ATTITUDES AND INFORMATION EFFECTS IN CONTINGENT ...

Attitudes and Information Effects in Contingent Valuation ofNatural Resources

Author

Raybould, Michael

Published

2006

Thesis Type

Thesis (PhD Doctorate)

School

Australian School of Environmental Studies

DOI

https://doi.org/10.25904/1912/2518

Copyright Statement

The author owns the copyright in this thesis, unless stated otherwise.

Downloaded from

http://hdl.handle.net/10072/367928

Griffith Research Online

https://research-repository.griffith.edu.au

ATTITUDES AND INFORMATION EFFECTS IN CONTINGENT VALUATION OF NATURAL RESOURCES

Mike Raybould B.A. (Hons), P.G.C.E., M.Reg Sci

The Australian School of Environmental Studies Faculty of Environmental Sciences

Griffith University

Thesis submitted in fulfilment of the requirements of the degree of Doctor of Philosophy October 2005

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ABSTRACT

This thesis investigated the effects of photographic and text information on

respondents’ attitudes and willingness-to-pay for a proposed beach protection scheme in

the erosion prone Gold Coast region on the east coast of Australia. The research

developed two alternative expectancy-value attitude-behaviour models to test residents’

attitudes toward relevant targets and behavioural intention, expressed through stated

willingness-to-pay, and compared the proposed models with one established attitude-

behaviour model.

The thesis set out to investigate three central research questions; one question

relating to the effects of information on attitudes and willingness-to-pay, and two

questions relating to the relationships between attitudes and willingness-to-pay. It was

hypothesised that photographs that depicted severe erosion damage would result in

more positive attitudes toward, and greater willingness-to-pay for, beach protection than

photographs that showed only mild levels of erosion damage. Positive relationships

were hypothesised between variables representing attitudes toward beach erosion,

attitude toward beach protection, attitude toward paying for beach protection, and

willingness-to-pay. Finally, it was hypothesised that the relationships between attitudes

and willingness-to-pay could be adequately explained by the proposed attitude-

behaviour models.

The thesis describes how seven information treatments and eight attitude

measurement scales were developed and tested in a pilot experiment before use in a

survey of homeowners in the region of interest

Analysis of variance showed that, while respondent’s attitude toward beach

protection was affected by the information treatments, their willingness-to-pay for the

proposed program was insensitive to information. There were no significant effects that

could be attributed exclusively to text descriptions of the good but there were significant

effects that could be attributed to photographic information treatments. However, none

of the effects on attitudes resulted in significant effects on the behavioural intention

expressed in stated willingness-to-pay. Analysis of respondents with low previous

knowledge of the proposed good revealed more extensive information effects on

attitudes, but still not on willingness-to-pay, and this suggests that high levels of

previous knowledge in a large proportion of the sample had a moderating effect on

attitude change caused by the information treatments.

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Regression analysis showed that seven of the eight attitude and behaviour

variables in the proposed attitude-behaviour model were significant predictors of

willingness-to-pay. In the final phase of the analysis, goodness-of-fit indices, estimated

using Structural Equation Modelling, indicated a good fit between the data and the

attitude-behaviour models tested. Standardised coefficients on the model indicated that

perceived behavioural control, expected utility of outcomes, and subjective norms all

had strong direct relationships with stated willingness-to-pay, and strong indirect

relationships on willingness-to-pay via attitudes toward payment. These results are

consistent with the relationships proposed in attitude-behaviour models and the

moderating effects of these variables explain why significant information treatment

effects were observed on attitude to beach protection but not on willingness-to-pay.

This research showed that respondent’s willingness-to-pay in a contingent

valuation experiment is quite insensitive to photographic treatments when previous

knowledge is high and that costly and time consuming testing procedures,

recommended by authorities, may not be necessary under these conditions. It also

demonstrated that measures of attitude, consistent with an attitude-behaviour model, can

be collected easily in a contingent valuation study and can contribute to understanding

of participant responses and to identification of protest responses.

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Table of Contents

ABSTRACT ................................................................................................................................................... I TABLE OF CONTENTS ................................................................................................................................ III LIST OF TABLES .......................................................................................................................................VII LIST OF FIGURES .....................................................................................................................................VIII LIST OF MAPS..........................................................................................................................................VIII LIST OF APPENDICES ................................................................................................................................. IX DIGITAL APPENDICES FILE STRUCTURE .................................................................................................... IX ACKNOWLEDGEMENTS.........................................................................................................................X

STATEMENT OF ORIGINALITY.......................................................................................................... XI

CHAPTER 1 INTRODUCTION..................................................................................................................1 1.1 THE CONTINGENT VALUATION METHOD ............................................................................................... 1 1.2 NON MARKET RECREATION GOODS AND BEACH PROTECTION ............................................................... 3 1.3 THE RESEARCH AIMS AND RATIONALE.................................................................................................. 4

