Validity of contingent valuation estimates from developing countries

scope sensitivity analysis

Mushtaq Ahmed Memon, Shunji Matsuoka

Research output: Contribution to journalArticle

6 Citations (Scopus)

Abstract

In developing countries contingent valuation (CV) has become an important tool for estimating willingness to pay (WTP). So far, however, the CV studies usually have not assessed the validity of the WTP estimates mainly due to ambiguities in the criteria for scope sensitivity analysis. In this article we clarify the criteria from theoretical and empirical aspects. The main debate on scope sensitivity analysis targets the proportionality theory: One group supports strong proportionality, and the other group supports weak proportionality. We highlight the shortcomings of strong proportionality and support weak proportionality. We set up the criteria for statistical significance and plausible responsiveness between the WTP and its explanatory variables. We conducted scope sensitivity of our case study from rural Pakistan to show its applicability in developing countries and to test the validity of our WTP estimates. Statistical analysis, based on the maintained hypothesis, reveals that the magnitude of the benefits and per capita income are significant variables that influence the WTP. The Kruskall-Wallis test reconfirmed the significance of the size of the benefits. Plausible responsiveness is evident from the influence of the household characteristics over the WTP. Finally, we concluded that CV can provide valid results in developing countries if the survey is conducted according to the mainstream guidelines. Further empirical testing is required to support the criterion of plausible responsiveness.

Original languageEnglish
Pages (from-to)39-61
Number of pages23
JournalEnvironmental Economics and Policy Studies
Volume5
Issue number1
DOIs
Publication statusPublished - 2002
Externally publishedYes

Fingerprint

contingent valuation
willingness to pay
sensitivity analysis
developing world
Developing countries
Sensitivity analysis
Contingent valuation
Willingness-to-pay
Scope sensitivity
statistical analysis
Proportionality
income
Responsiveness

Keywords

  • Contingent valuation
  • Developing countries
  • Health risks
  • Scope sensitivity analysis
  • Water supply

ASJC Scopus subject areas

  • Management, Monitoring, Policy and Law
  • Economics and Econometrics

Cite this

Validity of contingent valuation estimates from developing countries : scope sensitivity analysis. / Memon, Mushtaq Ahmed; Matsuoka, Shunji.

In: Environmental Economics and Policy Studies, Vol. 5, No. 1, 2002, p. 39-61.

Research output: Contribution to journalArticle

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