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Valuing local endangered species: The role of intra-species substitutes
EC O LO GIC A L E CO N O M ICS 6 8 ( 2 00 8 ) 3 6 2 –3 69
a v a i l a b l e a t w w w. s c i e n c e d i r e c t . c o m
w w w. e l s e v i e r. c o m / l o c a t e / e c o l e c o n
ANALYSIS
Valuing local endangered species: The role of intra-species substitutes☆ Maria L. Loureiroa,b,⁎, Elena Ojeab a b
Department of Economic Analysis, Universidade de Santiago, Spain IDEGA, Universidade de Santiago de Compostela, Campus Sur, Avda das Ciencias, S/N. 15782, Santiago de Compostela, Spain
AR TIC LE I N FO
ABS TR ACT
Article history:
Valuation of endangered species is important in many circumstances, and particularly
Received 5 November 2007
when assessing the impact of large accidental oil spills. Previous studies have tested the
Received in revised form
effects of including in the contingent valuation survey reminders about the existence of
10 February 2008
diverse substitutes (in terms of other natural resources also in danger of extinction in the
Accepted 6 April 2008
same area, other programs to be valued, or alternative uses of money). We include a
Available online 14 May 2008
reminder about the existence of the same biological species not being under danger of extinction elsewhere. We believe this reminder allows individuals to make an easy
Keywords:
assessment of the biological scarcity of the species they are supposed to value. Thus, the key
Contingent valuation
difference with previous studies is that valuation of endangered species is combined with
Endangered species
an assessment of preferences towards conservation of local and native species. Our WTP
Substitutes
results are not sensitive to the information provided about other foreign substitutes. Implications of this finding are discussed. © 2008 Elsevier B.V. All rights reserved.
1.
Introduction
It is expected that the existence of a substitute of the good or asset being valued may decrease the mean willingness to pay (WTP) estimate when valuing such a resource. This expectation was put forward when the NOAA panel (Arrow et al., 1993) recommended the inclusion of references to possible substitutes of the good being valued. In line with the NOAA panel guidelines, there is an important debate about the role that substitute goods may potentially play on the valuation process of the good or resource of interest. Diverse studies have tested the effects of considering substitute goods or substitute prices in the valuation scenario (Boyle et al., 1990; Loomis et al., 1994; Neill, 1995; Whitehead and Blomquist, 1995; Kotchen and Reiling, 1999) with mixed results. Boyle
et al. (1990) value single day hunting trips when participants are reminded about variations of prices of substitutes, providing unclear results with respect to the changes of substitute prices on WTP estimates for hunting different species. Loomis et al. (1994) and Kotchen and Reiling (1999) reminded survey participants of the existence of other species threatened by extinction, or other places in which the recovery program of interest would have no effect. A number of these studies rejected the hypothesis of sensitivity of the WTP estimates when substitutes are presented (see for example Loomis et al., 1994; Kotchen and Reiling, 1999), while others have shown that information about reminders can significantly affect WTP estimates (Whitehead and Blomquist, 1995). Cummings et al. (1994) and Hailu et al. (2000) examine the effect of substitute programs on the one being valued,
☆
The authors whish to thank, without implicating, John Loomis for comments on earlier versions of this manuscript, participants of the BIOECON-2006 conference, and two anonymous referees for their comments and suggestions. ⁎ Corresponding author. Tel.: +34 981563100 14337; fax: +34 981528031. E-mail address: [email protected] (M.L. Loureiro). 0921-8009/$ – see front matter © 2008 Elsevier B.V. All rights reserved. doi:10.1016/j.ecolecon.2008.04.002
EC O L O G IC A L E C O N O M IC S 6 8 ( 2 0 08 ) 36 2 –3 69
asking participants to value all programs simultaneously. Overall, the results obtained from this last set of studies show that the value of the program is sensitive to the inclusion of other programs. Hoehn and Loomis (1993) have shown that when valuing jointly different programs affecting different resources located in the same geographical area, these turned out to be valued as substitutes instead of complementary goods. Thus, there appear to be conflicting results about the effects of information regarding substitutes in the valuation process. However, a majority of studies recommend the need to remind individuals about the existence of substitutes in any case, since the reminder increases the efficiency of the welfare estimates (Kotchen and Reiling, 1999; Whitehead and Blomquist, 1995). Based on this recommendation, an important area of research deals with the type of information and content that should be transmitted in the valuation process. The current paper adds to the literature providing some insights about the type of information that should be included. Prior CVM studies which included other substitutes did mainly consider the role of reminders about the fact that many other different species, in addition to the one being valued, were in danger of extinction (Loomis et al., 1994; Kotchen and Reiling, 1999). As indicated by Whitehead and Blomquist (1999), the inclusion of reminders in the valuation scenario that indicate that other different species may also be threatened by extinction may generate confusion or anomalies in the valuation process, mainly due to the respondents' lack of experience with CVM. These anomalies may not necessarily correspond with any rational economic response linked to the information provided. In this paper, we apply Whitehead and Blomquist's (1999) recommendation, which refers to the desirability of informing individuals about the existence of other close substitutes which are not threatened by extinction. Currently, we are unaware of any work that tested the effects of including a reminder of this type in the valuation exercise. Thus, the main objective of this paper is to present further evidence about the effect of close substitute reminders in the valuation of endangered species. In general terms, we expect that individuals which are presented with information about the existence of closely related substitutes should have a lower WTP estimate for the restoration program being valued. Many studies have already valued endangered species (Giraud et al., 2002; Jakobsson and Dragun, 2001; Langford et al., 2001) or the re-introduction of a particular species (Chambers and Whitehead, 2003). In the current research we expand this prior literature by evaluating the sensitivity of WTP values when reminders about the existence of other close substitutes are included in the valuation process. Furthermore, in our valuation exercise individual preferences towards preserving local resources are also discussed. In the empirical analysis that follows, we will assess the importance of substitute populations of the guillemot bird species (also known as common murre), which are threatened by extinction in Spain. This paper has the following structure. Next, we present the main motivation and empirical hypothesis to be tested, followed by the data description, the empirical analysis, and obtained results. We conclude with a number of recommendations and remarks.
2.