1.3.1 Information effects in contingent valuation .............................................................................. 5 1.3.2 Attitude-behaviour models in contingent valuation experiments.............................................. 6

1.4 RESEARCH METHODS AND DESIGN........................................................................................................ 7 1.4.1 Research methods..................................................................................................................... 7 1.4.2 The conceptual attitude-behaviour framework for the research .............................................. 8 1.4.3 The research questions and hypotheses.................................................................................... 9 1.4.3 An overview of the research design ........................................................................................ 12

1.5 SUMMARY AND CHAPTER STRUCTURE OF THE THESIS......................................................................... 14 CHAPTER 2 DEFINING AND MEASURING ENVIRONMENTAL VALUE ....................................16 2.1 ECONOMICS AND THE ENVIRONMENT ................................................................................................. 16 2.2 ENVIRONMENTAL GOODS AND MARKET FAILURE ............................................................................... 18 2.3 THE MEANING OF ECONOMIC VALUE .................................................................................................. 19

2.3.1 The Total Economic Value (TEV) model ................................................................................ 20 2.4 CONSUMER CHOICE AND FORMATION OF ECONOMIC VALUES ............................................................. 22

2.4.1 Utility and consumer preferences........................................................................................... 23 2.4.2 Constraints and consumer choice........................................................................................... 23 2.4.3 Consumer choice and demand for non-market goods ............................................................ 24

2.5 MEASURING ENVIRONMENTAL VALUES.............................................................................................. 25 2.5.1 Travel cost methods................................................................................................................ 26 2.5.2Hedonic pricing methods......................................................................................................... 29 2.5.3 Random Utility Models........................................................................................................... 34 2.5.4 The contingent valuation method............................................................................................ 38

2.6 SUMMARY .......................................................................................................................................... 42 CHAPTER 3 RESEARCH DIRECTIONS IN CONTINGENT VALUATION ....................................45 3.1 A FRAMEWORK FOR REVIEWING CONTINGENT VALUATION RESEARCH............................................... 45

3.1.1 Structure of the literature review............................................................................................ 49 3.2 VALIDITY AND RELIABILITY OF CONTINGENT VALUATION METHOD ................................................... 50

3.2.1 Criterion validity .................................................................................................................... 50 3.2.2 Theoretical construct validity ................................................................................................. 53 3.2.3 Convergent construct validity................................................................................................. 55 3.2.4 Reliability of the contingent valuation method ....................................................................... 57

3.3 DESIGN ISSUES AND INSTRUMENT VALIDITY AND RELIABILITY .......................................................... 59 3.3.1 Choice of welfare measure ..................................................................................................... 59 3.3.2 Elicitation method .................................................................................................................. 61 3.3.3 Choice of payment vehicle ...................................................................................................... 64 3.3.4 Question order (priming) effects ............................................................................................ 65 3.3.5 Response incentive effects ...................................................................................................... 65

3.4 INFORMATION AND VALUE FORMATION IN CONTINGENT VALUATION................................................. 68 3.4.1 Elements of the contingent market scenario ........................................................................... 69 3.4.2 Amenity definition and value formation.................................................................................. 70 3.4.3 Context definition and value formation .................................................................................. 73 3.4.4 Information about income and relative expenditures and value formation............................ 75

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3.4.5 Visual communication devices in contingent valuation experiments...................................... 76 3.5 INTERPRETATION OF STATED VALUES................................................................................................. 79

3.5.1 Protest responses.................................................................................................................... 80 3.5.2 Lexicographic preferences ..................................................................................................... 80 3.5.3 Protest definition and the contingent market framework........................................................ 82 3.5.4 Treatment of protest zeros ...................................................................................................... 84

3.6 SUMMARY .......................................................................................................................................... 85 CHAPTER 4 ATTITUDES AND INFORMATION IN CONTINGENT VALUATION......................87 4.1 DECISION MAKING IN CONTINGENT VALUATION EXPERIMENTS .......................................................... 87 4.2 THE STRUCTURE AND FUNCTION OF ATTITUDES ................................................................................. 88

4.2.1 Attitudes toward the environment........................................................................................... 90 4.3 ATTITUDES AS PREDICTORS OF BEHAVIOUR........................................................................................ 91

4.3.1 Expectancy-value models of the attitude-behaviour relationship........................................... 92 4.3.2 Predicting behavioural intention and behaviour.................................................................... 94 4.3.3 Attitudes as predictors of environmentally related behaviour................................................ 95 4.3.4 Attitudes toward paying for environmental protection........................................................... 97

