elsevier, vol. 43(3), pages 303-343, July.
    12. Godwin Kofi Vondolia & Håkan Eggert & Ståle Navrud & Jesper Stage, 2014. "What do respondents bring to contingent valuation? A comparison of monetary and labour payment vehicles," Journal of Environmental Economics and Policy, Taylor & Francis Journals, vol. 3(3), pages 253-267, November.
    13. Christopher B. Barrett & Shane M. Sherlund & Akinwumi A. Adesina, 2008. "Shadow wages, allocative inefficiency, and labor supply in smallholder agriculture," Agricultural Economics, International Association of Agricultural Economists, vol. 38(1), pages 21-34, January.
    14. Train,Kenneth E., 2009. "Discrete Choice Methods with Simulation," Cambridge Books, Cambridge University Press, number 9780521766555.
    15. W. Michael Hanemann, 1984. "Welfare Evaluations in Contingent Valuation Experiments with Discrete Responses," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 66(3), pages 332-341.
    16. Ekin Birol & Sukanya Das, 2010. "Valuing the Environment in Developing Countries: Modeling the Impact of Distrust in Public Authorities’ Ability to Deliver on the Citizens’ Willingness to Pay for Improved Environmental Quality," Working Papers 2010-055, Madras School of Economics,Chennai,India.
    17. Young-Sook Eom & Douglas Larson, 2006. "Valuing housework time from willingness to spend time and money for environmental quality improvements," Review of Economics of the Household, Springer, vol. 4(3), pages 205-227, September.
    18. Herriges, Joseph A. & Shogren, Jason F., 1996. "Starting Point Bias in Dichotomous Choice Valuation with Follow-Up Questioning," Journal of Environmental Economics and Management, Elsevier, vol. 30(1), pages 112-131, January.
    19. Heckman, James J, 1978. "Dummy Endogenous Variables in a Simultaneous Equation System," Econometrica, Econometric Society, vol. 46(4), pages 931-959, July.
    20. Kassahun, Habtamu Tilahun & Nicholson, Charles F. & Jacobsen, Jette Bredahl & Steenhuis, Tammo S., 2016. "Accounting for user expectations in the valuation of reliable irrigation water access in the Ethiopian highlands," Agricultural Water Management, Elsevier, vol. 168(C), pages 45-55.
    21. Meginnis, Keila & Hanley, Nick & Mujumbusi, Lazaaro & Lamberton, Poppy H.L., 2020. "Non-monetary numeraires: Varying the payment vehicle in a choice experiment for health interventions in Uganda," Ecological Economics, Elsevier, vol. 170(C).
    22. Dale Whittington, 2010. "What Have We Learned from 20 Years of Stated Preference Research in Less-Developed Countries?," Annual Review of Resource Economics, Annual Reviews, vol. 2(1), pages 209-236, October.
    23. Gregory L. Poe & Michael P. Welsh & Patricia A. Champ, 1997. "Measuring the Difference in Mean Willingness to Pay When Dichotomous Choice Contingent Valuation Responses Are Not Independent," Land Economics, University of Wisconsin Press, vol. 73(2), pages 255-267.
    24. M. Morrison & R. Blamey & J. Bennett, 2000. "Minimising Payment Vehicle Bias in Contingent Valuation Studies," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 16(4), pages 407-422, August.
    25. Chiara Monfardini & Rosalba Radice, 2008. "Testing Exogeneity in the Bivariate Probit Model: A Monte Carlo Study," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 70(2), pages 271-282, April.
    26. J. M. Gibson & D. Rigby & D. A. Polya & N. Russell, 2016. "Discrete Choice Experiments in Developing Countries: Willingness to Pay Versus Willingness to Work," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 65(4), pages 697-721, December.
    27. Hugh R. Waters, 1999. "Measuring the impact of health insurance with a correction for selection bias-a case study of Ecuador," Health Economics, John Wiley & Sons, Ltd., vol. 8(5), pages 473-483.