363
Background and main motivation
In the present study, we value a program to recover the guillemot population (Uria aalge) in Galicia, Spain, which was significantly affected by the Prestige oil spill in 2002. The Galician coast experienced the greatest amount of damage as a result of the spill and is also the only geographical area in Southern Europe that is home to local colonies of guillemots. In addition to the Prestige oil spill, the intensive fishing activity in this area and the consequences of global climate change have all contributed to the depletion of available food resources for the guillemot. The guillemot is now threatened by extinction in Spain (Martí and Del Moral, 2003). The guillemot colonies in Spain are populated by only 3–5 adult pairs (Rodriguez and Furelos coord, 2004). However, in contrast to this very small local population, guillemot colonies throughout Northern Europe are not threatened by extinction. Winter migrations bring these Northern European populations to Southern Europe, where they coexist with the local Spanish guillemot. In the analysis that follows, we consider these Northern European colonies as substitutes of the local guillemot population, given that they are classified as belonging to the same subspecies (Uria aalge albionus) in the Spanish red list of endangered birds1 (Martí and Del Moral, 2003). In the present study all participants were informed about the critical situation of the guillemot in Galicia, Spain. Furthermore, and in order to introduce realism in the survey, they were also informed that 13 other species (including reptiles, fishes, mammals and other birds) are also in danger of extinction in Galicia. To test the possible effect of close substitutes, half of the sample received information about the existence of Northern European guillemot colonies which are not in danger of extinction (survey version with substitutes), while the other half did not receive such information (survey version without substitutes). Thus, the null hypothesis of interest in this valuation exercise is whether the welfare estimates (WTP) are equal across treatments: WTPðwithout substitutesÞ ¼ WTPðwith subsitutesÞ :
ð1Þ
We expect that given a rational valuation process and according to the principles of micro-economic theory, individuals who are aware of the existence of close substitutes will value the recovery program for the local guillemot less than those who are unaware of the existence of intra-species substitutes.
3.
Data
Our data has been obtained via personal surveys. The recovery program valued in this survey has been designed following the recommendations of previous feasibility studies for the local 1
The Spanish Bird Atlas is the Spanish IUCN red list for birds, and it is the national reference for species status in Spain. In the international IUCN red list the guillemot is not endangered (listed as Least Concern-LC) while the Spanish population is classified as CR (critically endangered).
364
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population of guillemot (Rodríguez and Furelos coord, 2004), and was completed with other information provided by similar restoration programs applied in California (U.S. Fish and Wildlife Service, 1995). The local recovery plans contained the following actions: re-introduction of mature birds, an effective surveillance (via video-cameras) and the creation of a comfortable habitat for their growth and reproduction. The creation of such habitat would imply reductions and stricter regulations in terms of fishery activities, as well as commercial cargo transportation. In this way, we aimed to create a very realistic recovery action. This recovery action was at the time considered as an actual restoration program promoted by several NGOs and developed by the Galician government.2 The survey indicated that the main goal of the recovery program was to increase the number of the total number of adult pairs of guillemots living in Galicia from the current critical levels (3–5) to 20 pairs in about 10 years. Survey participants were also informed that a threshold of 20 pairs was the minimum viable population (MVP) according to recent biological studies (Rodríguez and Furelos coord, 2004). This recovery objective would be reached via four basic restoration actions: 1) creating protected areas, 2) restricting commercial fishing in the designated protected areas, 3) increasing the control over spills and pollution episodes, and 4) constant surveillance of the existing and new colonies (via cameras and radio telecommunications). The survey design followed the NOAA panel recommendations, including the use of dichotomous choice WTP questions (with follow ups), the reminder of other forgone alternative uses of the money paid for the recovery program; as well as the inclusion of precise information about the good in question (including the existence of other species also in danger of extinction that would not be affected by this recovery program). In addition, other features of previous surveys conducted by Giraud et al. (2002), and Kotchen and Reiling (2000) were also incorporated in terms of general survey structure. The survey was administered in 12 municipalities of Galicia, with an equal distribution of coastal and non-coastal communities. These municipalities also offered a representation of semi-rural, semi-urban, and urban areas. The main criteria followed to select these locations were related to their similarities with the current Galician Population Census (IGE, 2004). The main socio-economic variables in our sample correspond well with the Census profile, in terms of age distribution and gender. However, and replicating common features to many other surveys, our sample is more educated, with about 26% of the individuals having a university degree, while this figure is about 11% for the population of reference (IGE, 2004). The survey and visual aids were intensively pre-tested for comprehensiveness in several focus groups and in test surveys. The final surveys were conducted in June and July 2005, and administered following a random route, so that the selection of the final selected sample was random. Surveys were conducted face to face in private homes or at home entrances. The final sample size contains 341 observations, 170 for the substitutes sub-sample and 171 for the non2
Unfortunately no restoration program has been put in place after all.
substitutes sub-sample. Final number of observations included in the analysis slightly differs due to missing values. The obtained response rate was 65.48%, which can be considered fairly high for surveys not employing any economic incentive for participants. The survey structure was devised with specific sections. The initial section was comprised of basic questions about consumption habits and environmental behaviour (recycling, water and energy use, etc), followed by a section containing information about species conservation and the status of the guillemot in Galicia. This written information was complemented by graphics that detailed the current situation and location of the local colonies of guillemot in Galicia. Half of the sample also received additional information regarding the location of other guillemot colonies in Northern Europe, as well as a description of the migratory processes. (In particular, card 1 and card 2 were presented only to those informed about the existence of Northern colonies, while the rest of the cards were shown to all participants). In both survey versions individuals were reminded about the fact that a minimum viable population of 20 pairs was necessary for the guillemot to survive in Galicia. All participants were unaware about the existence of guillemot colonies in Northern Europe. This fact has helped increasing the credibility of the two survey versions, given that both survey versions were credible. Once the information about the species was provided and individuals were familiar with the conservation problem at hand, half the sample received the following reminder:
“The guillemot population is distributed along the Northern European coast (showing Card 1, Appendix C) and in Southern Europe along the Galician and the Northern coasts of Portugal. During the winter season, there are migrations from the Northern European breeding colonies towards Southern Europe (showing Card 2, Appendix C). These migratory guillemots spend the winter in Galicia. In spring they return to the Northern European colonies for breeding. These Northern European colonies are quite abundant and are not threatened by extinction.” After that, respondents were presented with the WTP question reproduced in Appendix A.
4.
