nep-dcm New Economics Papers
on Discrete Choice Models
Issue of 2011‒10‒01
one paper chosen by
Philip Yu
Hong Kong University

  1. Valuing local environmental amenity: Using discrete choice experiments to control for the spatial scope of improvements By Bruno Lanz; Allan Provins

  1. By: Bruno Lanz (Centre for Energy Policy and Economics (CEPE), Department of Management, Technology and Economics, ETH Zurich); Allan Provins (Economics for the Environment Consultancy (eftec) ltd., London, U.K.)
    Abstract: We report results from a series of discrete choice experiments designed to elicit preferences for environmental improvements brought about by local regeneration initiatives. Amenities we consider are areas of open space, restoration of derelict properties, outdoor recreation facilities, street cleanliness, public areas, and the provision of paths dedicated to cycling and walking. We include a measure for the spatial coverage of the policy as an attribute, making the trade-off between space and other attributes explicit. The experimental design is selected to efficiently estimate the first order interaction effects between the spatial attribute and the nimprovements based on a constrained version of the D-efficiency criteria. We use a mixed logit model to analyse observed choices and derive a second order Taylor approximation for the mean willingness to pay for marginal improvement in the presence of preference heterogeneity and price insensitive respondents. We find evidence that the spatial scope of improvements affects both the intensity and heterogeneity of preferences. Our results suggest significant economic values in dimensions that are difficult to capture in observed market transaction data, thereby contributing to ex-ante assessment of local regeneration policies.
    Keywords: Non-market valuation, Discrete choice experiments, Spatial analysis, Urban planning, Regeneration policy
    JEL: Q Q28 Q51 R R53 R58 C C21 C35 C81
    Date: 2011–08

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