Applying Contingent Valuation in China Xu Zhongmin, Cheng Guodong, Zhang Zhiqiang, Su Zhiyong Vs Anglers’ WTP For Information About Chemical Residues in.

Applying Applying Contingent ValuationContingent Valuation

in Chinain China Xu Zhongmin , Cheng Guodong, Xu Zhongmin , Cheng Guodong,

Zhang Zhiqiang, Su ZhiyongZhang Zhiqiang, Su Zhiyong

VsVsAnglers’ WTPAnglers’ WTP

For Information About Chemical For Information About Chemical Residues in Sport FishResidues in Sport Fish

Douglas J. Krieger and John P. HoehnDouglas J. Krieger and John P. Hoehn

TopicsTopics

Brief history of the two papersBrief history of the two papers Define the sampling as use value, non use Define the sampling as use value, non use

valuevalue PretestingPretesting Methods to elicit WTPMethods to elicit WTP Response rateResponse rate Future valueFuture value Conclusion and commentsConclusion and comments

Introduction (Ejina)Introduction (Ejina)

The study reports an attempt to apply The study reports an attempt to apply CVM in Ejina Basin , China.CVM in Ejina Basin , China.

The objective of the study is to measure The objective of the study is to measure the economic total value of restoring the the economic total value of restoring the Ejina ecosystem.Ejina ecosystem.

Survey DesignSurvey Design of Ejina paperof Ejina paper

The investigation group consisted of 12 The investigation group consisted of 12 persons ;persons ; 7 ecologists and 5 economists.7 ecologists and 5 economists.

Payment Card approach was adopt to use Payment Card approach was adopt to use in the questionnaire.in the questionnaire.

700 households in Hei valley were 700 households in Hei valley were selected as the sample.selected as the sample.

Introduction (Michigan)Introduction (Michigan) The study emphasizes on improving the draft The study emphasizes on improving the draft

questionnaires by pretesting carefully.questionnaires by pretesting carefully. The objective is to find out the WTP for The objective is to find out the WTP for

improving the advisory program of Michigan improving the advisory program of Michigan state.state.

Questionnaire DesignQuestionnaire Design

This chapter focused on the design and This chapter focused on the design and implementation of CV which was setting into 2 implementation of CV which was setting into 2 scenario.scenario.

1.1. 11stst ,reviewed the Michigan’s current advisory ,reviewed the Michigan’s current advisory program.program.

2.2. 22ndnd ,proposed ,proposed the alternatives for the the alternatives for the respondents with new advisory program.respondents with new advisory program.

PretestingPretesting Goal: Goal:

UncoverUncover

- misinterpretation of questions- misinterpretation of questions

- Ambiguity in response categories- Ambiguity in response categories

- clarity of visual aids- clarity of visual aids

- ...- ...

Reduce Bias

How did they do it?How did they do it? Ejina Paper:Ejina Paper:- Questionnaire pre-tested using a sample of 42 Questionnaire pre-tested using a sample of 42

respondents from Hei Riverrespondents from Hei River

- Ask respondents to write down their own Ask respondents to write down their own maximum amount; use this as a guide for maximum amount; use this as a guide for alternative values in final PCalternative values in final PC

Comment: Comment: Paper does not mention how pretesting helped Paper does not mention how pretesting helped

to improve the questionnaire or how researchers to improve the questionnaire or how researchers came up with the final questionnairecame up with the final questionnaire

How did they do it?How did they do it? Michigan Paper:Michigan Paper:

- Use focus groups to explore how anglers think - Use focus groups to explore how anglers think about chemical residues in fish, language they about chemical residues in fish, language they use, how they think and respond to current use, how they think and respond to current advisory advisory

Draft QuestionnaireDraft Questionnaire

- Pretest of draft questionnaire in personal Pretest of draft questionnaire in personal interviews with 12 anglersinterviews with 12 anglers

Result:Result:

• Questions removed, combined Questions removed, combined

• Examples: Examples:

1.Payment vehicle1.Payment vehicle

2.Knowledge about current advisory2.Knowledge about current advisory

Elicit WTPElicit WTP

Two ApproachesTwo Approaches

Payment Card ApproachPayment Card Approach

(Ejina Paper)(Ejina Paper)

Referendum Approach Referendum Approach

( Michigan Paper)( Michigan Paper)

Payment CardPayment Card Respondents are confronted with a sequence Respondents are confronted with a sequence

of bids where they choose the maximum of bids where they choose the maximum amount they are willing to payamount they are willing to pay

Ejina Paper: Ejina Paper: - Maximum amount hh would vote for and - Maximum amount hh would vote for and

lowest amount hh would switch to a nolowest amount hh would switch to a no - Result: Lowest amount hh would switch to no - Result: Lowest amount hh would switch to no

only one category higher than what he would only one category higher than what he would vote forvote for

WTP 0 2WTP 0 2 5 105 10 20 20 35 50 75 35 50 75 100 200100 200

(RMB)

Referendum ApproachReferendum Approach Dichotomos choice of voting for or against a Dichotomos choice of voting for or against a

programm at a specified costprogramm at a specified cost Michigan Paper:Michigan Paper:

Why was the method chosen?Why was the method chosen? Payment CardPayment Card

- People not familiar with People not familiar with market pricesmarket prices

- Simple for respondent Simple for respondent and researcherand researcher

Referendum ApproachReferendum Approach

- Easier for respondent: Easier for respondent: decision to accept or reject decision to accept or reject a good at given price is a good at given price is most common type of most common type of market transaction market transaction

- People are familiar with People are familiar with voting on public programsvoting on public programs

- Reduces incentives for Reduces incentives for strategic over- or strategic over- or understatement of WTPunderstatement of WTP

What about the payment vehicle?What about the payment vehicle? Ejina Paper:Ejina Paper:- Three methods of paying:Three methods of paying:

donation, ecological protection donation, ecological protection tax, water billtax, water bill

- Blank to fill in preferred method - Blank to fill in preferred method of paymentof payment

Overcome problem of non-Overcome problem of non-

acceptance of payment vehicleacceptance of payment vehicle

- Problem: Payment vehicles differ - Problem: Payment vehicles differ in their incentives to reveal true in their incentives to reveal true maximum WTP + potential for maximum WTP + potential for free riding behaviourfree riding behaviour

Michigan Paper:Michigan Paper:- Increase in license fee:Increase in license fee: - fees are collected by the state - fees are collected by the state

and people link them directly and people link them directly to spending on public to spending on public programs programs

- difficult to avoid- difficult to avoid

- drawback: people are afraid - drawback: people are afraid that money is not used to that money is not used to improve advisories improve advisories

ask people if they ask people if they

object to the license fee as a object to the license fee as a method of raising moneymethod of raising money

Response RateResponse RateEjina regionEjina region Personal interviews results in high response Personal interviews results in high response

ratesrates In-person investigation on July 2001In-person investigation on July 2001 700 household to be sampled were split into 700 household to be sampled were split into

24 groups , 20 – 35 people per group24 groups , 20 – 35 people per group From 700 questionnaires, 695 were From 700 questionnaires, 695 were

completedcompleted This survey achieved response rate of 99%This survey achieved response rate of 99%

Response RateResponse RateMichigan paperMichigan paper Use TDM (Total Design Method)Use TDM (Total Design Method) Sent the first questionnaires to 1,578 peopleSent the first questionnaires to 1,578 people Only 230 sets were returned as undeliverableOnly 230 sets were returned as undeliverable The response rate are as following:The response rate are as following:

First mailing obtained 30%First mailing obtained 30% Second mailing obtained 25%Second mailing obtained 25% Third mailing obtained 24%Third mailing obtained 24%

This survey achieved overall response rate of This survey achieved overall response rate of 73.4%73.4%

The discounting for WTPThe discounting for WTP The researcher resolved the problem of time The researcher resolved the problem of time

discount in aggregate of annual payment where discount in aggregate of annual payment where the lump sum and periodic payment should the lump sum and periodic payment should equal.equal.

The researcher put the high discount rate (15%) The researcher put the high discount rate (15%) for the environment goods which encouraged for the environment goods which encouraged the public to underestimate the future benefit of the public to underestimate the future benefit of the environment .the environment .

The researcher calculated by put the median of The researcher calculated by put the median of WTP. WTP.

Table 5Table 5

The result demonstrated that human should take The result demonstrated that human should take action to restore and protect the environment as action to restore and protect the environment as soon as possible.soon as possible.

Ejina Vs MichiganEjina Vs Michigan

EjinaEjina Put discount rate at 15 Put discount rate at 15

% to Value future % to Value future benefit benefit

The result should be The result should be restored the Ejina restored the Ejina ecosystemecosystem

MichiganMichigan Did not mention about Did not mention about

the discount ratethe discount rate

Conclusion and commentsConclusion and comments Ejina Paper:Ejina Paper:- In China WTA might be a In China WTA might be a

better approach, because better approach, because people are not familiar with people are not familiar with market pricesmarket prices

- As there exist few CVM studies As there exist few CVM studies in China, future research has in China, future research has to find out what payment to find out what payment vehicles are appropriate for vehicles are appropriate for different types of public goodsdifferent types of public goods

Michigan Paper:Michigan Paper:- People who are no anglers, but People who are no anglers, but

eat fish were not included in the eat fish were not included in the surveysurvey

- Paper does not tell how focus Paper does not tell how focus groups were selectedgroups were selected

- 12 personal interviews to test 12 personal interviews to test the draft questionnaire might the draft questionnaire might not be suffiencientnot be suffiencient

- Clear and precise description of Clear and precise description of current advisory and current advisory and alternatives alternatives

Present byPresent by

Ms. Kristina HammerstroemMs. Kristina Hammerstroem 501 00940 501 00940 2929

Ms Piyaporn PekkadMs Piyaporn Pekkad 508 56830 29508 56830 29

Mr. Poramate UdomsinanonMr. Poramate Udomsinanon 508 56796 508 56796 2929

Ms. Thienrat KummarabuthMs. Thienrat Kummarabuth 508 56612 508 56612 2929