Empirical results
A logit model was used to analyze the responses to the WTP question, where: ′
ProbðWTPi ¼ 1Þ ¼
ebxi 1 þ eb′xi
8
ð2Þ
and bVxi ¼ b0 þ b1 ln BIDi þ b2 COASTi þ b3 NATURALISTi þ b4 AGEi þ b5 INCOMEi
ð3Þ
In this specification, the dependent variable WTPi is the dichotomous variable representing the individual response to the WTP question. The explanatory variables include the BID
365
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amount (in its log form), and a series of socio-economic variables, representing respondent's characteristics that are suspected to affect individual preferences for the conservation program. These socio-economic variables include the COAST variable, which denotes whether the individual lives by the coast. The variable NATURALIST indicates whether the individual frequently engages in athletic activities or walks outdoors; while AGE indicates the respondent's age, and INCOME the monthly household income level. Summary statistics and complete variable definitions are presented in Table 1. Given our empirical objective, we need to first assess whether there are differences in the socio-economic composition of the two sub-samples or treatments (participants of each survey version). If differences are found, then these might justify a divergence in WTP estimates. However, according to the t-test results displayed in Table 1, no statistical significant difference between both sub-samples was found. Results obtained from the logit estimation are reported in Table 2. The first two columns present the results for the subsample that did not receive information about the existence of intra-species substitutes, while the last two columns report the results for the informed sub-sample. Results show that all variables carry the expected signs. The LNBID variable carries a negative and statistically significant effect, while the COAST variable is positive and statistically significant for the subsample that did not receive information about substitutes. That implies that in terms of preferences for conservation, there are differences between coastal and non-coastal communities, being those living by the coast more likely to pay for the conservation program, given that they are not aware of the existence of substitutes. The variable reflecting that the individual is a NATURALIST increases the probability of paying for the guillemot restoration program in both regressions by almost 14% and 12%. This may occur because individuals classified as naturalists may appreciate both, the use and nonuse values carried by this species, as well as any other potential benefit derived from the program. With respect to the effect of the AGE variable, older individuals are less likely to pay for the program, independently of being aware of the existence of substitutes. With respect to INCOME, individuals not aware of Table 1 – Mean values of explanatory variables for each of the treatments Variable
COAST
Description
Coastal municipality (1), otherwise (0) NATURALIST Frequently engages in outdoor nature related activities (visit natural spaces, watching wildlife, etc.) (1), otherwise (0) AGE Age of the respondent INCOME Monthly gross income
Galician European Tpopulation population test (version 1) (version 2) 0.49
0.47
0.27
0.31
0.29
0.35
44.56
42.62
0.98
1094.27
1042.26
0.68
Table 2 – WTP results for recovering the Spanish guillemot Variables
No info about substitutes Coefficient
LNBID COAST NATURALIST AGE INCOME CONSTANT N WTP 95% confidence intervals Log likelihood LRChi2(7) Prob N Chi2
Info about substitutes Z
Coefficient
Z
−1.1428 (0.2924) − 3.91⁎⁎⁎ 0.7650 (0.4434) 1.73⁎ 0.9069 (0.4587) 1.98⁎ −0.0267 (0.0125) − 2.13⁎ −0.0006 (0.0003) − 1.74⁎ 4.2416 (1.3287) 3.19⁎⁎⁎ 170 18.17 [16.12–20.21]
−1.4414 (0.2882) − 5.00⁎⁎⁎ −0.2168 (0.4298) − 0.50 0.7251 (0.4433) 1.64⁎ −0.0245 (0.0122) − 2.00⁎ 0.0006 (0.0003) 1.93⁎ 4.4581 (1.2494) 3.57⁎⁎⁎ 169 19.34 [17.80–20.87]
−71.73
−75.32
32.07 0.000
43.17 0.000
Marginal effects Variables
No info about substitutes Info about substitutes dy/dx
Z
dy/dx
Z
LNBID −0.1558 (0.0386) − 4.04⁎⁎⁎ −0.2244 (0.0407) − 5.51⁎⁎⁎ COAST 0.1056 (0.0615) 1.72⁎ −0.0336 (0.0662) − 0.51 NATURALIST 0.1389 (0.0772) 1.80⁎ 0.1237 (0.0811) 1.53 AGE −0.0036 (0.0017) − 2.15⁎ −0.0038 (0.0019) − 2.07⁎ INCOME −0.0001 (0.0001) − 1.76⁎ 0.0001 (0.0000) 1.94⁎ + Standard errors are in parenthesis. Confidence intervals were calculated using jackknife techniques. (⁎⁎⁎) indicates statistical significance at α = 0.001; (⁎⁎) indicates statistical significance at α = 0.01; and (⁎) indicates that the variable is statistically significant at α = 0.1.
substitutes are less likely to pay for the restoration program when income goes up. However, the opposite effect occurs when individuals are aware of substitutes. Thus, it seems that the demand for the restoration program at hand is income elastic when information about the substitutes is presented. Wald-tests provide evidence of the joint statistical significance of the included explanatory variables in each regression. Employing the coefficients reported in Table 2, we calculate the median3 WTP estimate (Hanemann, 1984) for each of the j samples, such that: 1 a ; ð4Þ WTPj ¼ exp 1 b where α ̑ is the grand constant term, which is defined as the cross-product of all the estimated coefficients (except the one associated with the bid amount) times their respective means; and β is the coefficient estimate associated with the bid amount. The j estimates in Eq. (4) have been calculated for both regressions, and are reported in Table 2. We should note that the median is a more accurate representation of the central tendency of the WTP distribution, while it is less sensitive to outliers. The median WTP estimates for the recovery program are computed as 18.17 €/household for those who were not