4.4 ATTITUDE FORMATION AND CHANGE ................................................................................................. 97 4.4.1 Behavioural approaches......................................................................................................... 98 4.4.2 Cognitive approaches ............................................................................................................. 99

4.5 INFORMATION IN ATTITUDE CHANGE................................................................................................ 101 4.5.1 Recipient variables in environmental attitude change.......................................................... 102 4.5.2 Dual-process models of attitude change............................................................................... 103

4.6 DEVELOPING ATTITUDE MEASURES .................................................................................................. 104 4.6.1 Item generation..................................................................................................................... 105 4.6.2 Item polarity ......................................................................................................................... 106 4.6.3 Number of items.................................................................................................................... 107 4.6.4 Choice of response scale ...................................................................................................... 108

4.7 SUMMARY ........................................................................................................................................ 108 CHAPTER 5 BEACH MANAGEMENT IN AUSTRALIA...................................................................110 5.1 THE STUDY REGION .......................................................................................................................... 110 5.2 THE BEACH AND COASTAL MANAGEMENT PROBLEM IN AUSTRALIA................................................. 112 5.3 EARLY DEVELOPMENT OF COASTAL MANAGEMENT POLICY IN AUSTRALIA ...................................... 113 5.4 THE CURRENT LEGISLATIVE FRAMEWORK FOR BEACH MANAGEMENT IN AUSTRALIA ...................... 115 5.5 RECENT POLICY INITIATIVES ............................................................................................................ 117

5.5.1 Commonwealth Government ................................................................................................ 118 5.5.2 Queensland State Government ............................................................................................. 120 5.5.3 Gold Coast City Council....................................................................................................... 121

CHAPTER 6 INSTRUMENT DESIGN, TESTING AND THE PILOT EXPERIMENT ..................126 6.1 INSTRUMENT DEVELOPMENT 1: THE ATTITUDE MEASUREMENT ITEMS AND SCALES......................... 126

6.1.1 General attitudes toward the environment (V1) ................................................................... 127 6.1.2 Measures of habit / environmental behaviour (V2) .............................................................. 128 6.1.3 Attitudes toward beach erosion (V3) and beach protection (V4) ......................................... 129 6.1.4 Expected utility of outcomes (V5) ......................................................................................... 130 6.1.5 Subjective norm (V6) ............................................................................................................ 131 6.1.6 Perceived Behavioural Control (V7) .................................................................................... 132 6.1.7 Attitude toward paying for beach protection (V8)................................................................ 133

6.2 INSTRUMENT DEVELOPMENT 2: INFORMATION TREATMENTS AND THE MARKET CONTEXT............... 134 6.2.1 Text information treatments.................................................................................................. 134 6.2.2 Photographic information treatments................................................................................... 135 6.2.3 The payment mechanism....................................................................................................... 139 6.2.4 Characteristics of the contingent market and the value elicitation question........................ 140

6.3 INSTRUMENT DEVELOPMENT 3: OTHER COMPONENTS OF THE SURVEY INSTRUMENT ....................... 142 6.3.1 Information relevance and previous knowledge................................................................... 143 6.3.2 Socio-economic measures..................................................................................................... 144

6.4 THE PILOT EXPERIMENT.................................................................................................................... 145 6.4.1 Aims and design of the pilot experiment............................................................................... 145 6.4.2 Sample selection and administration.................................................................................... 146 6.4.3 Sample statistics for the pilot experiment ............................................................................. 147

6.5 PILOT EXPERIMENT RESULTS 1: ITEM ANALYSIS AND SCALE FORMATION......................................... 148 6.5.1 General attitudes toward the environment (V1) ................................................................... 148

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6.5.2 Measures of habit / environmental behaviour (V2) .............................................................. 149 6.5.3 Measures of specific target-related attitudes (V3, V4, V5, V7 and V8) ................................ 149 6.5.4 Subjective norms (V6)........................................................................................................... 152 6.5.5 Scale validation: The effects of previous knowledge and beach use on attitudes................. 152 6.6.6 Evaluation and refinement of the attitude measurement scales............................................ 154

6.6 PILOT EXPERIMENT RESULTS 2: THE CONTINGENT MARKET AND THE WTP ELICITATION QUESTIONS156 6.6.1 WTP results for the pilot study ............................................................................................. 156 6.6.2 Evaluation and refinement of contingent market scenario and WTP elicitation questions .. 157

6.7 PILOT EXPERIMENT RESULTS 3: THE INFORMATION TREATMENTS .................................................... 158 6.7.1 The effects of information treatment on attitudes and WTP ................................................. 158 6.7.2 Evaluation and refinement of the information treatments .................................................... 160

6.8 SUMMARY ........................................................................................................................................ 161 CHAPTER 7 THE CONTINGENT VALUATION EXPERIMENT....................................................163 7.1 AIMS AND EXPERIMENTAL DESIGN ................................................................................................... 163 7.2 INSTRUMENT STRUCTURE AND ADMINISTRATION ............................................................................. 164