    28. Kevin J. Boyle & Richard C. Bishop & Michael P. Welsh, 1985. "Starting Point Bias in Contingent Valuation Bidding Games," Land Economics, University of Wisconsin Press, vol. 62(2), pages 188-194.
    29. Rajesh K. Rai & Helen Scarborough, 2015. "Nonmarket valuation in developing countries: incorporating labour contributions in environmental benefits estimates," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 59(4), pages 479-498, October.
    30. Oh, Hyungna & Hong, Jong Ho, 2012. "Citizens’ trust in government and their willingness-to-pay," Economics Letters, Elsevier, vol. 115(3), pages 345-347.
    31. Million A. Tadesse & Frode Alfnes & Olaf Erenstein & Stein T. Holden, 2017. "Demand for a labor-based drought insurance scheme in Ethiopia: a stated choice experiment approach," Agricultural Economics, International Association of Agricultural Economists, vol. 48(4), pages 501-511, July.
    32. Vondolia, Godwin K. & Navrud, Ståle, 2019. "Are non-monetary payment modes more uncertain for stated preference elicitation in developing countries?," Journal of choice modelling, Elsevier, vol. 30(C), pages 73-87.
    33. Le Trong Hung & John B. Loomis & Vu Tien Thinh, 2007. "Comparing money and labour payment in contingent valuation: the case of forest fire prevention in Vietnamese context," Journal of International Development, John Wiley & Sons, Ltd., vol. 19(2), pages 173-185.
    34. Mesfin Tilahun & Regina Birner & John Ilukor, 2017. "Household-level preferences for mitigation of invasion in the Afar region of Ethiopia: a contingent valuation," Journal of Environmental Planning and Management, Taylor & Francis Journals, vol. 60(2), pages 282-308, February.
    35. Jeff Bennett & Ekin Birol (ed.), 2010. "Choice Experiments in Developing Countries," Books, Edward Elgar Publishing, number 13208.
    36. Mohammed H. Alemu & Søren B. Olsen & Suzanne E. Vedel & John N. Kinyuru & Kennedy O. Pambo, 2017. "Can insects increase food security in developing countries? An analysis of Kenyan consumer preferences and demand for cricket flour buns," Food Security: The Science, Sociology and Economics of Food Production and Access to Food, Springer;The International Society for Plant Pathology, vol. 9(3), pages 471-484, June.
    37. Suziana Hassan & Søren Bøye Olsen & Bo Jellesmark Thorsen, 2018. "Appropriate Payment Vehicles in Stated Preference Studies in Developing Economies," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 71(4), pages 1053-1075, December.
    38. Godwin Kofi Vondolia & Håkan Eggert & Ståle Navrud & Jesper Stage, 2014. "What do respondents bring to contingent valuation? A comparison of monetary and labour payment vehicles," Journal of Environmental Economics and Policy, Taylor & Francis Journals, vol. 3(3), pages 253-267, November.
    39. Rakotonarivo, O. Sarobidy & Jacobsen, Jette B. & Larsen, Helle O. & Jones, Julia P.G. & Nielsen, Martin R. & Ramamonjisoa, Bruno S. & Mandimbiniaina, Rina H. & Hockley, Neal, 2017. "Qualitative and Quantitative Evidence on the True Local Welfare Costs of Forest Conservation in Madagascar: Are Discrete Choice Experiments a Valid ex ante Tool?," World Development, Elsevier, vol. 94(C), pages 478-491.
    40. Swallow, B. M. & Woudyalew, M., 1994. "Evaluating willingness to contribute to a local public good: Application of contingent valuation to tsetse control in Ethiopia," Ecological Economics, Elsevier, vol. 11(2), pages 153-161, November.
    41. Rai, Rajesh K. & Scarborough, Helen, 2015. "Nonmarket valuation in developing countries: incorporating labour contributions in environmental benefits estimates," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 59(4), October.