3 The mean WTP is undefined due to the value of the estimated coefficients of the WTP function (see Hanemann, 1984).
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informed about the existence of other Northern European colonies, and 19.34 €/household for the sub-sample who received such information. The magnitudes of these quantitative empirical estimates show that there are no clear differences between the welfare estimates obtained with and without the substitute reminder. The corresponding overlapping confidence intervals for the welfare measures provide further evidence of the statistical similarity of the above estimates. Thus, there is statistical evidence to fail to reject the null hypothesis presented in Eq. (1). These obtained results do not fulfil the expectations of the NOAA panel, regarding the role of reminders of substitutes in environmental valuation. They are also different from other results previously obtained by Whitehead and Blomquist (1995), who demonstrated that reminders affected WTP estimates. That is, estimates obtained in this study show that we cannot reject the null hypothesis, which postulated differences in the WTP estimates under the different valuation scenarios. However, this new set of results does not invalidate the CVM exercise or the basic premises of micro-economics. Although our exercise tested substitutes from an ecological point of view, these two birds (local and Northern European guillemot) may not be considered as substitutes by the local population. This happens in spite of the fact that the species on itself provides high non-use values and it is not so well known by the locals. Indeed, 79.47% of the individuals in our sample have never seen a guillemot outdoors. However, individuals may want to preserve their local endowment of biodiversity, even though there are other places in which such conservation is guaranteed. An additional and related consideration is that the conservation program valued in the present exercise aims to recover the species only up to its MVP. Local preferences to protect larger stocks above the MVP level may be valued differently (Bulte and van Kooten, 1999; Bandara and Tisdell, 2005), and may be affected by the presence of other biological substitutes elsewhere. Other considerations4 that may explain our results are related to the fact that the program described provides ancillary benefits in both scenarios, and such benefits may be confounding of the intrinsic value of the guillemot restoration program, such as the restrictions in cargo transportation. Furthermore, given that surveys were conducted face to face, social desirability bias may be expected (Loureiro and Lotade, 2005), particularly by participants having prior limited information.
5.
Conclusions
The aim of this article was to test the effect of a reminder about substitutes of the same bird species in a valuation exercise conducted with an endangered species. In particular, we valued a program to recover the population of guillemots in Spain. The guillemot in Spain is threatened by extinction due to the damaging effects of intensive fishing in the area and the Prestige oil spill, along with additional indirect effects caused by global climate change.
4 We wish to thank a reviewer for providing these additional reasons that might help explain our results.
In order to test the effect of substitute reminders, our sample was split into two treatments. One group received information about the existence of guillemot colonies in Northern Europe which are not in danger of extinction. The second group learned only about the current critical condition of the guillemot population in Spain. Our results show that there are no statistically significant differences between the median WTP per household obtained for the sample uniformed about the existence of colonies in Northern Europe, and the median WTP computed for the sample informed about the existence of substitutes. This new set of results differs from those previously obtained in other studies in which sensitivity of the WTP estimates with respect to the reminder of substitutes was found. Thus, in spite of the non-statistical difference of WTP estimates, the current reminder may be important in terms of providing accurate information about the uniqueness of the good when valuing endangered species. In order to provide robustness to these findings, we recommend that future studies test this assertion with other species and natural resources. Further research should also investigate whether WTP would be statistically different when a very unique or charismatic environmental good with hardly any substitutes is valued, such as the blue whale. The inclusion of a reminder stating that such good or resource does not have any direct substitute may potentially provide the opposite results as those presented in this paper. Our results may be justified by different arguments, including the fact that the presented program provides ancillary benefits in both valuation scenarios. Overall, our results suggest that individuals value endangered species based on concerns motivated by local scarcity of the species and subsequent loss of local natural habitat.
Acknowledgements Maria Loureiro acknowledges funding support from the Spanish Ministry of Education and Science, research project number SEJ2004-06357.
Appendix A. WTP Question Consider that the Galician Guillemot Restoration Program will be the only way to avoid guillemot extinction, so that by the year 2015 the guillemot population will be increased from 5 pairs (current level) up to 20 pairs, while 20 pairs is the minimum viable level of population (MVP) for the guillemot to survive. The Galician Guillemot Restoration Program will be put in place only if a majority of households in Galicia support it. As you know, in order to manage this restoration program economic resources are needed. This restoration program will be funded with a one time increase on income taxes⁎ in the next income tax declaration (only for adults over 18 years of age). All the money collected would be kept in a fund for the disposition of the program, which will be audited every two years. We want you to be aware that the money collected via this extra tax would only legally be used for this program. However, there are at least 13 other endangered species in Galicia, including birds, fish, reptiles, and mammals.
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Also remember that the money you spend on this program will not be available for the purchase of other goods or for supporting recovery programs for other endangered species. Given your current income level, are you willing to pay X € (10–150€) in a one-time payment for the Galician Guil-
lemot Restoration Program, so that the program will be implemented? □ YES □ NO (⁎) Individuals who are not obligated to pay their income taxes will receive in the mail a special tax form requesting their contribution to this specific program.
Appendix B. Graphic materials common for both survey versions Location of Galicia in Spain and Europe
Card 2
367
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Card 3
Appendix C. Additional materials only for survey version with substitutes Card 1
Card 2
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REFERENCES Arrow, K., Solow, R., Portney, P., Leamer, E., Radner, R., Schuman, H., 1993. Report of the NOAA panel on contingent valuation. Federal Register 58, 4601–4614. Bandara, R., Tisdell, C., 2005. Changing abundance of elephants and willingness to pay for their conservation. Journal of Environmental Management 76, 47–59. Boyle, K.J., Reiling, S.D., Phillips, M.L., 1990. Species substitution and question sequencing in contingent valuation surveys evaluating the hunting of several types of wildlife. Leisure Sciences 12, 103–118. Bulte, E.H., van Kooten, G.C., 1999. Marginal valuation of charismatic species: implications for conservation. Environmental and Resource Economics 14, 119–130. Chambers, C.M., Whitehead, J.C., 2003. A contingent valuation estimate of the benefits of wolves in Minnesota. Environmental and Resource Economics 26, 249–267. Cummings, R.G., Ganderton, P.T., MacGuckin, T., 1994. Substitution effects in CVM Values. American Journal of Agricultural Economics 76, 205–214. Giraud, K., Turcin, B., Loomis, J.B., Cooper, J., 2002. Economic benefit of the protection program for the Steller sea lion. Marine Policy 26, 451–458. Hanemann, M., 1984. Welfare evaluations in contingent valuation experiments with discrete responses. American Journal of Agricultural Economics 66 (3), 332–341. IGE, 2004. Padrón Municipal. Galician Institute of Statistics. http:// ige.xunta.es. Jakobsson, K.M., Dragun, A.K., 2001. The worth of a possum: valuing species with the contingent valuation method. Environmental and Resource Economics 19, 211–227. Hailu, A., Adamowicz, W.L., Boxall, P.C., 2000. Complements, substitutes, budget constraints and valuation. Environmental and Resource Economics 16, 51–68. Hoehn, J.P., Loomis, J.B., 1993. Substitution effects in the valuation of multiple environmental programs. Journal of Environmental Economics and Management 25 (1), 56–75.
