PRUEBA MODO AUTOMÁTICO

Most Hungarians have visited Lake Balaton; 98% of the representative national Hungarian sample have visited the Lake and 93% visited more than once, regularly or occasionally. Thus almost every respondent can be classified as a ‘user’, the difference being whether the interview took place on or off-site.

Of the on-site users, the average tourist visits the Lake on a regular yearly basis while second-home owners visit regularly throughout the year. Tourists tend to stay for one or two weeks while nearly a third of second-home owners stay for longer periods of time. The majority o f residents and second-home owners have owned a house or have lived in the area for more than ten years. The main motivation for acquiring a house in the area was linked to the local amenities and only 8% consider it as an income source. This is compatible with the fact that most of those interviewed do not rent out their homes/ rooms on a regular basis. Most of these sub-samples spent at least part of their holidays in the Lake area. The main activity at the Lake is leisure and enjoying the scenery for both residents and second-home owners. Tourists appear to prefer resting on the beach and swimming, while fishing and water sports do not seem to be very popular amongst any of the users.

Only 6-10% o f the sample thought the Balaton waters were not polluted with 51-56% of respondents considering the Lake to be polluted or very polluted, the lower percentage being for the on-site users (since they are actively using the Lake, this reflects perhaps some form o f cognitive dissonance). However, the differences between both samples are small and some consensus does seem to exist. It is important to recall in this respect that almost every respondent, on or off-site, could be classified as a ‘user’.

Interestingly, a majority of 54% o f national respondents consider industrial discharges and agriculture run-off to be the main causes o f water pollution in the Balaton. The

actual main source of pollution, sewage flow from local users (whether residents or tourists), is only cited by 43% of the population. Respondents consider industry and agriculture to be the sectors most responsible for environmental degradation and these general feelings seem to have been extrapolated for the particular case o f the Balaton.

5.6 Willingness to Pay Estimates

As noted above, the Lake Balaton study explored three different funding mechanisms: general taxes; local resident taxes; and local tourist taxes. Three different samples were surveyed to address each o f these different possibilities: a representative sample o f the Hungarian population, interviewed in various locations throughout the country; a sample of habitual residents and second-home owners in the Balaton proximity; and a sample of Hungarian tourists interviewed on-site.

The bid levels used in each o f the sub-samples are depicted in Table 5.3. Table 5.4 displays the percentage of respondents falling in each bid interval. The proportion of respondents accepting the highest bid level varies from 0.9% in the national sample to

8% in the second-home owners sample. These low values indicate the non-existence of a ‘fat tail’ in the estimated value distribution, which suggests that the chosen amounts adequately capture respondents’ WTP distribution.

A number of econometric models were used to analyse the survey data arising from single and double-bounded dichotomous choice and open-ended questions.^ Table 5.5 illustrates basic valuation functions with the bid level as an explanatory variable. The single and double-bounded models (SB and DB respectively) were estimated using a logit and probit link function respectively (Greene, 1997). All estimated functions depend negatively on the bid level as expected: the higher the amount, the lower the probability of accepting to pay. Extended valuation functions including socio-

® Care should be taken when interpreting the open-ended maximum WTP results. Since these were not determined independently of the dichotomous choice elicitation process (i.e. in a split-sample context) but resulted from follow-up questions in the same questionnaire, the resulting estimates will be influenced by the bid amounts presented beforehand.

economic and attitudinal regressors were also found to perform well, with the coefficient signs according to prior expectations.^

Table 5.3: Bid vectors

Low bid Initial bid High bid N

I 500 1000 3000 139 National II 1000 3000 5000 149 Sample m 3000 5000 10000 148 IV 5000 10000 15000 190 V 10000 15000 20000 111 I 1000 2000 3000 70 Second-home n 2000 3000 5000 49 Owners m 3000 5000 7000 50 rv 5000 7000 10000 50 I 1000 2000 3000 50 Residents

n

in

n

m

^ Valuation functions with several covariates were also estimated. The results reveal a number of significant relationships, with the anticipated signs, between WTP and: age (-); sex (female) (+); income (+); frequency of visits to the Lake (+); interest in environmental issues (+); favourable attitude towards the proposed programme (+); belief in fairness of the payment mechanism (+); and perception of water quality of the Lake (-). See Mourato et al. (1997) for more details.