7.2.1 The sample frame and survey logistics ................................................................................. 165 7.3 SAMPLE STATISTICS AND THE SOCIO-ECONOMIC PROFILE OF RESPONDENTS..................................... 166 7.4 BEACH USE AND PREVIOUS KNOWLEDGE.......................................................................................... 169 7.5 SCALE ANALYSIS AND FORMATION................................................................................................... 170

7.5.1 General attitude towards the environment (V1) ................................................................... 170 7.5.2 Measures of previous behaviour (V2)................................................................................... 170 7.5.3 Measures of specific target related attitudes (V3, V4, V5, V7 and V8) ................................ 171 7.5.4 Subjective norms (V6)........................................................................................................... 176

7.6 ATTITUDES AND IDENTIFICATION OF PROTEST RESPONSES ............................................................... 176 7.6.1 Protest definitions 1 and 2 using a single item approach..................................................... 177 7.6.2 Protest definitions 3 and 4 using composite measures ......................................................... 178 7.6.3 Protest definition 5: A decision tracking approach.............................................................. 179

7.7 WTP VALUES UNDER ALTERNATIVE DEFINITIONS OF PROTEST......................................................... 184 7.8 EXPLORING INCONSISTENT RESPONSES USING ATTITUDE MEASURES................................................ 186 7.9 SUMMARY ........................................................................................................................................ 187 CHAPTER 8 RESULTS AND DISCUSSION OF THE CONTINGENT VALUATION EXPERIMENT..........................................................................................................................................190 8.1 INFORMATION EFFECTS ON ATTITUDES AND WTP ............................................................................ 190

8.1.1 Exploration and transformation of variables ....................................................................... 192 8.1.2 Scale validation: The effects of beach use and previous knowledge on attitudes and WTP. 192 8.1.3 Information treatment effects on attitudes and WTP ............................................................ 194 8.1.4 Information treatment effects when controlling for previous knowledge and beach use...... 197 8.1.5 Evaluation of hypotheses 1-8 and discussion ....................................................................... 198

8.2 THE EFFECTS OF SOCIO-ECONOMIC VARIABLES AND ATTITUDES ON WTP........................................ 200 8.2.1 Socio-economic variables as predictors of WTP.................................................................. 201 8.2.2 Attitudes as predictors of WTP............................................................................................. 204 8.2.3 Evaluation of hypotheses 9-12 and discussion ..................................................................... 209

8.3 EVALUATING THE ATTITUDE-BEHAVIOUR MODELS........................................................................... 211 8.3.1 Confirmatory factor analysis of the measurement model ..................................................... 212 8.3.2 Specification of the structural equation models ................................................................... 216 8.3.3 Model identification and estimation ..................................................................................... 220 8.3.4 Testing goodness of fit and model re-specification............................................................... 220 8.3.5 Evaluation of hypotheses 13-15 and discussion ................................................................... 225

8.4 SUMMARY ........................................................................................................................................ 228 CHAPTER 9 CONCLUSIONS AND IMPLICATIONS........................................................................230 9.1 CONCLUSIONS ABOUT THE RESEARCH QUESTIONS AND HYPOTHESES ............................................... 230

9.1.1 Information effects on attitudes and WTP ............................................................................ 230 9.1.2 Attitudes as predictors of WTP............................................................................................. 231 9.1.3 Inter-attitudinal relationships on WTP................................................................................. 232

9.2 IMPLICATIONS FOR RESEARCH IN CONTINGENT VALUATION ............................................................. 233 9.2.1 Implications for research into formation of construct values............................................... 233 9.2.2 Implications for interpretation of contingent valuation responses ....................................... 234 9.2.3 Implications for research into validity of contingent valuation methods ............................. 235

9.3 IMPLICATIONS FOR POLICY AND PRACTICE ....................................................................................... 236 9.3.1 Implications for researchers applying the contingent valuation method.............................. 236

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9.3.2 Implications for policy makers ............................................................................................. 237 9.4 LIMITATIONS .................................................................................................................................... 239

9.4.1 Limitations relating to characteristics of the proposed good ............................................... 239 9.4.2 Limitations relating to the experimental design ................................................................... 239 9.4.3 Limitations relating to the sample ........................................................................................ 240

9.5 IMPLICATIONS FOR FURTHER RESEARCH........................................................................................... 240 9.5.1 Research on information effects ........................................................................................... 241 9.5.2 Research which combines measures of attitudes with contingent valuation ........................ 241

APPENDICES ...........................................................................................................................................270