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Kotchen, M.J., Reiling, S.D., 1999. Do reminders of substitutes and budget constraints influence contingent valuation estimates? Another comment. Land Economics 75 (3), 478–482. Kotchen, M.J., Reiling, S.D., 2000. Environmental attitudes, motivations, and contingent valuation of non-use values: a case study involving endangered species. Ecological Economics 32, 93–107. Langford, I.H., Skourtos, M.S., Kontogianni, A., Day, R.J., Georgiou, S., Bateman, I.J., 2001. Use and nonuse values for conserving endangered species: the case of the Mediterranean monk seal. Environment and Planning A 33, 2219–2233. Loomis, J.B., González-Caban, A., Gregory, R., 1994. Do reminders of substitutes and budget constraints influence contingent valuation estimates? Land Economics 70 (4), 499–506. Loureiro, M.L., Lotade, J., 2005. Interviewer effect on the valuation of goods with ethical and environmental attributes. Environmental and Resource Economics 30 (1), 49–72. Martí, R., Del Moral, J.C., (2003), Atlas de las aves reproductoras de España, Ministerio de Medioambiente and Sociedad Española de Ornitología. Neill, H.R., 1995. The context of substitutes in CVM studies: some empirical observations. Journal of Environmental Economics and Management 29, 393–397. Rodríguez, J., Furelos coord, P., (2004), Bases para la conservación de la población de arao (Uria aalge) en Galicia. SEAS. Servicios medioambientales. Project funded by Fundación Arao. U.S. Fish and Wildlife Service, 1995. Notice of availability, final Apex Houston oil spill restoration plan. Federal Register 60 (81), 20739–20749. Whitehead, J.C., Blomquist, G.C., 1995. Do reminders of substitutes and budget constraints influence contingent valuation estimates? Comment. Land Economics 71 (4), 541–543. Whitehead, J.C., Blomquist, G.C., 1999. Do reminders of substitutes and budget constraints influence contingent valuation estimates? Reply to another Comment. Land Economics 75 (3), 483–484.
a v a i l a b l e a t w w w. s c i e n c e d i r e c t . c o m
w w w. e l s e v i e r. c o m / l o c a t e / e c o l e c o n
ANALYSIS
Valuing local endangered species: The role of intra-species substitutes☆ Maria L. Loureiroa,b,⁎, Elena Ojeab a b
Department of Economic Analysis, Universidade de Santiago, Spain IDEGA, Universidade de Santiago de Compostela, Campus Sur, Avda das Ciencias, S/N. 15782, Santiago de Compostela, Spain
AR TIC LE I N FO
ABS TR ACT
Article history:
Valuation of endangered species is important in many circumstances, and particularly
Received 5 November 2007
when assessing the impact of large accidental oil spills. Previous studies have tested the
Received in revised form
effects of including in the contingent valuation survey reminders about the existence of
10 February 2008
diverse substitutes (in terms of other natural resources also in danger of extinction in the
Accepted 6 April 2008
same area, other programs to be valued, or alternative uses of money). We include a
Available online 14 May 2008
reminder about the existence of the same biological species not being under danger of extinction elsewhere. We believe this reminder allows individuals to make an easy
Keywords:
assessment of the biological scarcity of the species they are supposed to value. Thus, the key
Contingent valuation
difference with previous studies is that valuation of endangered species is combined with
Endangered species
an assessment of preferences towards conservation of local and native species. Our WTP
Substitutes
results are not sensitive to the information provided about other foreign substitutes. Implications of this finding are discussed. © 2008 Elsevier B.V. All rights reserved.
1.
Introduction
It is expected that the existence of a substitute of the good or asset being valued may decrease the mean willingness to pay (WTP) estimate when valuing such a resource. This expectation was put forward when the NOAA panel (Arrow et al., 1993) recommended the inclusion of references to possible substitutes of the good being valued. In line with the NOAA panel guidelines, there is an important debate about the role that substitute goods may potentially play on the valuation process of the good or resource of interest. Diverse studies have tested the effects of considering substitute goods or substitute prices in the valuation scenario (Boyle et al., 1990; Loomis et al., 1994; Neill, 1995; Whitehead and Blomquist, 1995; Kotchen and Reiling, 1999) with mixed results. Boyle
et al. (1990) value single day hunting trips when participants are reminded about variations of prices of substitutes, providing unclear results with respect to the changes of substitute prices on WTP estimates for hunting different species. Loomis et al. (1994) and Kotchen and Reiling (1999) reminded survey participants of the existence of other species threatened by extinction, or other places in which the recovery program of interest would have no effect. A number of these studies rejected the hypothesis of sensitivity of the WTP estimates when substitutes are presented (see for example Loomis et al., 1994; Kotchen and Reiling, 1999), while others have shown that information about reminders can significantly affect WTP estimates (Whitehead and Blomquist, 1995). Cummings et al. (1994) and Hailu et al. (2000) examine the effect of substitute programs on the one being valued,
☆
The authors whish to thank, without implicating, John Loomis for comments on earlier versions of this manuscript, participants of the BIOECON-2006 conference, and two anonymous referees for their comments and suggestions. ⁎ Corresponding author. Tel.: +34 981563100 14337; fax: +34 981528031. E-mail address: [email protected] (M.L. Loureiro). 0921-8009/$ – see front matter © 2008 Elsevier B.V. All rights reserved. doi:10.1016/j.ecolecon.2008.04.002
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asking participants to value all programs simultaneously. Overall, the results obtained from this last set of studies show that the value of the program is sensitive to the inclusion of other programs. Hoehn and Loomis (1993) have shown that when valuing jointly different programs affecting different resources located in the same geographical area, these turned out to be valued as substitutes instead of complementary goods. Thus, there appear to be conflicting results about the effects of information regarding substitutes in the valuation process. However, a majority of studies recommend the need to remind individuals about the existence of substitutes in any case, since the reminder increases the efficiency of the welfare estimates (Kotchen and Reiling, 1999; Whitehead and Blomquist, 1995). Based on this recommendation, an important area of research deals with the type of information and content that should be transmitted in the valuation process. The current paper adds to the literature providing some insights about the type of information that should be included. Prior CVM studies which included other substitutes did mainly consider the role of reminders about the fact that many other different species, in addition to the one being valued, were in danger of extinction (Loomis et al., 1994; Kotchen and Reiling, 1999). As indicated by Whitehead and Blomquist (1999), the inclusion of reminders in the valuation scenario that indicate that other different species may also be threatened by extinction may generate confusion or anomalies in the valuation process, mainly due to the respondents' lack of experience with CVM. These anomalies may not necessarily correspond with any rational economic response linked to the information provided. In this paper, we apply Whitehead and Blomquist's (1999) recommendation, which refers to the desirability of informing individuals about the existence of other close substitutes which are not threatened by extinction. Currently, we are unaware of any work that tested the effects of including a reminder of this type in the valuation exercise. Thus, the main objective of this paper is to present further evidence about the effect of close substitute reminders in the valuation of endangered species. In general terms, we expect that individuals which are presented with information about the existence of closely related substitutes should have a lower WTP estimate for the restoration program being valued. Many studies have already valued endangered species (Giraud et al., 2002; Jakobsson and Dragun, 2001; Langford et al., 2001) or the re-introduction of a particular species (Chambers and Whitehead, 2003). In the current research we expand this prior literature by evaluating the sensitivity of WTP values when reminders about the existence of other close substitutes are included in the valuation process. Furthermore, in our valuation exercise individual preferences towards preserving local resources are also discussed. In the empirical analysis that follows, we will assess the importance of substitute populations of the guillemot bird species (also known as common murre), which are threatened by extinction in Spain. This paper has the following structure. Next, we present the main motivation and empirical hypothesis to be tested, followed by the data description, the empirical analysis, and obtained results. We conclude with a number of recommendations and remarks.
