Valuing Benefits of Finnish Forest Biodiversity Conservation – Logit Models for Pooled Contingent Valuation and Contingent Rating/Ranking Survey Data

This paper examines contingent valuation and contingent rating/ranking valuation methods (CV and CR methods) for measuring willingness-to-pay (WTP) for nonmarket goods. Recent developments in discrete choice econometrics using random parameter models are applied to CV and CR data and their performance evaluated in comparison to conventionally used fixed parameter models. A framework for using data pooling techniques to test for invariance between separate sources of data is presented and applied to combined CV and CR data. The empirical application deals with measuring the WTP for conserving biodiversity hotspots in Finnish non-industrial private forests. Results suggest that random coefficient models perform statistically well in comparison to fixed parameter models that sometimes violate the assumptions of conditional logit model. Random parameter models also result in considerably lower WTP estimates than fixed paramater models. Based on the pooled models on combined data, parameter invariance between CV and CR data cannot be uniformly accepted or rejected. Rejecting pooling of the data is more likely as more detailed response models are applied. * Work-in-progress, comments and suggestions welcome, please do not cite. ** Ph.D. Candidate, Department of Environmental Science and Policy, University of California, Davis. Email: [email protected]