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Non-market values for fresh water in the Waikato region: a combined revealed and stated preference approach

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Report: TR 2014/17

Author: Y Phillips

About this report

The Waikato Economic Impact Joint Venture Project studies were undertaken to support and inform decision-making by central government, regional government and the wider community on the potential impacts of setting freshwater objectives and limits in the Waikato River catchment.

The studies will help ensure that the Healthy Rivers: Plan for Change/ Wai Ora: He Rautaki Whakapaipai project for the Waikato and Waipa river catchments is supported by analysis on the potential economic and environmental impacts of different policy scenarios. The overall Waikato work can be used with other data sources for the Healthy Rivers/Wai Ora Technical Alliance experts to consider when making decisions about the way ahead for management of the Waikato and Waipa rivers catchment.

Many of the values (benefits) of good water quality cannot be directly assessed in dollar terms ‘in the market’; so they are called ‘non-market values’. This is in contrast to the cost of restoring and protecting rivers and other water bodies where a dollar value (or market value) can be put on many of the costs (e.g. improved sewage treatment systems, effluent disposal systems, changes in farm management).

Non-market valuation methods have been developed and have proved to be a very useful tool for assessing the value of environmental resources for which there is no price tag. These methods enable policy makers to take account of the costs and benefits of alternative policies, while taking account of both market and non-market values.

The purpose of the Non-Market Valuation study is to assess non-market values of fresh water quality in the Waikato/Waipa catchment in terms of willingness to pay by households. The scope of non-market values assessed in this study consists of recreational and cultural use, option values for future use, and non-use or existence value.

This report explains the methodology and how the models can be used to help inform policy using some hypothetical water quality scenarios.

Read or download the report

Non-market values for fresh water in the Waikato region: a combined revealed and stated preference approach (3mb)

Contents

  Executive summary
1 Introduction
2 Valuation framework
2.1 Non-market valuation methods
2.2 Limitations of the valuation framework
3 Literature review
3.1 Purpose
3.2 Method
3.3 Summary
3.4 Limitations
3.5 Application of findings
4 Revealed preferred analysis
4.1 Purpose
4.2 Methodology
4.3 Descriptive statistics
4.4 Revealed preference model
4.5 Application of findings
4.6 Scenario analysis using revealed preference model
4.7 Limitations of the revealed preference analysis
5 Stated preference analysis
5.1 Purpose
5.2 Method
5.3 Descriptive statistics
5.4 Stated preference model
5.5 Application of findings
5.6 Limitations
6 Combined revealed and sated preference model
6.1 Purpose
6.2 Methodology
6.3 Model results
6.4 Willingness to pay comparison
6.5 Application of results
6.6 Limitations
7 Marginal benefit analysis
7.1 Purpose
7.2 Bias adjustments
7.3 Scenario 1: improvement across the catchment
7.4 Scenario 2: prevent the decline in quality in the Waikato reiver from the upper to central zone
8 Discussion and conclusion
8.1 Areas for further work
  References / Bibliography
9 Appendix
9.1 Revealed preference model specification
9.2 Scenario analysis using revealed preference model
9.3 Choice experiment design
9.4 Weighting of stated preference data
9.5 Stated preference model specifications
9.6 Stated preference model estimates
9.7 Combined model specification and results
9.8 Population uses estimates
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