• Environmental and Resource Economics Review
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• v.20 no.1
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• pp.119-153
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• 2011

This study reviews various aspects of model formulating processes of dichotomous choice responses of the contingent valuation method (CVM), which has been increasingly used in the preliminary feasibility test of Korea public investment projects. The theoretical review emphasizes the consistency between WTP estimation process and WTP measurement process. The empirical analysis suggests that two common parametric models for dichotmous choice responses (RUM and RWTP) and two commonly used probability distributions of random components (probit and logit) resulted in all most the same empirical WTP distributions, as long as the WTP functions are specified to be a linear function of the bid amounts. However, the efficiency gain of DB response compared to SB response were supported on the ground that the two CV responses are derived from the same WTP distribution. Moreover for the exponential WTP function which guarantees the non-negative WTP measures, sample mean WTP were quite different from median WTP if the scale parameter of WTP function turned out to be large.

• Environmental and Resource Economics Review
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• v.25 no.1
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• pp.1-25
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• 2016

This study investigated the variability of WTP estimates(i.e. mean or median) with ad hoc assumptions of specific parametric probability distributions(i.e. normal, logistic, lognormal, and exponential distribution) to estimate WTP function using dichotomous choice CV data on mortality risk reduction. From the perspective of policy decision, the variability of these WTP estimates are intolerable in comparison with those of Turnbull nonparametric estimation method which is free from ad hoc distribution assumptions. The Turnbull nonparametric estimation can avoid a kind of misspecification bias due to ad hoc assumption of specific parametric distributions. Furthermore, the WTP estimates by Turnbull nonparametric estimation are robust because the similar estimates are elicited from a dichotomous choice or double dichotomous choice CV data, and the statistically significant WTP estimates can be obtained even though it is not possible by parametric estimation methods. If there are considerable variability among those WTP estimates by parametric estimation methods in condition with no criteria of model adequacy, the mean WTPs from Turnbull nonparametric estimation can be the robust estimates without ad hoc assumptions, which can avoid controversial issues in the perspective of policy decisions.

• Environmental and Resource Economics Review
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• v.20 no.3
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• pp.595-628
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• 2011

This study investigates the issues and suggests reform measures in applying CV methods to the Korea Development Institute's (KDI's) Preliminary Feasibility Test (PFT) of public projects. Most public projects on culture, science and environment evaluated under the PFT system belong to the category of "nonstandard" projects whose outputs are non-marketed, and CV is currently the main tool used for their benefit estimation. A careful discussion and investigation is recommended for the selection of target population, payment vehicle, and number of payment times. Operating expert reviews, focus group interviews, and pre-tests is highly recommended to reduce the potential bias involved in the CV studies. A single or double bounded dichotomous choice format is the most popular design of questionnaire, but we identify several undissolved issues in designing and implementing the format. Some other forms of inducing WTPs may still deserve our consideration. Various specifications of the WTP function need to be tried and tested based on their stability, in particular. Employing a nonparametric approach is also recommended. Treatments of 0 or negative WTPs and protest bids are shown to be the most serious issues that affect the estimation results significantly. We review diverse measures of handling those issues and summarize their advantages and shortcomings.

• KSCE Journal of Civil and Environmental Engineering Research
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• v.32 no.4B
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• pp.233-242
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• 2012

In the past, the domestic water supply benefit of dam has been estimated by replacement dam cost approach. But it is logically inappropriate that we use the second priority dam as a replaced facility. Therefore, this study aims to suggest the estimation method of the domestic water supply benefit by using demand function, which is deduced from Willingness-To-Pay (WTP) of consumers. For this purpose, a survey concerning the marginal WTP is carried out according to the change of water use amount used, targeted 1,000 households in metropolitan area. And by using the marginal WPT, we estimated the demand function of a family. Finally, the monthly benefit equation is derived. The approach is demonstrated and discussed for an example, the Song-Li-Won dam project which is now renamed Young-Ju dam. From the example study, the total benefit for the durable years (50 years), was about 90 billion won. The method proposed herein is expected to be practical and useful in the economic analysis of the domestic water supply project including dam construction, as well as in further studies.

• Environmental and Resource Economics Review
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• v.12 no.4
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• pp.545-557
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• 2003

A new semiparametric estimator of a dichotomous choice contingent valuation model is proposed by adapting the well-known density weighted average derivative of the regression function. A small sample behavior of the estimator is demonstrated very briefly by a simulation and the estimator is applied to estimate the WTP for preserving the Dong River area in Korea.

• Journal of Korea Water Resources Association
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• v.56 no.3
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• pp.225-233
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• 2023

Urban rivers and their surrounding environments have been altered due to factors such as rapid economic growth and urban development. This alteration have caused the rivers to lose their original value and become exposed to various pollution, resulting decrease in citizens' quality of life. This study aims to estimate citizens' Willingness To Pay (WTP) for water quality improvement in Suyeong River in Busan. To estimate the non-market value of the Suyeong River, the WTP of Busan citizens for water quality improvement was estimated, applying Contingent Valuation Method (CVM). The WTP for improving the water quality from Grade 4(polluted water) to Grade 2(game fish like bass can live in it) was estimated using the water quality ladder concept of the US Environmental Protection Agency, assuming annual donations for five years. For the CVM, the logistic distribution and Spike Model were adopted. As a result, citizens residing in the surrounding area of Suyeong River expressed a higher WTP. Considering more than half of the Busan citizens are aware of the "conservation of nature and ecosystems" as a major function of the Suyeong River, this higher WTP could serve as a basis for improving the value of urban rivers.

