Travisi und Nijkamp - 2008 - Valuing environmental and health risk in agricultu

ECOLOGICAL ECONOMICS 67 (2008) 598– 607
605
Table 5 – Sensitivity analysis to the valuation results
Average respondent (1) Age − (2) Age + (3) Concern − (2) Concern + (3)
BIODIV 3.87 3.49 5.23 2.68 35.71
GRWATER 2.27 2.05 3.07 1.57 20.95
HEALTH 0.15 0.14 0.21 0.11 1.43
Based on Model (2).
Note: (1) Average respondent with respect to age and concern profile. (2) ‘Age −’ and ‘Concern −’ are measured at the first quartile of the
distribution. (3) ‘Age +’ and ‘Concern +’ are measured at the third quartile of the distribution.
computed by multiplying the related interaction estimate by
individual profiles, measured at the sample mean, and at the
first and third quartile of the distribution. An average respondent
(with respect to age and concern), is associated to a
marginal WTP for BIODIV, GRWATER and HEALTH equal to,
respectively, €3.8, €.32and €0.15 per month.
In a similar way, we can run the same valuation exercise,
and thus estimate the marginal WTP for BIODIV, GRWATER
and HEALTH, when considering changes in the individual
characteristics namely her/his age profile and concern level.
6. Welfare analysis
We have developed now a framework for the economic
valuation of several relevant pesticide impacts on ecosystems
and human health using choice experiments. This approach
allows us to estimate the effect that different environmental
attributes of a foodstuff can have on daily household grocery
shopping decisions. Our results indicate that the choice between
alternative scenarios depends in predictable ways on
their environmental and economic shopping attributes. Thus,
respondents consider food purchased in shops to be less
attractive if the pesticide pollution generated by the underlying
agricultural production process is higher.
From an analytical point of view, the results of the choice
modelling experiment perform well in terms of fit and theoretical
validity. The Pseudo-R 2 values of the estimated models
are very high (N0.56) (Hensher et al., 2005), and the signs of
major estimated coefficients are statistically significant
and consistent with the theoretical predictions. Respondents
evaluate a price increase negatively, but evaluate a risk reduction
positively. This is true for any type of pesticide risk
considered (biodiversity, farmland contamination and human
health).
Marginal utilities vary depending on the type of pesticide
risk and provide mixed results (see Table 6). For a unit level of
Table 6 – Willingness-to-pay estimates
Mean Lower-bound Upper-bound
BIODIV 4.86 2.54 7.39
GRWATER 1.88 1.34 2.48
HEALTH 0.43 0.01 0.87
Based on Model (1).
Note: Willingness-to-pay is expressed in Euros per household per
month. Upper and lower bounds are calculated using the delta
method (Goldberger, 1991, pp.110) at 95% confidence levels.
risk decrease, reductions are priced higher if they refer to
biodiversity. However, the interpretation of results is complicated
by the use of different unit of measure for different risks.
To facilitate the interpretation of these results, we can consider
unit trade-offs between attributes shown by their rate of
substitution (see Table 7).
In Table 7 we can see that, on average, respondents are
willing to tolerate (i.e. to trade) six additional cases of human
illness to save one entire species of farmland birds, and two
cases of human illness to reduce soil and groundwater contamination
by 1%. Similarly, Foster and Mourato (2000) find
that respondents are willing to tolerate six to eight additional
cases of human illness to save an entire farmland bird species.
However, for bird biodiversity and human illness, our estimates
are higher than those by Foster and Mourato (2000).
They calculate a willingness-to- pay (WTP) of about €20 per
household per year to save one farmland bird species, and a
WTP of about €3 per household per year to avoid one case of
human illness. Our average estimates (based on Model (1)) are
approximately: €58.3 per household per year to save one
farmland bird species; €5.1 per household per year to avoid
one case of human illness; and €22.5 per household per year
to reduce soil and groundwater contamination by 1% 12 .
According to our estimations, therefore, the annual WTP of
an Italian household ranges from €874 to protect all the 15
endangered bird species; €1,465 to eliminate soil and groundwater
contamination in farmland areas (currently set at 65%);
to €1,286 to eliminate all the cases of acute pesticide intoxication
(250 cases a year).
Finally, our results confirm that WTPs are affected by the
respondents' socio-economic profiles, in terms of age and
level of concern about pesticide risks. The coefficient
estimates for HEALTH⁎ AGE, GRWATER ⁎ CONCERN in Model
(2) suggest that the individual age and concern profiles are
likely to influence the WTP for pesticide risk abatement in a
predictable way. In particular, respondent more aged, are
more prone to pay to purchase risk abatements, and so do
respondents with a higher concern profile (see Table 5).
These results signal the importance of knowing as accurately
as possible the respondents' socio-economic and attitudinal
12 Differences from the estimations by Foster and Mourato (2000)
might derive both from differences in modelling and elicitation
features. In fact, whereas they employ contingent ranking and
use a price premium on a single food product, a loaf of bread, we
use choice experiment and employ a green shopping payment
vehicle.