Advertisement

Wetlands

pp 1–10 | Cite as

The Importance of Loss Aversion in Public Preferences for Wetland Management Policies: Evidence from a Choice Experiment with Reference-Dependent Discrete Choice Model

  • Biqi Mao
  • Changlin AoEmail author
  • Jingxia Wang
  • Lishan Xu
Socioeconomic aspects of Wetlands

Abstract

Scientific analysis of public preferences for wetland management policies could provide valuable information for the management by government, where individual preferences can be affected by the loss aversion. Hence, this paper aims to clarify the importance of loss aversion in public preferences for wetland management scenarios based on a choice experiment described by five attributes: wetland acreage, biodiversity, water condition, natural landscape, and payment for wetland management. We constructed a random parameters model based on reference-dependent utility to derive testable hypotheses about how loss aversion affects public preferences for wetland management scenarios. The results suggest that the reference-dependent random parameters models are more appropriate to account for the choices of respondents, indicating loss aversion is an important choice driver for wetland management policies. Moreover, both the loss aversion parameters in reference-dependent random parameters models are greater than 1, implying that respondents consider the losses from the deterioration of the current wetland attribute status are more than the gains from the improvement. Especially, the choice preferences are different in the two choice paradigms, considering with and without loss aversion. Our findings have important implications for policy-makers, as the choice prediction will be inaccurate without considering the importance of the loss aversion.

Keywords

Wetland management Loss aversion Choice experiment Reference-dependent Random parameters logit model 

Notes

Acknowledgments

This study was supported by the National Natural Science Foundation of China (71874026 & 71171044). We would like to express our sincere thanks to the Forestry Bureau in Heilongjiang Province and the Sanjiang Wetland Nature Reserve Administration of China for their support and their help with our survey.

