Estimating Willingness-to-Pay with Random Valuation Models: An Application to Lake Sevan, Armenia

41 Pages Posted: 20 Apr 2016

See all articles by Hua Wang

Hua Wang

World Bank - Infrastructure and Environment Team

Benoît Laplante

World Bank - Research Department

Xun Wu

World Bank

Craig M. Meisner

The World Bank; The World Bank

Date Written: August 5, 2004

Abstract

This paper presents a case study of willingness-to-pay (WTP) estimation using random valuation models. A contingent valuation survey was conducted in Yerevan, Armenia to estimate people's WTP for the protection of Lake Sevan. Three elicitation formats-open-ended, closed-ended, and the stochastic payment card (SPC) approach - were used with split random samples. WTP models with heterogeneous errors were constructed and estimated with the survey data. The SPC approach produces a higher estimation of the mean WTP than both the open-ended and closed-ended approaches, while results from the open-ended and closed-ended elicitation formats are similar. Furthermore, contrary to research findings obtained in the United States, this study finds higher WTP estimations with mail surveys than with personal interviews.

This paper - a product of the Infrastructure and Environment Team, Development Research Group - is part of a larger effort in the group to understand the economics of sustainable development in developing countries.

JEL Classification: D80, Q21

Suggested Citation

Wang, Hua and Laplante, Benoît and Wu, Xun and Meisner, Craig M., Estimating Willingness-to-Pay with Random Valuation Models: An Application to Lake Sevan, Armenia (August 5, 2004). World Bank Policy Research Working Paper No. 3367, Available at SSRN: https://ssrn.com/abstract=625244

Hua Wang (Contact Author)

World Bank - Infrastructure and Environment Team ( email )

1818 H. Street, N.W.
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Washington, DC 20433
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Benoît Laplante

World Bank - Research Department ( email )

1818 H Street, N.W.
Washington, DC 20433
United States
202-458-5878 (Phone)
202-522-3230 (Fax)

Xun Wu

World Bank

1818 H Street, N.W.
Washington, DC 20433
United States

Craig M. Meisner

The World Bank ( email )

1818 H Street
Washington, DC 20433
United States

The World Bank ( email )

1818 H Street N.W
Washington, DC 20433
United States

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