2.
363
Background and main motivation
In the present study, we value a program to recover the guillemot population (Uria aalge) in Galicia, Spain, which was significantly affected by the Prestige oil spill in 2002. The Galician coast experienced the greatest amount of damage as a result of the spill and is also the only geographical area in Southern Europe that is home to local colonies of guillemots. In addition to the Prestige oil spill, the intensive fishing activity in this area and the consequences of global climate change have all contributed to the depletion of available food resources for the guillemot. The guillemot is now threatened by extinction in Spain (Martí and Del Moral, 2003). The guillemot colonies in Spain are populated by only 3–5 adult pairs (Rodriguez and Furelos coord, 2004). However, in contrast to this very small local population, guillemot colonies throughout Northern Europe are not threatened by extinction. Winter migrations bring these Northern European populations to Southern Europe, where they coexist with the local Spanish guillemot. In the analysis that follows, we consider these Northern European colonies as substitutes of the local guillemot population, given that they are classified as belonging to the same subspecies (Uria aalge albionus) in the Spanish red list of endangered birds1 (Martí and Del Moral, 2003). In the present study all participants were informed about the critical situation of the guillemot in Galicia, Spain. Furthermore, and in order to introduce realism in the survey, they were also informed that 13 other species (including reptiles, fishes, mammals and other birds) are also in danger of extinction in Galicia. To test the possible effect of close substitutes, half of the sample received information about the existence of Northern European guillemot colonies which are not in danger of extinction (survey version with substitutes), while the other half did not receive such information (survey version without substitutes). Thus, the null hypothesis of interest in this valuation exercise is whether the welfare estimates (WTP) are equal across treatments: WTPðwithout substitutesÞ ¼ WTPðwith subsitutesÞ :
ð1Þ
We expect that given a rational valuation process and according to the principles of micro-economic theory, individuals who are aware of the existence of close substitutes will value the recovery program for the local guillemot less than those who are unaware of the existence of intra-species substitutes.
3.
Data
Our data has been obtained via personal surveys. The recovery program valued in this survey has been designed following the recommendations of previous feasibility studies for the local 1
The Spanish Bird Atlas is the Spanish IUCN red list for birds, and it is the national reference for species status in Spain. In the international IUCN red list the guillemot is not endangered (listed as Least Concern-LC) while the Spanish population is classified as CR (critically endangered).
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population of guillemot (Rodríguez and Furelos coord, 2004), and was completed with other information provided by similar restoration programs applied in California (U.S. Fish and Wildlife Service, 1995). The local recovery plans contained the following actions: re-introduction of mature birds, an effective surveillance (via video-cameras) and the creation of a comfortable habitat for their growth and reproduction. The creation of such habitat would imply reductions and stricter regulations in terms of fishery activities, as well as commercial cargo transportation. In this way, we aimed to create a very realistic recovery action. This recovery action was at the time considered as an actual restoration program promoted by several NGOs and developed by the Galician government.2 The survey indicated that the main goal of the recovery program was to increase the number of the total number of adult pairs of guillemots living in Galicia from the current critical levels (3–5) to 20 pairs in about 10 years. Survey participants were also informed that a threshold of 20 pairs was the minimum viable population (MVP) according to recent biological studies (Rodríguez and Furelos coord, 2004). This recovery objective would be reached via four basic restoration actions: 1) creating protected areas, 2) restricting commercial fishing in the designated protected areas, 3) increasing the control over spills and pollution episodes, and 4) constant surveillance of the existing and new colonies (via cameras and radio telecommunications). The survey design followed the NOAA panel recommendations, including the use of dichotomous choice WTP questions (with follow ups), the reminder of other forgone alternative uses of the money paid for the recovery program; as well as the inclusion of precise information about the good in question (including the existence of other species also in danger of extinction that would not be affected by this recovery program). In addition, other features of previous surveys conducted by Giraud et al. (2002), and Kotchen and Reiling (2000) were also incorporated in terms of general survey structure. The survey was administered in 12 municipalities of Galicia, with an equal distribution of coastal and non-coastal communities. These municipalities also offered a representation of semi-rural, semi-urban, and urban areas. The main criteria followed to select these locations were related to their similarities with the current Galician Population Census (IGE, 2004). The main socio-economic variables in our sample correspond well with the Census profile, in terms of age distribution and gender. However, and replicating common features to many other surveys, our sample is more educated, with about 26% of the individuals having a university degree, while this figure is about 11% for the population of reference (IGE, 2004). The survey and visual aids were intensively pre-tested for comprehensiveness in several focus groups and in test surveys. The final surveys were conducted in June and July 2005, and administered following a random route, so that the selection of the final selected sample was random. Surveys were conducted face to face in private homes or at home entrances. The final sample size contains 341 observations, 170 for the substitutes sub-sample and 171 for the non2
Unfortunately no restoration program has been put in place after all.