Table 5.4 Percentage of respondents in each interval NN NY YN YY I 25.9 20.1 36.0 18.0 National n 48.3 23.5 16.1 12.1 Sample m 65.5 8.8 17.6 8.1 IV 67.4 17.4 7.4 7.9 V 87.4 9.0 2.7 0.9 I 30.0 8.6 24.3 37.1 Second-home n 46.9 12.2 14.3 26.5 Owners m 34.0 26.0 26.0 14.0 rv 70.0 14.0 8.0 8.0 I 18.0 22.0 24.0 36.0 Residents n 39.1 14.5 21.7 24.6 m 50.0 12.5 22.9 14.6 IV 78.0 10.0 8.0 4.0 I 40.5 7.2 40.5 11.7 Hungarian n 42.4 8.7 42.4 6.6 Tourists

m

NN: reject 1st and 2nd bids; NY; reject 1st, accept 2nd bid; YN: accept 1st, reject 2nd bid; YY: accept 1st and 2nd bids

Table 5.5: Simple bid functions

National 2nd Home owners Residents Hungarian

Sample tourists SB DB SB DB SB DB SB DB Const. 0.9602 1.1568 1.0731 0.8153 1.2221 0.9092 1.0156 0.8509 (6.876) (10.93) (3.232) (6.732) (3.410) (6.578) (4.592) (8.572) Bid Level -0.0002 -0.0003 -0.0004 -0.0003 -0.0004 -0.0003 -0.0081 -0.007 (-10.6) (-18.1) (-4.53) (-12.2) (-4.77) (-11.9) (-6.07) (-19.5) Log L -424.66 -974.55 -137.11 -276.1 -132.44 -265.77 -210.5 -455.1 T-ratios in parenthesis.

Annual mean willingness to pay results from the dichotomous choice questions are tabulated in Table 5.6, based on 1,000 random draws from the distributions of the parameters estimated in the statistical models displayed in Table 5.5 (Krinsky and Robb, 1986) and using the formula in equation (5.8).

Table 5.6: Mean WTP estimates across models and sub-samples

Sub-Sample Single-Bounded Double-Bounded Open-Ended

National Sample 4340.7 3901.8 3756.8

Second-home Owners 2965.2 2998.2 3144.3

Residents 2939,9 2925.2 2768.4

Hungarian Tourists 979.0 903.6 791

Notes: (i)N=1509

(ii) All data in Hungarian Forints (HUF)

Inspection o f the values included in Table 5.6 shows a significant disparity in WTP estimates across sub-samples. This suggests that the choice, and specifically the temporal dimension, of the payment vehicle can crucially affect the results.

Hungarian tourists faced a daily payment frequency, while other sub-samples were asked for yearly payments. Could the significant difference found between Hungarian tourists’ WTP and the WTP o f other sub-samples be indicative o f the presence of what Kahneman and Knetsch (1992) have called ‘temporal embedding’ According to these authors, this type o f embedding applies to situations whereby respondents fail to appropriately discriminate between a one-time payment and a series of payments. This definition can be extended to cover a sensitivity to differences in payment frequency such as daily versus yearly, as in the Balaton survey. Several other studies have found that WTP is sensitive to the payment schedule. In particular, there is

A formal test of temporal embedding would imply a split-sample experiment within the Hungarian tourist sample, where the frequency of payments would vary. In this sense, the results reported here provide only a weak ‘test’ of this proposition given that there may be differences within the samples used. Nevertheless, the results do hold when comparing the aggregated daily WTP of the Hungarian tourist sample with the aimual WTP of the part of the national sample who can be classified as having

evidence that the present value of WTP inferred jfrom periodic payments tends to be higher than a corresponding lump-sum payment, for reasonable implicit discount rates (Stevens et a l, 1997). Similarly, the present value of annual WTP inferred from monthly payments tends to be higher than the directly elicited mean annual WTP (Wasike and Hanley, 1996; Spaninks and Hoevenagel, 1995). However, the direction o f the results found in the Balaton study is the exact opposite of these findings: the present value o f a series o f daily payments does not seem to exceed the corresponding annual payment. Hence, temporal embedding, as is usually described, does not seem to be present in the study.

