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The Economic Value of Ecosystem Conservation in Japan:

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  1. The Economic Value of Ecosystem Conservation in Japan: Reduction of elicitation effect by Bid Effect Function Mitsuyasu YABE Kyushu University

  2. Contents • Background and Purpose • Analytical Model • Survey Design and Explanatory Variables • Estimation Results • Conclusion

  3. Background of the Study National Park Aso • Over 18 million people visit and enjoy the view of Aso grassland. • Many valuable flora and fauna were maintained by traditional human activities. • With decline of farmer and the change of farming pattern, the Aso grassland verge to crisis of maintaining

  4. Photo by Miura

  5. Photo by Miura

  6. Photo by Miura

  7. Photo by Miura

  8. Photo by Miura

  9. Photo by Miura

  10. Photo by Miura

  11. Endangered Species in Aso Grassland Photo by Miura

  12. Photo by Miura

  13. Photo by Miura

  14. Photo by Miura

  15. Photo by Miura

  16. Photo by Miura

  17. Photo by Miura

  18. Photo by Miura

  19. Purpose of the Study • Estimating the conservation value of Aso Glass Land • Improving the Contingent Valuation Method (CVM): Deceasing Elicitation Effects 1) Starting Point Effects 2) Yea-saying

  20. Elicitation Effects in CV • Dichotomous choice CV is most commonly applied since respondents only need to select “accept” or “not accept” • However, even when the bid is higher than the latent willingness to pay, the respondents tend to “accept” the bid.

  21. Characteristics of the Model • To decrease Elicitation Effects on the WTP →Introducing Bid Effect Function →Applying DC Approach for Five choice

  22. Formulation of Bid Effects • Latent WTP for the irespondent: • The gap between the bid ti and latent WTP: • Bid effect function:

  23. Stated WTP • the stated WTP can be expressed: • The probability that the stated WTP yiis larger than the bid ti:

  24. The Hypothetical Question(1) • “suppose that grassland could be converted to forest and grassland could be lost as grazing and open burning are discontinued in Aso region. • In order to prevent that happens, we set up the “Aso Grassland World Heritage Fund” to register and conserve the grassland • The activity cost of “Aso Grassland World Heritage Fund” is supported by the public contribution.

  25. The hypothetical question(2) • If the fund costs (***) per household per annum, you may pay the amount of money? (Select only one) 1. will pay> “YES” in Model 1 & 2 2. probably will pay > “YES” in Model 3 & 4 3. probably will not pay 4. will not pay 5. don’t know

  26. The Log-likelihood Function in DC-CVM Where di1 and di2 are coded 1 when respondent chose the option and otherwise 0.

  27. Form of Bid Effect Function • If bid effect function is liner function : • We have a relation as follows:

  28. Bid Effect function based on logistic function • Hypotheses: • >>

  29. Summary of Survey Questionnaire • Survey Period: December 1998 • Respondents:Residents of Kumamoto Prefecture • Samples:1000 • Samples used for Analysis:418

  30. Attributes of Survey Respondents • Average Age: 59 years old • Average Income: 5,740,000 yen per ann. (Approx. 52,000 US$) • Conservation Activities of Aso Glass land: Highly Appreciated

  31. Explanatory Variables and Means

  32. Comparison of Estimated Results

  33. Comparison of Latent WTPs: Definitely Pay (Unite: Yen)

  34. Comparison of Latent WTPs: Probably Pay (Unite: Yen)

  35. Results of Bid Effect Function • Bid effect coefficient was statistically significant • The error term was reduced by more than 70% • Difference between Mean and Median was also reduced

  36. Conservation Value of Aso Grassland • Estimated Value who definitely pay: Mean 1,028 Yen ( = US$ 9.3) • Return rate of this survey:41.8% • Number of households of Kumamoto prefecture:594,197 • Total Conservation Value per Year = 1,028 x 0.418 x 594197 = 255 Million Yen/Year = US$ 2.3 Million/Year

  37. Conclusion • Removal of influence from the bid effect bias enabled a more appropriate WTP estimation • Price Oriented Attribute affected the WTP more than income • The estimated total environmental value was more than the amount of the environmental gross investment at HTB

  38. Thank you very much for your attention