Economic Valuation of the Aquatic Biodiversity Conservation in South Korea: Correcting for the Endogeneity Bias in Contingent Valuation

Ik Chang Choi; Hyun No Kim; Hio Jung Shin; John Tenhunen; Trung Thanh Nguyen

doi:10.3390/su9060930

Details

Original language	English
Article number	930
Journal	Sustainability (Switzerland)
Volume	9
Issue number	6
Publication status	Published - 2 Jun 2017

Abstract

In this study, we use the Contingent Valuation (CV) method to estimate households' willingness to pay (WTP) for the aquatic ecosystem health (biodiversity) improvement. This paper extends CV studies by dealing with the endogenous effect of a proxy variable, namely the subjective experience of negative environmental quality changes. The results show that the correction for the endogeneity bias facilitates the efficiency of parameter estimation in the empirical model. The mean WTP per household accounts for around 46.8% (KRW 79.6) of the current water use charge (KRW 170 per cubic meter). The total benefit from conserving the biodiversity is around KRW 198.62 billion. We found several factors that affect households' WTP for fish biodiversity conservation, suggesting the importance of these factors in the formulation of water policies associated with aquatic biodiversity. In addition, the inefficient water management costs should be redistributed to other projects or new programs such as for the fish biodiversity conservation.

Keywords

Aquatic biodiversity, Benefit calculation, Bivariate probit model, Contingent valuation method, Endogeneity bias, Willingness to pay

ASJC Scopus subject areas

Social Sciences(all)
Geography, Planning and Development
Energy(all)
Renewable Energy, Sustainability and the Environment
Environmental Science(all)
Management, Monitoring, Policy and Law

Sustainable Development Goals

Cite this

Economic Valuation of the Aquatic Biodiversity Conservation in South Korea: Correcting for the Endogeneity Bias in Contingent Valuation. / Choi, Ik Chang; Kim, Hyun No; Shin, Hio Jung et al.
In: Sustainability (Switzerland), Vol. 9, No. 6, 930, 02.06.2017.

Research output: Contribution to journal › Article › Research › peer review

Choi, IC, Kim, HN, Shin, HJ, Tenhunen, J & Nguyen, TT 2017, 'Economic Valuation of the Aquatic Biodiversity Conservation in South Korea: Correcting for the Endogeneity Bias in Contingent Valuation', Sustainability (Switzerland), vol. 9, no. 6, 930. https://doi.org/10.3390/su9060930

Choi, I. C., Kim, H. N., Shin, H. J., Tenhunen, J., & Nguyen, T. T. (2017). Economic Valuation of the Aquatic Biodiversity Conservation in South Korea: Correcting for the Endogeneity Bias in Contingent Valuation. Sustainability (Switzerland), 9(6), Article 930. https://doi.org/10.3390/su9060930

Choi IC, Kim HN, Shin HJ, Tenhunen J, Nguyen TT. Economic Valuation of the Aquatic Biodiversity Conservation in South Korea: Correcting for the Endogeneity Bias in Contingent Valuation. Sustainability (Switzerland). 2017 Jun 2;9(6):930. doi: 10.3390/su9060930

Choi, Ik Chang ; Kim, Hyun No ; Shin, Hio Jung et al. / Economic Valuation of the Aquatic Biodiversity Conservation in South Korea: Correcting for the Endogeneity Bias in Contingent Valuation. In: Sustainability (Switzerland). 2017 ; Vol. 9, No. 6.

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abstract = "In this study, we use the Contingent Valuation (CV) method to estimate households' willingness to pay (WTP) for the aquatic ecosystem health (biodiversity) improvement. This paper extends CV studies by dealing with the endogenous effect of a proxy variable, namely the subjective experience of negative environmental quality changes. The results show that the correction for the endogeneity bias facilitates the efficiency of parameter estimation in the empirical model. The mean WTP per household accounts for around 46.8% (KRW 79.6) of the current water use charge (KRW 170 per cubic meter). The total benefit from conserving the biodiversity is around KRW 198.62 billion. We found several factors that affect households' WTP for fish biodiversity conservation, suggesting the importance of these factors in the formulation of water policies associated with aquatic biodiversity. In addition, the inefficient water management costs should be redistributed to other projects or new programs such as for the fish biodiversity conservation.",

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AU - Choi, Ik Chang

AU - Kim, Hyun No

AU - Shin, Hio Jung

AU - Tenhunen, John

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Research@Leibniz University