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List of Tables Table 2-1 Choice sets in a park valuation exercise.....................................................................................36 Table 2-2 An overview of non-market valuation methods .........................................................................44 Table 3-1 Summary of elicitation methods in contingent valuation studies...............................................61 Table 3-2 Strategic bidding in contingent valuation responses ..................................................................66 Table 3-3 Text information treatments for wetland preservation (Bergstrom et al., 1990) ........................71 Table 3-4 Text information treatments for recreational anglers (Boyle, 1989) ..........................................72 Table 3-5 Summary of identification criteria for protest bids ....................................................................83 Table 6-1 Measurement items for general attitudes toward the environment (V1) ..................................127 Table 6-2 Measurement items for environmental behaviour / habit (V2) ................................................129 Table 6-3 Measurement items for attitude toward beach erosion (V3) and protection (V4) ....................130 Table 6-4 Measurement items for expected utility of outcomes (V5) ......................................................131 Table 6-5 Measurement items for subjective norms (V6) ........................................................................132 Table 6-6 Measurement items for perceived behavioural control (V7)....................................................133 Table 6-7 Measurement items for attitude toward paying for beach protection (V8)...............................133 Table 6-8 Text information treatments used in the pilot study.................................................................135 Table 6-9 Results of the image pre-test ....................................................................................................139 Table 6-10 Experimental design for the pilot experiment ........................................................................146 Table 6-11 Response rate for the pilot survey ..........................................................................................147 Table 6-12 Item Loadings, Communalities (h2), Eigenvalues and Percentage of Variance for Principal

Components Analysis with Varimax Rotation .................................................................................151 Table 6-13 Effects of previous knowledge on attitudes, past behaviour and WTP ..................................154 Table 6-14 Effects of beach use on attitudes, past behaviour and WTP...................................................154 Table 6-15 Effects of Information Treatment on Behaviours, Attitudes and WTP (ANOVA) ................159 Table 7-1 Experimental design for the main contingent valuation experiment ........................................164 Table 7-2 Response rates for the main contingent valuation experiment .................................................166 Table 7-3 A socio-economic profile of respondents.................................................................................167 Table 7-4 Comparison of sample and population socio-economic variables ...........................................168 Table 7-5 Beach visitation per month.......................................................................................................169 Table 7-6 Previous knowledge of beach erosion and protection ..............................................................169 Table 7-7 Previous environmental behaviour...........................................................................................171 Table 7-8 Item Loadings, Communalities (h2), Eigenvalues and Percentage of Variance for Principal

Components Analysis with Varimax Rotation .................................................................................173 Table 7-9 Cross-tables of rights to have protected beaches vs WTP........................................................178 Table 7-10 Cross-table of attitude towards payment (composite scale V8) vs WTP ...............................179 Table 7-11 A summary of four different approaches to identifying protest zeros....................................184 Table 7-12 The effects of protest definition and case deletion on WTP values .......................................186 Table 7-13 Comparing rational and irrational positive WTP values ........................................................187 Table 8-1 Effects of beach use on behaviours, attitudes and WTP...........................................................194 Table 8-2 Effects of previous knowledge on behaviours, attitudes and WTP..........................................194 Table 8-3 Effects of Information Treatment on Behaviours, Attitudes and WTP....................................196 Table 8-4 Variables in the socio-economic regression model ..................................................................201 Table 8-5 The socio-economic regression model .....................................................................................203 Table 8-6 Variables in the behavioural regression models.......................................................................205 Table 8-7 The behavioural regression models compared (Logit, DV=WTP)...........................................206 Table 8-8 The behavioural regression models compared (Tobit, DV = log of WTP+1) ..........................208 Table 8-9 Standardised path coefficients and R2 values for the confirmatory factor model.....................214 Table 8-10 Goodness-of-Fit measures for the alternative models ............................................................226 Table 9-1 Potential attitude combinations toward beach erosion and protection .....................................235