substitutes sub-sample. Final number of observations included in the analysis slightly differs due to missing values. The obtained response rate was 65.48%, which can be considered fairly high for surveys not employing any economic incentive for participants. The survey structure was devised with specific sections. The initial section was comprised of basic questions about consumption habits and environmental behaviour (recycling, water and energy use, etc), followed by a section containing information about species conservation and the status of the guillemot in Galicia. This written information was complemented by graphics that detailed the current situation and location of the local colonies of guillemot in Galicia. Half of the sample also received additional information regarding the location of other guillemot colonies in Northern Europe, as well as a description of the migratory processes. (In particular, card 1 and card 2 were presented only to those informed about the existence of Northern colonies, while the rest of the cards were shown to all participants). In both survey versions individuals were reminded about the fact that a minimum viable population of 20 pairs was necessary for the guillemot to survive in Galicia. All participants were unaware about the existence of guillemot colonies in Northern Europe. This fact has helped increasing the credibility of the two survey versions, given that both survey versions were credible. Once the information about the species was provided and individuals were familiar with the conservation problem at hand, half the sample received the following reminder:
“The guillemot population is distributed along the Northern European coast (showing Card 1, Appendix C) and in Southern Europe along the Galician and the Northern coasts of Portugal. During the winter season, there are migrations from the Northern European breeding colonies towards Southern Europe (showing Card 2, Appendix C). These migratory guillemots spend the winter in Galicia. In spring they return to the Northern European colonies for breeding. These Northern European colonies are quite abundant and are not threatened by extinction.” After that, respondents were presented with the WTP question reproduced in Appendix A.
4.
Empirical results
A logit model was used to analyze the responses to the WTP question, where: ′
ProbðWTPi ¼ 1Þ ¼
ebxi 1 þ eb′xi
8
ð2Þ
and bVxi ¼ b0 þ b1 ln BIDi þ b2 COASTi þ b3 NATURALISTi þ b4 AGEi þ b5 INCOMEi
ð3Þ
In this specification, the dependent variable WTPi is the dichotomous variable representing the individual response to the WTP question. The explanatory variables include the BID
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amount (in its log form), and a series of socio-economic variables, representing respondent's characteristics that are suspected to affect individual preferences for the conservation program. These socio-economic variables include the COAST variable, which denotes whether the individual lives by the coast. The variable NATURALIST indicates whether the individual frequently engages in athletic activities or walks outdoors; while AGE indicates the respondent's age, and INCOME the monthly household income level. Summary statistics and complete variable definitions are presented in Table 1. Given our empirical objective, we need to first assess whether there are differences in the socio-economic composition of the two sub-samples or treatments (participants of each survey version). If differences are found, then these might justify a divergence in WTP estimates. However, according to the t-test results displayed in Table 1, no statistical significant difference between both sub-samples was found. Results obtained from the logit estimation are reported in Table 2. The first two columns present the results for the subsample that did not receive information about the existence of intra-species substitutes, while the last two columns report the results for the informed sub-sample. Results show that all variables carry the expected signs. The LNBID variable carries a negative and statistically significant effect, while the COAST variable is positive and statistically significant for the subsample that did not receive information about substitutes. That implies that in terms of preferences for conservation, there are differences between coastal and non-coastal communities, being those living by the coast more likely to pay for the conservation program, given that they are not aware of the existence of substitutes. The variable reflecting that the individual is a NATURALIST increases the probability of paying for the guillemot restoration program in both regressions by almost 14% and 12%. This may occur because individuals classified as naturalists may appreciate both, the use and nonuse values carried by this species, as well as any other potential benefit derived from the program. With respect to the effect of the AGE variable, older individuals are less likely to pay for the program, independently of being aware of the existence of substitutes. With respect to INCOME, individuals not aware of Table 1 – Mean values of explanatory variables for each of the treatments Variable
COAST
Description
Coastal municipality (1), otherwise (0) NATURALIST Frequently engages in outdoor nature related activities (visit natural spaces, watching wildlife, etc.) (1), otherwise (0) AGE Age of the respondent INCOME Monthly gross income
Galician European Tpopulation population test (version 1) (version 2) 0.49
0.47
0.27
0.31
0.29
0.35
44.56
42.62
0.98
1094.27
1042.26
0.68
Table 2 – WTP results for recovering the Spanish guillemot Variables
No info about substitutes Coefficient
LNBID COAST NATURALIST AGE INCOME CONSTANT N WTP 95% confidence intervals Log likelihood LRChi2(7) Prob N Chi2
Info about substitutes Z
Coefficient
Z
−1.1428 (0.2924) − 3.91⁎⁎⁎ 0.7650 (0.4434) 1.73⁎ 0.9069 (0.4587) 1.98⁎ −0.0267 (0.0125) − 2.13⁎ −0.0006 (0.0003) − 1.74⁎ 4.2416 (1.3287) 3.19⁎⁎⁎ 170 18.17 [16.12–20.21]
−1.4414 (0.2882) − 5.00⁎⁎⁎ −0.2168 (0.4298) − 0.50 0.7251 (0.4433) 1.64⁎ −0.0245 (0.0122) − 2.00⁎ 0.0006 (0.0003) 1.93⁎ 4.4581 (1.2494) 3.57⁎⁎⁎ 169 19.34 [17.80–20.87]
−71.73
−75.32
32.07 0.000
43.17 0.000
Marginal effects Variables
No info about substitutes Info about substitutes dy/dx
Z
dy/dx
Z
LNBID −0.1558 (0.0386) − 4.04⁎⁎⁎ −0.2244 (0.0407) − 5.51⁎⁎⁎ COAST 0.1056 (0.0615) 1.72⁎ −0.0336 (0.0662) − 0.51 NATURALIST 0.1389 (0.0772) 1.80⁎ 0.1237 (0.0811) 1.53 AGE −0.0036 (0.0017) − 2.15⁎ −0.0038 (0.0019) − 2.07⁎ INCOME −0.0001 (0.0001) − 1.76⁎ 0.0001 (0.0000) 1.94⁎ + Standard errors are in parenthesis. Confidence intervals were calculated using jackknife techniques. (⁎⁎⁎) indicates statistical significance at α = 0.001; (⁎⁎) indicates statistical significance at α = 0.01; and (⁎) indicates that the variable is statistically significant at α = 0.1.