• Journal of Korean Society of Forest Science
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• v.99 no.6
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• pp.891-899
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• 2010

The purpose of this study is to estimate economic value of forest landscape function using conditional logit model, applied by Choice Experiment. For the study, we have chosen attributes and levels of forest landscape. In specific, topographical forest type, forest type, forest density, recreational factor (side trip, accessibility of valley) and WTP were included in attributes. Based on factors, we have made 48 choice sets with Balanced and Orthogonal form using SAS 9.1. The efficiency of questionnaire was 6.02 (D-Error: 0.1) and choice set and socio-economic variable were selected. In order to reduce cognitive load of respondent, 96 choice sets were divided into 4 types in questionnaire so that respondent could respond to 12 choice sets respectively. Population was citizens from 7 metropolitan cities including Seoul, and the interview survey was conducted to find out average annual WTP per household for the total 280 interviewees. As a result, In the Non-ASC model, Mcfadden' ${\rho}$ had 0.21, and Log Likelihood: -2,631. Average annual WTP per household for forest landscape was 266,723 Won(Korean currency).

• Journal of Korean Society of Rural Planning
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• v.26 no.1
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• pp.137-147
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• 2020

Rural Development Administration (RDA) has developed a manufacturing technology which can increase the amount of platycodin D in Platycodon grandiflorum. A study is needed to estimate the value of this new technology and predict the market demand for a new product. This study estimates additional amount of willingness to pay (WTP) using contingent valuation method (CVM) for a new product with the technology that RDA has developed. The survey was created under virtual health functional foods market of Platycodon grandiflorums. It was conducted with 1,000 adult males and females aged between 19 and 59 years old in 17 major cities and provinces nationwide from December 4 to December 7, 2018. The amount of WTP for the health functional Platycodon grandiflorum was drawn using maxinum likelihood estimation method. The estimated average and median WTP values are 21,933.85 won per person and 10,000 won per person, respectively. The independent factors, including the ratio of monthly average health function food consumption to income, the average monthly income level of a household, and existence of family members or relatives engaged in food and nutrition-related professions in a household, have been shown to have a statistically significant influence on the WTP. This study presents the potential magnitude of health functional food market and the value of the new technology based on health functional food market.

• Environmental and Resource Economics Review
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• v.13 no.3
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• pp.337-366
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• 2004

Contingent Valuation Method (CVM), as non-market valuation approach, has been criticized on that respondents may not realistically reflect their budget constraints in answering willingness to pay (WTP) for hypothetical CV questions. This paper empirically estimates the income calibration factor associated with CV responses through combining travel cost method and contingent valuation method in a utility-theoretic framework. The joint model of recreation demand function and contingent WTP function was applied to an important case study on the Man Kyoung River system, whose water quality is at issue because of the Sae Alan Kum reclamation project. Relevant economic variables such as price, income and water quality had significant influence as anticipated by the economic theory. Equally important, the income calibration factor was not significantly different from one, suggesting that the systematic discrepancies of CV responses relative to the actual behavior was not detected at least in terms of budget exaggeration. Overall, this study supports the notion that carefully designed CVM studies can provide informative data on individuals' willingness to pay for environmental quality changes.

• The Journal of Fisheries Business Administration
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• v.49 no.3
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• pp.85-99
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• 2018

This study is to compare and evaluate the estimating method of WTP(willingness to pay) for the valuation of oceans and fisheries resources with non-market goods characteristics using contingent valuation method. In general, when estimating parameters of the WTP function, we should take into account the assumption of probability distribution, inclusion of covariates, method of inducement of payment, and the treatment of 0 payment intention and resistance responses. This study utilizes survey data that was used to estimate the value of fisheries resource protection zones, with a total of 1,200 samples. The main results of this study are summarized as follows: First, the final willness to pay amount is estimated at a statistical significance of less than 1 percent, and the distribution of the final willness to pay amount is from \6,926 of the double bounded dichotomous model to \10,721 of the spike model. Second, the willness to pay amount based on assumptions about the normal and logistic probability distributions are estimated to be \9,429 and \9,370 respectively, so there was no significant difference. Third, the willness to pay amount of the single bounded dichotomous model and the double bounded dichotomous model are estimated to be \8,951 and \6,926 respectively, making a relatively large difference. Fourth, the willness to pay amount of the model without covariates and the model with covariates are estimated to be \9,429 and \8,951, respectively, so the willness to pay amount is underestimated when the covariates are included. Fifth, the Spike model that considers zero payment intention and resistance response estimates \10,405 as the highest payment in this study. Finally, the CVM analysis guidelines proposed by the Korea Development Institute (KDI) are estimated to be \9,749 and \10,405 respectively, depending on including no covariates and with covariates. Compared to other models, the final willness to pay amount is not estimated underestimated. Therefore this study suggests the use of KDI's guidance under government public policy projects. In view of these results, the estimating model for willness to pay amount model will be selected by considering the sample size, the suitability of the model, the sign of the estimated coefficient, the statistical significance, the ratio of the zero payment intention and the payment rejection. And, for CVMs on government public policy projects, it is desirable to estimate by the method proposed by the KDI.