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List of Figures

Figure 1-1 The proposed augmented attitude-behaviour model ...................................................................8 Figure 1-2 An overview of the research design..........................................................................................13 Figure 2-1 The Total Economic Value (TEV) model.................................................................................21 Figure 3-1 Bjornstad and Kahn's contingent valuation research model......................................................46 Figure 3-2 A conceptual model of research in non-market valuation.........................................................47 Figure 4-1 The Three-Component Model of Attitude Structure.................................................................89 Figure 4-2 The Theories of Reasoned Action and Planned Behaviour.......................................................93 Figure 4-3 A Composite Attitude-Behaviour Model..................................................................................94 Figure 4-4 Mediating Effects of Independent Variables on Attitude Change ..........................................102 Figure 4-5 The Elaboration-Likelihood model of persuasion...................................................................104 Figure 6-1 Summary of the photographic information treatments ...........................................................136 Figure 6-2 Structure of the pilot survey instrument..................................................................................146 Figure 6-3 Significant information effects between treatments in the pilot experiment...........................160 Figure 7-1 Structure of the final survey instrument..................................................................................165 Figure 7-2 A WTP Decision Tree in an Attitude-Behaviour model context ............................................181 Figure 7-3 The WTP decision tree in the current study............................................................................183 Figure 7-4 Venn diagram of the cases identified by alternative definitions of protest .............................185 Figure 8-1 Significant information effects in the contingent valuation experiment .................................195 Figure 8-2 Hypothesised Model 1 showing LISREL notation .................................................................217 Figure 8-3 Hypothesised Model 2 showing LISREL notation .................................................................218 Figure 8-4 Hypothesised Model 3 showing LISREL notation .................................................................219 Figure 8-5 Model 1 - Structural model showing standardised structural equation coefficients................222 Figure 8-6 Model 2 - Structural model showing standardised structural equation coefficients................223 Figure 8-7 Model 3 - Structural model showing standardised structural equation coefficients................224

List of Maps

Map 1 Southeast Queensland and the Gold Coast Local Government Area …………………….. 111 Map 2 The Northern Gold Coast Beach Protection Strategy…………………………………….. 124

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List of Appendices Appendix A Summary of focus group questions and comments

Appendix B Photographs used in the pre-test experiment

Appendix C Pilot Instrument (one example treatment)

Appendix D Photographic treatments used in final survey instrument

Appendix E Text treatments used in final survey instrument

Appendix F Final Survey Instrument (one example treatment)

Appendix G Covering letters and postcards used in the data collection

Appendix H Statistical Appendix: Summary of Logit and Tobit regression and SEM

Digital Appendices File Structure Pilot Survey Instrument - Treatment 1 - Treatment 2 - Treatment 3 - Treatment 4 - Treatment 5 - Treatment 6 - Treatment 7 Final Survey Instrument - Treatment 1 - Treatment 2 - Treatment 3 - Treatment 4 - Treatment 5 - Treatment 6 - Treatment 7 Results

SHAZAM output - Logit Model 1 Model 2 Model 3

SHAZAM output – Tobit Model 1 Model 2 Model 3

LISREL output – Structural Equation Modelling Model 1 Model 2 Model 3

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ACKNOWLEDGEMENTS

Many people have contributed to the completion of this thesis. It investigates

willingness-to-pay for a non-market good and many people, willing or otherwise, have

paid for its completion.

First, I am grateful to my parents, Keith and Jenny, who set me off on my educational

journey at considerable expense to themselves and other members of the family. They

made trade-off decisions that ultimately led to this.

To Dr John Tisdell, my long-suffering principal supervisor, thank you for your patience,

eye for detail and for your kind words when I needed them most. Thanks also to Dr

Trevor Hine for your comments on later drafts of the thesis. I am also grateful for the

support that I have received from all my colleagues at Griffith University and from the

Griffith Business School.

To Liz, thank you for your love and support.

To my son Guy, I hope that one day I can make you as proud of me as I am of you.

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Statement of Originality

This work has not previously been submitted for a degree or diploma in any University. To the

best of my knowledge and belief, the dissertation contains no material previously published or

written by another person except where due reference is made in the dissertation itself.

………………………………………………….

Mike Raybould

1

CHAPTER 1

INTRODUCTION

The research described in this thesis investigated the relationship between the

information provided in a contingent valuation instrument and respondent’s attitudes

toward relevant targets and willingness-to-pay (WTP) for a proposed non-market good.

Specifically the research investigated the effects of providing different types of

photographic and text information on respondent’s attitudes and stated WTP for a

proposed beach protection program. It used attitude-behaviour models, based on the

theory of planned behaviour (Ajzen, 1985), to interpret the relationship between general

environmental attitudes, target specific attitudes and WTP for the proposed good. As

such, the research drew upon theoretical concepts and research strands from

environmental economics and cognitive psychology to explain human economic

behaviour in the context of a contingent valuation experiment.

Chapter 1 of this thesis provides an introduction and rationale for the research. It

starts by introducing the contingent valuation method and the issue of beach protection,

which was the public good used as the vehicle for the contingent valuation experiment.

It then describes the aims and the rationale for the study and introduces the attitude-

behaviour model that served as the conceptual framework for the research. Next, it

describes the methods and research design for the project and the broad aims of the

research are translated into three central research questions. Chapter 1 concludes with

an overview of the structure of this thesis.