References

  1. Abdellaoui M, Bleichrodt H, Paraschiv C (2007) Loss aversion under prospect theory: a parameter-free measurement. Management Science 53:1659–1674.  https://doi.org/10.1287/mnsc.1070.0711 CrossRefGoogle Scholar
  2. Abdellaoui M, Bleichrodt H, l’Haridon O (2008) A tractable method to measure utility and loss aversion under prospect theory. Journal of Risk and Uncertainty 36:245–266.  https://doi.org/10.1007/s11166-008-9039-8 CrossRefGoogle Scholar
  3. Ahrens S, Pirschel I, Snower DJ (2017) A theory of price adjustment under loss aversion. Journal of Economic Behavior and Organization 134:78–95.  https://doi.org/10.1016/j.jebo.2016.12.008 CrossRefGoogle Scholar
  4. Ao C, Dong Y, Jiao Y, Zhang K, Dong L (2016) Ecological value evaluation of the Sanjiang plain wetland based on the double-hurdle model. Resource Science 38:929–938.  https://doi.org/10.18402/resci.2016.05.12 (in Chinese)Google Scholar
  5. Araña JE, León CJ (2009) Understanding the use of non-compensatory decision rules in discrete choice experiments: the role of emotions. Ecological Economics 68:2316–2326.  https://doi.org/10.1016/j.ecolecon.2009.03.003 CrossRefGoogle Scholar
  6. Asah ST, Guerry AD, Blahna DJ, Lawler JJ (2014) Perception, acquisition and use of ecosystem services: human behavior, and ecosystem management and policy implications. Ecosystem Services 10:180–186.  https://doi.org/10.1016/j.ecoser.2014.08.003 CrossRefGoogle Scholar
  7. Bierlaire M (2016) PythonBiogeme: a short introduction report TRANSP-OR 160706, series on Biogeme. Switzerland: Transport and Mobility Laboratory, School of Architecture, Civil and Environmental Engineering, Ecole Polytechnique Fédérale de LausanneGoogle Scholar
  8. Birol E, Karousakis K, Koundouri P (2006) Using a choice experiment to account for preference heterogeneity in wetland attributes: the case of Cheimaditida wetland in Greece. Ecological Economics 60:145–156.  https://doi.org/10.1016/j.ecolecon.2006.06.002 CrossRefGoogle Scholar
  9. Bleichrodt H, Pinto JL (2002) Loss aversion and scale compatibility in two-attribute trade-offs. Journal of Mathematical Psychology 46:315–337.  https://doi.org/10.1006/jmps.2001.1390 CrossRefGoogle Scholar
  10. Boeri M, Longo A (2017) The importance of regret minimization in the choice for renewable energy programmes: evidence from a discrete choice experiment. Energy Economics 63:253–260.  https://doi.org/10.1016/j.eneco.2017.03.005 CrossRefGoogle Scholar
  11. Brander LM, Florax RJGM, Vermaat JE (2006) The empirics of wetland valuation: a comprehensive summary and a meta-analysis of the literature. Environmental and Resource Economics 33:223–250.  https://doi.org/10.1007/s10640-005-3104-4 CrossRefGoogle Scholar
  12. Campbell RM, Venn TJ, Anderson NM (2018) Heterogeneity in preferences for woody biomass energy in the US Mountain west. Ecological Economics 145:27–37.  https://doi.org/10.1016/j.ecolecon.2017.08.018 CrossRefGoogle Scholar
  13. Caputo V, Lusk JL Jr, Nayga RM (2018) Choice experiments are not conducted in a vacuum: the effects of external price information on choice behavior. Journal of Economic Behavior and Organization 145:335–351.  https://doi.org/10.1016/j.jebo.2017.11.018 CrossRefGoogle Scholar
  14. Carlsson F, Frykblom P, Liljenstolpe C (2003) Valuing wetland attributes: an application of choice experiments. Ecological Economics 47:95–103.  https://doi.org/10.1016/j.ecolecon.2002.09.003 CrossRefGoogle Scholar
  15. Chen B, Nakama Y, Zhang Y (2017) Traditional village forest landscapes: Tourists' attitudes and preferences for conservation. Tourism Management 59:652–662CrossRefGoogle Scholar
  16. Dias V, Belcher K (2015) Value and provision of ecosystem services from prairie wetlands: a choice experiment approach. Ecosystem Services 15:35–44.  https://doi.org/10.1016/j.ecoser.2015.07.004 CrossRefGoogle Scholar
  17. Doherty E, Murphy G, Hynes S, Buckley C (2014) Valuing ecosystem services across water bodies: results from a discrete choice experiment. Ecosystem Services 7:89–97.  https://doi.org/10.1016/j.ecoser.2013.09.003 CrossRefGoogle Scholar
  18. He J, Dupras J, Poder TG (2016) The value of wetlands in Quebec: a comparison between contingent valuation and choice experiment. Journal of Environmental Economics and Policy 6:51–78.  https://doi.org/10.1080/21606544.2016.1199976 CrossRefGoogle Scholar
  19. Kahneman D, Tversky A (1979) Prospect theory: an analysis of decision under risk. Econometrica 47:263–292.  https://doi.org/10.2307/1914185 CrossRefGoogle Scholar
  20. Khan I, Zhao M (2019) Water resource management and public preferences for water ecosystem services: a choice experiment approach for inland river basin management. Science of the Total Environment 646:821–831.  https://doi.org/10.1016/j.scitotenv.2018.07.339 CrossRefGoogle Scholar
  21. Kim J, Park SY, Lee J (2018) Do people really want renewable energy? Who wants renewable energy?: discrete choice model of reference-dependent preference in South Korea. Energy Policy (In press) doi:  https://doi.org/10.1016/j.enpol.2018.04.062
  22. Li Z, Hensher DA (2010) Prospect theoretic contributions in understanding traveler behaviour: a review and some comments. Transport Reviews 31:97–115.  https://doi.org/10.1080/01441647.2010.498589 CrossRefGoogle Scholar
  23. Marre JB, Thébaud O, Pascoe S, Jennings S, Boncoeur J, Coglan L (2016) Is economic valuation of ecosystem services useful to decision-makers? Lessons learned from Australian coastal and marine management. Journal of Environmental Management 178:52–62.  https://doi.org/10.1016/j.jenvman.2016.04.014 CrossRefGoogle Scholar