substitutes are less likely to pay for the restoration program when income goes up. However, the opposite effect occurs when individuals are aware of substitutes. Thus, it seems that the demand for the restoration program at hand is income elastic when information about the substitutes is presented. Wald-tests provide evidence of the joint statistical significance of the included explanatory variables in each regression. Employing the coefficients reported in Table 2, we calculate the median3 WTP estimate (Hanemann, 1984) for each of the j samples, such that: 1 a ; ð4Þ WTPj ¼ exp 1 b where α ̑ is the grand constant term, which is defined as the cross-product of all the estimated coefficients (except the one associated with the bid amount) times their respective means; and β is the coefficient estimate associated with the bid amount. The j estimates in Eq. (4) have been calculated for both regressions, and are reported in Table 2. We should note that the median is a more accurate representation of the central tendency of the WTP distribution, while it is less sensitive to outliers. The median WTP estimates for the recovery program are computed as 18.17 €/household for those who were not
3 The mean WTP is undefined due to the value of the estimated coefficients of the WTP function (see Hanemann, 1984).
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informed about the existence of other Northern European colonies, and 19.34 €/household for the sub-sample who received such information. The magnitudes of these quantitative empirical estimates show that there are no clear differences between the welfare estimates obtained with and without the substitute reminder. The corresponding overlapping confidence intervals for the welfare measures provide further evidence of the statistical similarity of the above estimates. Thus, there is statistical evidence to fail to reject the null hypothesis presented in Eq. (1). These obtained results do not fulfil the expectations of the NOAA panel, regarding the role of reminders of substitutes in environmental valuation. They are also different from other results previously obtained by Whitehead and Blomquist (1995), who demonstrated that reminders affected WTP estimates. That is, estimates obtained in this study show that we cannot reject the null hypothesis, which postulated differences in the WTP estimates under the different valuation scenarios. However, this new set of results does not invalidate the CVM exercise or the basic premises of micro-economics. Although our exercise tested substitutes from an ecological point of view, these two birds (local and Northern European guillemot) may not be considered as substitutes by the local population. This happens in spite of the fact that the species on itself provides high non-use values and it is not so well known by the locals. Indeed, 79.47% of the individuals in our sample have never seen a guillemot outdoors. However, individuals may want to preserve their local endowment of biodiversity, even though there are other places in which such conservation is guaranteed. An additional and related consideration is that the conservation program valued in the present exercise aims to recover the species only up to its MVP. Local preferences to protect larger stocks above the MVP level may be valued differently (Bulte and van Kooten, 1999; Bandara and Tisdell, 2005), and may be affected by the presence of other biological substitutes elsewhere. Other considerations4 that may explain our results are related to the fact that the program described provides ancillary benefits in both scenarios, and such benefits may be confounding of the intrinsic value of the guillemot restoration program, such as the restrictions in cargo transportation. Furthermore, given that surveys were conducted face to face, social desirability bias may be expected (Loureiro and Lotade, 2005), particularly by participants having prior limited information.
5.
Conclusions
The aim of this article was to test the effect of a reminder about substitutes of the same bird species in a valuation exercise conducted with an endangered species. In particular, we valued a program to recover the population of guillemots in Spain. The guillemot in Spain is threatened by extinction due to the damaging effects of intensive fishing in the area and the Prestige oil spill, along with additional indirect effects caused by global climate change.
4 We wish to thank a reviewer for providing these additional reasons that might help explain our results.
In order to test the effect of substitute reminders, our sample was split into two treatments. One group received information about the existence of guillemot colonies in Northern Europe which are not in danger of extinction. The second group learned only about the current critical condition of the guillemot population in Spain. Our results show that there are no statistically significant differences between the median WTP per household obtained for the sample uniformed about the existence of colonies in Northern Europe, and the median WTP computed for the sample informed about the existence of substitutes. This new set of results differs from those previously obtained in other studies in which sensitivity of the WTP estimates with respect to the reminder of substitutes was found. Thus, in spite of the non-statistical difference of WTP estimates, the current reminder may be important in terms of providing accurate information about the uniqueness of the good when valuing endangered species. In order to provide robustness to these findings, we recommend that future studies test this assertion with other species and natural resources. Further research should also investigate whether WTP would be statistically different when a very unique or charismatic environmental good with hardly any substitutes is valued, such as the blue whale. The inclusion of a reminder stating that such good or resource does not have any direct substitute may potentially provide the opposite results as those presented in this paper. Our results may be justified by different arguments, including the fact that the presented program provides ancillary benefits in both valuation scenarios. Overall, our results suggest that individuals value endangered species based on concerns motivated by local scarcity of the species and subsequent loss of local natural habitat.
Acknowledgements Maria Loureiro acknowledges funding support from the Spanish Ministry of Education and Science, research project number SEJ2004-06357.
Appendix A. WTP Question Consider that the Galician Guillemot Restoration Program will be the only way to avoid guillemot extinction, so that by the year 2015 the guillemot population will be increased from 5 pairs (current level) up to 20 pairs, while 20 pairs is the minimum viable level of population (MVP) for the guillemot to survive. The Galician Guillemot Restoration Program will be put in place only if a majority of households in Galicia support it. As you know, in order to manage this restoration program economic resources are needed. This restoration program will be funded with a one time increase on income taxes⁎ in the next income tax declaration (only for adults over 18 years of age). All the money collected would be kept in a fund for the disposition of the program, which will be audited every two years. We want you to be aware that the money collected via this extra tax would only legally be used for this program. However, there are at least 13 other endangered species in Galicia, including birds, fish, reptiles, and mammals.
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Also remember that the money you spend on this program will not be available for the purchase of other goods or for supporting recovery programs for other endangered species. Given your current income level, are you willing to pay X € (10–150€) in a one-time payment for the Galician Guil-
lemot Restoration Program, so that the program will be implemented? □ YES □ NO (⁎) Individuals who are not obligated to pay their income taxes will receive in the mail a special tax form requesting their contribution to this specific program.
Appendix B. Graphic materials common for both survey versions Location of Galicia in Spain and Europe
Card 2
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Card 3
Appendix C. Additional materials only for survey version with substitutes Card 1
Card 2
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