1.1 The contingent valuation method

Contingent valuation is a survey-based method of estimating economic values

for goods and services not bought and sold in the marketplace. It has been used

extensively in assessment of values for environmental resources for which it is often the

only feasible method of assessing non-use values. A contingent valuation survey

describes a hypothetical market for a good, such as clean air resulting from pollution

controls (Brookshire, Thayer, Schulze and d’Arge, 1982) or preservation of natural

recreation areas (Benson and Willis, 1993), and attempts to determine how much

respondents would be willing to pay for the good if it were traded. Sample surveys are

used to infer total community values for the good in question and to guide formulation

of public policy regarding appropriate levels of supply of these goods.

2

The contingent valuation method was developed in the 1960’s and was initially

applied to studies of outdoor recreation values (Davis, 1963; Knetsch and Davis, 1966).

Since then it has been used to estimate consumer surplus for projects in areas as diverse

as public health care programs (Ryan and Ratcliffe, 2000), transport safety (Jones-Lee,

Loomes and Philips, 1995), support for the arts (Thompson, 1998) and species

protection (Samples, Dixon and Gowen, 1986). Over the last decade, government

agencies in North America and Europe have increasingly used contingent valuation

studies to guide policy formation relating to supply of public goods (Willis, 1995). The

method has gained approval, for use within strict guidelines, from government agencies

such as the National Oceanic and Atmospheric Administration (NOAA) in the USA

(Arrow, Solow, Leamer, Portney, Radner and Schuman, 1993) and the Ministry of

Agriculture, Fisheries and Food (MAFF) in the United Kingdom (Whitmarsh, Jaffry and

Northen, 1999). Contingent valuation studies have also featured prominently in

environmental damage assessment cases before courts in the USA (Schwartz and Kopp,

1997) and UK (Willis, 1995).

Despite the qualified official approval and the many empirical studies that have

used contingent valuation methods over a period of more than thirty years, this direct

approach to soliciting consumer surplus is still seen as controversial by a significant

number of researchers. Critics of the method have argued that it produces results that

are inconsistent across studies and inconsistent with economic theory (Kahneman and

Knetsch, 1992; Fisher, 1996; Diamond and Hausman, 1994; Diamond, Hausman,

Leonard and Denning, 1993; Schkade and Payne, 1994). However, according to Ajzen,

Brown and Rosenthal (1996, p. 43) “…most critics have upheld the fundamental utility

of the method, and have urged a more careful approach to the elicitation of WTP

estimates”. As with any other survey technique, contingent valuation studies are subject

to sample and non-sample biases and a significant focus of the research has been on

finding ways of improving instrument reliability and validity (Brown, Champ, Bishop

and McCollum, 1996; Lunander, 1998; Welsh and Poe, 1998).

More fundamental research questions relate to how respondents to contingent

valuation surveys form construct values for non-market goods and how these are

translated into economic values. Information about the good to be valued and the

context in which it will be offered should affect respondent’s attitudes and stated WTP

but subtle changes in presentation or detail can change perceptions significantly. This

point was emphasised by Hanemann (1994, p.27) when he wrote; “One cannot avoid the

3

fact that surveys, like all communication, are sensitive to nuance and context and are

bound by the constraints of human cognition”. Marketers have long recognised the

power of visual images in attitude formation toward a consumer good (Loomis and du

Vair, 1993). It was with this in mind that the NOAA expert panel recommended that all

photographs to be used in contingent valuation studies should be pre-tested because they

“may have great emotional impact” (Willis, 1995, p. 121). Despite this warning, visual

images in the form of photographs, artist impressions and videos are regularly used in

contingent valuation studies with no reported attempts to pre-test them. While there has

been some research into how text descriptions of the good affect stated WTP for it

(Ajzen et al., 1996; Bateman and Langford, 1997; Boyle, 1989), there have been only a

small number of studies that have tested the effects of visual images (Carson, Mitchell,

Hanemann, Kopp, Presser and Ruud, 1992; Samples et al., 1986). Even fewer studies

have attempted to investigate the relationship between visual images, attitude change

and stated WTP for the non-market good (Navrud, 1997).

1.2 Non market recreation goods and beach protection

Consumers constantly reveal their preferences for marketed goods and services

through auction or ‘take-it-or-leave-it’ mechanisms. Consumer theory indicates that the

alternative chosen must be at least as desirable, from the individual’s perspective, as the

alternatives foregone. So, when a consumer chooses to spend part of their income on

tickets to the theatre they implicitly value the activity at least as highly as the alternative

uses that the money could have been put to, for example dinner in a restaurant.

However, a range of goods such as clean air and natural attractions are not supplied

through the normal market process because problems in defining property rights for

these goods would inevitably lead to market failure. Individuals in society benefit from

these public goods but do not reveal an economic value for them through a market

mechanism. Ocean beaches are a good example of such a public good.