  24. McCain KW (2015) Mining full-text journal articles to assess obliteration by incorporation: Herbert a. Simon's concepts of bounded rationality and satisficing in economics, management, and psychology. Journal of the Association for Information Science and Technology 66:2187–2201.  https://doi.org/10.1002/asi.23335 CrossRefGoogle Scholar
  25. Mcfadden D (1974) Conditional logit analysis of qualitative choice behavior. Frontiers in Econometrics Academic Press, New York, pp 105–141Google Scholar
  26. Meyerhoff J, Liebe U, Hartje V (2009) Benefits of biodiversity enhancement of nature-oriented silviculture: evidence from two choice experiments in Germany. Journal of Forest Economics 15:37–58.  https://doi.org/10.1016/j.jfe.2008.03.003 CrossRefGoogle Scholar
  27. Millennium Ecosystem Assessment (2005) Ecosystems and human well-being: current states and trends. Island Press, WashingtonGoogle Scholar
  28. Pan D, Zhou G, Zhang N, Zhang L (2016) Farmers' preferences for livestock pollution control policy in China: a choice experiment method. Journal of Cleaner Production 131:572–582.  https://doi.org/10.1016/j.jclepro.2016.04.133 CrossRefGoogle Scholar
  29. Perni A, Martínez-Paz JM (2017) Measuring conflicts in the management of anthropized ecosystems: evidence from a choice experiment in a human-created Mediterranean wetland. Journal of Environmental Management 203:40–50.  https://doi.org/10.1016/j.jenvman.2017.07.049 CrossRefGoogle Scholar
  30. Rakotonarivo OS, Schaafsma M, Hockley N (2016) A systematic review of the reliability and validity of discrete choice experiments in valuing non-market environmental goods. Journal of Environmental Management 183:98–109.  https://doi.org/10.1016/j.jenvman.2016.08.032 CrossRefGoogle Scholar
  31. Rouyard T, Attema A, Baskerville R, Leal J, Gray A (2018) Risk attitudes of people with 'manageable' chronic disease: an analysis under prospect theory. Social Science and Medicine 214:144–153.  https://doi.org/10.1016/j.socscimed.2018.08.007 CrossRefGoogle Scholar
  32. Sælen H, Ericson T (2013) The recreational value of different winter conditions in Oslo forests: a choice experiment. Journal of Environmental Management 131:426–434.  https://doi.org/10.1016/j.jenvman.2013.10.006 CrossRefGoogle Scholar
  33. Senzaki M, Yamaura Y, Shoji Y, Kubo T, Nakamura F (2017) Citizens promote the conservation of flagship species more than ecosystem services in wetland restoration. Biological Conservation 214:1–5.  https://doi.org/10.1016/j.biocon.2017.07.025 CrossRefGoogle Scholar
  34. Soga M, Gaston KJ, Yamaura Y, Kurisu K, Hanaki K (2016) Both direct and vicarious experiences of nature affect children's willingness to conserve biodiversity. International Journal of Environmental Research and Public Health 13:529.  https://doi.org/10.3390/ijerph13060529 CrossRefGoogle Scholar
  35. Sun T, Lin W, Chen G, Guo P, Zeng Y (2016) Wetland ecosystem health assessment through integrating remote sensing and inventory data with an assessment model for the Hangzhou Bay, China. Science of the Total Environment 566-567:627–640.  https://doi.org/10.1016/j.scitotenv.2016.05.028 CrossRefGoogle Scholar
  36. Tan Y, Lv D, Cheng J, Wang D, Mo W, Xiang Y (2018) Valuation of environmental improvements in coastal wetland restoration: a choice experiment approach. Global Ecology and Conservation 15:e0040.  https://doi.org/10.1016/j.gecco.2018.e00440 CrossRefGoogle Scholar
  37. Train, KE (2009) Discrete choice methods with simulation. Cambridge University Press, UKGoogle Scholar
  38. Tversky A, Kahneman D (1992) Advances in prospect theory: cumulative representation of uncertainty. Journal of Risk Uncertainty 5:297–323.  https://doi.org/10.1007/BF00122574 CrossRefGoogle Scholar
  39. Wang Y, Yang J, Liang J, Qiang Y, Fang S, Gao M, Fan X, Yang G, Zhang B, Feng Y (2018) Analysis of the environmental behavior of farmers for non-point source pollution control and management in a water source protection area in China. Science of the Total Environment 633:1126–1135.  https://doi.org/10.1016/j.scitotenv.2018.03.273 CrossRefGoogle Scholar
  40. Wen CH, Wu WN, Fu C (2017) Preferences for alternative travel arrangements in case of major flight delays: evidence from choice experiments with prospect theory. Transport Policy In press.  https://doi.org/10.1016/j.tranpol.2017.02.005
  41. Woodward RT, Wui YS (2001) The economic value of wetland services a meta-analysis. Ecological Economics 37:257–270.  https://doi.org/10.1016/S0921-8009(00)00276-7 CrossRefGoogle Scholar
  42. Xiao C, McCright AM (2014) A test of the biographical availability argument for gender differences in environmental behaviors. Environment and Behavior 46:241–263.  https://doi.org/10.1177/0013916512453991 CrossRefGoogle Scholar
  43. Yan X, Hu Y, Chang Y, Zhang D, Liu M, Guo J, Ren B (2017) Monitoring wetland changes both outside and inside reclamation areas for coastal Management of the Northern Liaodong bay, China. Wetlands 2017:1–13.  https://doi.org/10.1007/s13157-017-0922-4 Google Scholar

Copyright information

© Society of Wetland Scientists 2019

Authors and Affiliations

  • Biqi Mao
    • 1
  • Changlin Ao
    • 1
    Email author
  • Jingxia Wang
    • 1
  • Lishan Xu
    • 1
  1. 1.Department of Management Science and EngineeringNortheast Agricultural UniversityHarbinChina

Personalised recommendations