Applying Contingent Valuation in China Xu Zhongmin, Cheng Guodong, Zhang Zhiqiang, Su Zhiyong Vs Anglers’ WTP For Information About Chemical Residues in Sport Fish Douglas J. Krieger and John P. Hoehn

Topics  Brief history of the two papers  Define the sampling as use value, non use value  Pretesting  Methods to elicit WTP  Response rate  Future value  Conclusion and comments

Introduction (Ejina)  The study reports an attempt to apply CVM in Ejina Basin, China.  The objective of the study is to measure the economic total value of restoring the Ejina ecosystem.

Survey Design of Ejina paper  The investigation group consisted of 12 persons ; 7 ecologists and 5 economists.  Payment Card approach was adopt to use in the questionnaire.  700 households in Hei valley were selected as the sample.

Introduction (Michigan)  The study emphasizes on improving the draft questionnaires by pretesting carefully.  The objective is to find out the WTP for improving the advisory program of Michigan state.

Questionnaire Design This chapter focused on the design and implementation of CV which was setting into 2 scenario st,reviewed the Michigan’s current advisory program nd,proposed the alternatives for the respondents with new advisory program.

Pretesting  Goal: Uncover Uncover - misinterpretation of questions - misinterpretation of questions - Ambiguity in response categories - Ambiguity in response categories - clarity of visual aids - clarity of visual aids Reduce Bias

How did they do it?  Ejina Paper: - Questionnaire pre-tested using a sample of 42 respondents from Hei River - Ask respondents to write down their own maximum amount; use this as a guide for alternative values in final PC  Comment: Paper does not mention how pretesting helped to improve the questionnaire or how researchers came up with the final questionnaire Paper does not mention how pretesting helped to improve the questionnaire or how researchers came up with the final questionnaire

How did they do it?  Michigan Paper: - Use focus groups to explore how anglers think about chemical residues in fish, language they use, how they think and respond to current advisory Draft Questionnaire - Pretest of draft questionnaire in personal interviews with 12 anglers

Result: Questions removed, combined Questions removed, combined Examples: Examples: 1.Payment vehicle 2.Knowledge about current advisory

Elicit WTP Two Approaches Payment Card Approach (Ejina Paper) Referendum Approach ( Michigan Paper)

Payment Card  Respondents are confronted with a sequence of bids where they choose the maximum amount they are willing to pay  Ejina Paper: - Maximum amount hh would vote for and lowest amount hh would switch to a no - Maximum amount hh would vote for and lowest amount hh would switch to a no - Result: Lowest amount hh would switch to no only one category higher than what he would vote for - Result: Lowest amount hh would switch to no only one category higher than what he would vote for WTP (RMB)

Referendum Approach  Dichotomos choice of voting for or against a programm at a specified cost  Michigan Paper:

Why was the method chosen?  Payment Card - People not familiar with market prices - Simple for respondent and researcher  Referendum Approach - Easier for respondent: decision to accept or reject a good at given price is most common type of market transaction - People are familiar with voting on public programs - Reduces incentives for strategic over- or understatement of WTP

What about the payment vehicle?  Ejina Paper: - Three methods of paying: donation, ecological protection tax, water bill - Blank to fill in preferred method of payment Overcome problem of non- acceptance of payment vehicle Overcome problem of non- acceptance of payment vehicle - Problem: Payment vehicles differ in their incentives to reveal true maximum WTP + potential for free riding behaviour  Michigan Paper: - Increase in license fee: - fees are collected by the state and people link them directly to spending on public programs - fees are collected by the state and people link them directly to spending on public programs - difficult to avoid - difficult to avoid - drawback: people are afraid that money is not used to improve advisories - drawback: people are afraid that money is not used to improve advisories ask people if they object to the license fee as a method of raising money

Response Rate Ejina region  Personal interviews results in high response rates  In-person investigation on July 2001  700 household to be sampled were split into 24 groups, 20 – 35 people per group  From 700 questionnaires, 695 were completed  This survey achieved response rate of 99%

Response Rate Michigan paper  Use TDM (Total Design Method)  Sent the first questionnaires to 1,578 people  Only 230 sets were returned as undeliverable  The response rate are as following: First mailing obtained 30% First mailing obtained 30% Second mailing obtained 25% Second mailing obtained 25% Third mailing obtained 24% Third mailing obtained 24%  This survey achieved overall response rate of 73.4%

The discounting for WTP TTTThe researcher resolved the problem of time discount in aggregate of annual payment where the lump sum and periodic payment should equal. TTTThe researcher put the high discount rate (15%) for the environment goods which encouraged the public to underestimate the future benefit of the environment. TTTThe researcher calculated by put the median of WTP.

Table 5

 The result demonstrated that human should take action to restore and protect the environment as soon as possible.

Ejina Vs Michigan Ejina  Put discount rate at 15 % to Value future benefit  The result should be restored the Ejina ecosystem Michigan  Did not mention about the discount rate

Conclusion and comments  Ejina Paper: - In China WTA might be a better approach, because people are not familiar with market prices - As there exist few CVM studies in China, future research has to find out what payment vehicles are appropriate for different types of public goods  Michigan Paper: - People who are no anglers, but eat fish were not included in the survey - Paper does not tell how focus groups were selected - 12 personal interviews to test the draft questionnaire might not be suffiencient - Clear and precise description of current advisory and alternatives

Present by Ms. Kristina Hammerstroem Ms Piyaporn Pekkad Mr. Poramate Udomsinanon Ms. Thienrat Kummarabuth