Non-Market Measurement Techniques of Willingness to Pay, the Case of Environmental Resources: A Review

Authors

  • Birara Endalew College of Agriculture and Environmental Sciences, Bahir Dar University, Bahir Dar, Ethiopia
  • Kassahun Tassie College of Agriculture and Environmental Sciences, Bahir Dar University, Bahir Dar, Ethiopia
  • Zemen Ayalew College of Agriculture and Environmental Sciences, Bahir Dar University, Bahir Dar, Ethiopia

Keywords:

Choice experiment, contingent valuation, non-use value, revealed preference, stated preference, use value

Abstract

The objective of this study is to review measurement techniques of willingness to pay (WTP), comparison of techniques and review of empirical evidences to support the theoretical concept of willingness to pay measurement methods. Particularly, the review mainly focuses on stated preference method. To address these objectives, intensive literature review was under taken. Finally, the result of the review was presented in narration, tabular and diagrammatic form. The review indicated that the concept of WTP has been applied in different field of study to assign monetary value using observed market behavior and hypothetical market scenarios for non-marketed goods and services. There are two commonly used methods for estimating WTP into revealed and stated preference methods. Depending on the type of goods or services in question, the time and research resources available, both methods can be useful though they have their own advantages and disadvantages. Revealed preference technique is used to estimate the use value only; on the other hand, stated preference technique is applicable to estimate both use and non-use value. This indicates that stated preference technique has broader scope than revealed preference.

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Published

2023-07-29

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Section

Articles