Estimates vary from HUF791 to HUF4,341 (1995 US$6-30). Generally, it cannot be inferred from these results that on-site respondents value water quality improvements less than citizens interviewed off-site given the differences in the payment vehicles used in the questionnaires.^^ The relatively lower values obtained by local taxes may be due to the fact that: (i) Hungarians object to paying locally for something that is of avowed national interest; (ii) on-site elicitation exacerbates particular use values while a less contextual scenario may highlight broader non-use concerns; (iii) daily taxes tend to invoke more consumptive use values (i.e. something one may easily pay for on a daily basis) than non-use benefits (that may be perceived to be more on a long-term basis and thus be better captured by annual payments) or, less plausibly; (iv) that local authorities may be perceived as less capable o f implementing and managing the BCUP.

The lower estimated benefits for each sub-sample can be used for policy purposes, given the NOAA panel emphasis on arriving at conservative estimates for values elicited in contingent markets (see Table 1.2 in Chapter 1), and they correspond

visited the Balaton for tourist purposes and, at the same time, do not have a home, or a second-home, near the lake.

" Successful application of the contingent valuation method is not just about the public good being valued. It has long been recognised that the context in which the good is presented matters. Furthermore, many other additional elements of a hypothetical market, such as the information provided, the payment vehicle, the elicitation mechanism or the likelihood of actual provision, enter respondents’ utility function and may be non-neutral. A number of studies in the literature have addressed the contextual effects of CV scenarios. For example, Ajzen et al. (1996) find that estimates of willingness to pay vary significantly influenced with variations in information. And, as already noted, Stevens et al. (1997) and Wasike and Hanley (1996) show a sensitivity to the payment schedule. Interestingly, Loomis et al. (1994) find that reminders of substitutes and budget constraints do not have a material impact on WTP.

approximately to a reasonable 1% o f respondents’ annual net income. The results also suggest that an annual tax levied at the national level maximises the revenue that potentially can be obtained from Hungarian citizens. This would reduce the market failure by capturing part of the externalities created from water quality improvements at the Lake.^^

Confidence intervals for mean WTP calculated from referendum data, estimated using the Krinsky and Robb (1986) procedure, show that the differences between alternative econometric models are not statistically different from zero. It seems to have become a stylised fa ct in CV studies that the mean WTP resulting from dichotomous choice data is consistently larger than that obtained from open-ended elicitations. In this study such differences were not, however, statistically significant and were in the ‘wrong’ direction in the second-home owners case.

Follow-up questions included after the valuation section revealed that, on average, respondents were almost exactly split between choosing non-use motivations or use related benefits as the main reason for supporting the BCUP. Both seem to be equally important. The most cited non-use benefit is a bequest motive followed by nature and wildlife preservation.

One of the motivations for including a maximum WTP question as a follow-up to the referendum elicitation process is the identification of zero bidders. The proportion of null WTP values was 16% in the national sample, 24% in both the residents and Hungarian tourist sub-groups and 22% for the owners of a weekend home. These values are within the same magnitude, if a little smaller, than those usually found in CV studies. Further debriefing revealed that around 40% o f those stating a zero WTP either said they could not afford to pay more taxes or considered that there were more important goals than the BCUP. A little more than 50% o f respondents protested against some aspect o f the proposed programme. Reasons included: paying more taxes; disbelief in the effectiveness of the programme; or a perceived lack of responsibility for the pollution at the Lake. For these people, the survey instrument may not have elicited the true benefit of cleaner water at the Balaton. However, all answers were included in the overall estimates o f average WTP because: (i) the pre-

test showed that many respondents, given the chance, simultaneously stated ‘valid’ and ‘invalid’ motivations for a zero WTP, making it difficult to accurately identify true protesters; (ii) open-ended information is not reliable in the context of this survey; (iii) and all throughout a conservative approach was favoured - the inclusion of potential protest answers in the final calculations can only bias the results downwards.