    42. Rai, Rajesh Kumar & Scarborough, Helen, 2013. "Economic value of mitigation of plant invaders in a subsistence economy: incorporating labour as a mode of payment," Environment and Development Economics, Cambridge University Press, vol. 18(2), pages 225-244, April.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Meles, Tensay Hadush & Lokina, Razack & Mtenga, Erica Louis & Tibanywana, Julieth Julius, 2023. "Stated preferences with survey consequentiality and outcome uncertainty: A split sample discrete choice experiment," EfD Discussion Paper 23-16, Environment for Development, University of Gothenburg.
    2. Diriba Abdeta, 2022. "Households' willingness to pay for forest conservation in Ethiopia: A review," Journal of Forest Science, Czech Academy of Agricultural Sciences, vol. 68(11), pages 437-451.
    3. Victor Champonnois & Olivier Chanel, 2023. "Accounting for subsistence needs in non-market valuation: a simple proposal," Journal of Environmental Planning and Management, Taylor & Francis Journals, vol. 66(5), pages 1037-1060, April.
    4. Manhique, Henrique & Wätzold, Frank, 2023. "Effects of Institutional Setting on Value Estimates of Stated Preference Surveys in Developing Economies: A Discrete Choice Experiment on Conserving Biodiversity in The Cape Floristic Region," MPRA Paper 118750, University Library of Munich, Germany.
    5. Kassahun, Habtamu Tilahun & Swait, Joffre & Jacobsen, Jette Bredahl, 2021. "Distortions in willingness-to-pay for public goods induced by endemic distrust in institutions," Journal of choice modelling, Elsevier, vol. 39(C).
    6. Tensay Hadush Meles & Razack Lokina & Erica Louis Mtenga & Julieth Julius Tibanywana, 2023. "Stated Preferences with Survey Consequentiality and Outcome Uncertainty: A Split Sample Discrete Choice Experiment," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 86(4), pages 717-754, December.
    7. Wanek, Eva & Bartkowski, Bartosz & Bourgeois-Gironde, Sacha & Schaafsma, Marije, 2023. "Deliberately vague or vaguely deliberative: A review of motivation and design choices in deliberative monetary valuation studies," Ecological Economics, Elsevier, vol. 208(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Hagedoorn, Liselotte C. & Koetse, Mark J. & van Beukering, Pieter J.H. & Brander, Luke M., 2021. "Reducing the finance gap for nature-based solutions with time contributions," Ecosystem Services, Elsevier, vol. 52(C).
    2. Vondolia, Godwin K. & Navrud, Ståle, 2019. "Are non-monetary payment modes more uncertain for stated preference elicitation in developing countries?," Journal of choice modelling, Elsevier, vol. 30(C), pages 73-87.
    3. Kocsis, Tamás & Marjainé, Szerényi Zsuzsanna, 2018. "Gazdag szegények. Időráfordítási hajlandóság a környezeti javak értékelésében [The wealthy poor - "willingness to spend time" in evaluating environmental benefits]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(11), pages 1154-1171.
    4. J. M. Gibson & D. Rigby & D. A. Polya & N. Russell, 2016. "Discrete Choice Experiments in Developing Countries: Willingness to Pay Versus Willingness to Work," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 65(4), pages 697-721, December.
    5. Ahlheim, Michael & Frör, Oliver & Nguyen Minh Duc & Rehl, Antonia & Siepmann, Ute & Pham Van Dinh, 2017. "Labour as a utility measure reconsidered," Hohenheim Discussion Papers in Business, Economics and Social Sciences 03-2017, University of Hohenheim, Faculty of Business, Economics and Social Sciences.
    6. Diafas, Iason & Barkmann, Jan & Mburu, John, 2017. "Measurement of Bequest Value Using a Non-monetary Payment in a Choice Experiment—The Case of Improving Forest Ecosystem Services for the Benefit of Local Communities in Rural Kenya," Ecological Economics, Elsevier, vol. 140(C), pages 157-165.
    7. Kassahun, Habtamu Tilahun & Swait, Joffre & Jacobsen, Jette Bredahl, 2021. "Distortions in willingness-to-pay for public goods induced by endemic distrust in institutions," Journal of choice modelling, Elsevier, vol. 39(C).
    8. Tilahun, Mesfin & Vranken, Liesbet & Muys, Bart & Deckers, Jozef A. & Gebregziabher, Kidanemariam & Gebrehiwot, Kindeya & Bauer, Hans & Mathijs, Erik, 2012. "Rural Households’ Demand for Frankincense Forest Conservation in Tigray: A Continent Valuation Analysis," Working Papers 146520, Katholieke Universiteit Leuven, Centre for Agricultural and Food Economics.
    9. Manhique, Henrique & Wätzold, Frank, 2023. "Effects of Institutional Setting on Value Estimates of Stated Preference Surveys in Developing Economies: A Discrete Choice Experiment on Conserving Biodiversity in The Cape Floristic Region," MPRA Paper 118750, University Library of Munich, Germany.
    10. Habtamu Tilahun Kassahun & Bo Jellesmark Thorsen & Joffre Swait & Jette Bredahl Jacobsen, 2020. "Social Cooperation in the Context of Integrated Private and Common Land Management," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 75(1), pages 105-136, January.
    11. Andreas Pondorfer & Katrin Rehdanz, 2018. "Eliciting Preferences for Public Goods in Nonmonetized Communities: Accounting for Preference Uncertainty," Land Economics, University of Wisconsin Press, vol. 94(1), pages 73-86.
    12. Diriba Abdeta, 2022. "Households' willingness to pay for forest conservation in Ethiopia: A review," Journal of Forest Science, Czech Academy of Agricultural Sciences, vol. 68(11), pages 437-451.
    13. Meginnis, Keila & Hanley, Nick & Mujumbusi, Lazaaro & Lamberton, Poppy H.L., 2020. "Non-monetary numeraires: Varying the payment vehicle in a choice experiment for health interventions in Uganda," Ecological Economics, Elsevier, vol. 170(C).
    14. Rai, Rajesh Kumar & Shyamsundar, Priya & Nepal, Mani & Bhatta, Laxmi Dutt, 2015. "Differences in demand for watershed services: Understanding preferences through a choice experiment in the Koshi Basin of Nepal," Ecological Economics, Elsevier, vol. 119(C), pages 274-283.
    15. Robert J. Johnston & Kevin J. Boyle & Wiktor (Vic) Adamowicz & Jeff Bennett & Roy Brouwer & Trudy Ann Cameron & W. Michael Hanemann & Nick Hanley & Mandy Ryan & Riccardo Scarpa & Roger Tourangeau & Ch, 2017. "Contemporary Guidance for Stated Preference Studies," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 4(2), pages 319-405.
    16. Li, Liqing & Long, Dede, 2022. "Household Preference for Impure Public Goods - an Application of Community Gardens," 2022 Annual Meeting, July 31-August 2, Anaheim, California 322142, Agricultural and Applied Economics Association.
    17. Hagedoorn, L.C. & Bubeck, P. & Hudson, P. & Brander, L.M. & Pham, M. & Lasage, R., 2021. "Preferences of vulnerable social groups for ecosystem-based adaptation to flood risk in Central Vietnam," World Development, Elsevier, vol. 148(C).
    18. Li, Liqing & Long, Dede, 2024. "Who values urban community gardens and how much?," Food Policy, Elsevier, vol. 126(C).
    19. Joseph Arbiol & Maridel Borja & Mitsuyasu Yabe & Hisako Nomura & Nina Gloriani & Shin-ichi Yoshida, 2013. "Valuing Human Leptospirosis Prevention Using the Opportunity Cost of Labor," IJERPH, MDPI, vol. 10(5), pages 1-16, May.
    20. Roshan Sherchan & Rajesh Kumar Rai & Roshani Rai & Arun Dhakal, 2022. "Designing a community-based insurance scheme to reduce human–wildlife conflict," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 24(4), pages 5112-5130, April.

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:arx:papers:2006.01290. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: arXiv administrators (email available below). General contact details of provider: http://arxiv.org/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.