Southeast Queensland is recognised internationally for its ocean beaches that

draw tourists and residents to the region to benefit from this amenity. But, the climatic

and environmental processes that have built this region’s beaches over many thousands

of years also provide a constant threat to their short-term existence (Smith and Jackson,

1990). Many of the beaches in Southeast Queensland suffer from periodic erosion

resulting from storms and high seas. On the Gold Coast and Sunshine Coast, local

authorities have attempted to protect the beach facility through beach protection projects

4

that involve pumping sand onto the beach and into the wave zone from offshore

deposits, stabilising dunes systems, and providing erosion control points (Tomlinson,

2001). These projects protect beaches from severe storm damage and enhance the

recreation value of the amenity. However, the cost of such projects is considerable and,

in Queensland, this is borne predominantly by local ratepayers with small contributions

from state government (Boak, Jackson, McGrath and Brosnan, 2001; Tomlinson et al.,

2003).

Local authorities frequently seek to justify capital expenditure on beach

protection projects in terms of the ratio of benefits gained to costs (Raybould and

Mules, 1999). Users are not charged to access beaches in Australia, though user fees are

common in other parts of the world. Since non-market benefits represent a significant

proportion of the total benefits derived from this type of project, an alternative to the

market system needs to be used to estimate project benefits and contingent valuation has

been used on occasions to estimate the benefits of beach protection projects (for

examples see; Judge, Osborne and Smith, 1995; Lindsay, Halstead, Tupper and Vaske,

1992; Silberman, Gerowski and Williams, 1992; and Whitmarsh, Jaffry and Northen,

1999).

1.3 The research aims and rationale

This research aimed to make a contribution to the current body of knowledge in

two related areas. First, it sought to extend understanding of how information affects

responses to a contingent valuation question by investigating the affects of both text and

photographic information provided in the contingent valuation scenario on attitudes

toward relevant targets and WTP for an environmental good. Second, it aimed to

contribute to understanding of the relationship between attitudes and WTP, as an

expression of behavioural intention, in a contingent valuation experiment by developing

and testing a suitably specified attitude-behaviour model. A contingent valuation survey

of Gold Coast resident’s WTP for beach protection measures was used as the vehicle to

investigate this methodological issue.

The literature relevant to attitude-behaviour models, and specifically their

application in contingent valuation experiments, and to information effects in contingent

valuation experiments is reviewed in Chapters 3 and 4. The key features of this

literature and the relevant gaps that this research attempted to address are summarised

next.

5

1.3.1 Information effects in contingent valuation

The contingent market scenario aims to assist respondents to explore their utility

function for the good in question but the information supplied in this phase of the

survey instrument, and the communication devices used, have the potential to influence

respondent’s attitudes toward targets and their construct values in undesirable ways

(Ajzen, et al., 1996). The challenge for contingent valuation researchers is to achieve a

balance between providing enough information to assist and motivate respondents to

report their true value and providing information that triggers undesirable emotive

responses. Chapter 3 reviews research that has investigated sensitivity of reported WTP

values to information relating to the amenity definition, market context and budget

reminders, and the use of communication devices including text, diagrams, photographs

and video.

Loomis and du Vair (1993) recognised that alternative communication devices

can affect the receiver’s interpretation and perception of the content, and the NOAA

panel expressed concern about the potential effects of using visual images in contingent

valuation surveys (Arrow et al., 1993). Despite the NOAA panel’s call for a strict

testing regime for visual communication aids in contingent valuation instruments, few

tests have been reported.

Several studies have investigated respondent sensitivity to text descriptions

containing varying amounts of information about the amenity (Ajzen et al., 1996;

Bergstrom, Stoll and Randal, 1990; Boyle, 1989) but there have been no reported

comparable tests that have investigated the effects on WTP of supplying different levels

of amenity information using photographs. Navrud (1997) compared the effects on

WTP of photographs and video to communicate amenity information but did not include

control treatments or test for sensitivity to varying levels of photographic or video

information. There have been no reported attempts to compare the relative sensitivity of

respondents WTP to text and visual information and very few studies have investigated

the affects of information on the attitudes that act as antecedents to stated WTP (Ajzen

et al., 1996).

In previously reported studies of information effects in contingent valuation, the

dependent variable has been WTP (for example Blomquist and Whitehead, 1998;

Loomis and du Vair, 1993). In a substantial number of these studies respondent’s WTP

has been insensitive to information treatment (for example Bergstrom, Stoll and Randal,

6

1989; Bohara, McKee, Berrens, Jenkins-Smith, Silva and Brookshire, 1998; Boyle,

1989; Brown, Barro, Manfredo and Peterson, 1995; Loomis, Gonzales-Caban and

Gregory, 1994; Protiere, Donaldson, Luchini, Moatti and Shackley, 2004; Samples et

al., 1986). Attitude-behaviour models such as theory of planned behaviour (Ajzen,

1985) suggest that WTP may be moderated by factors such as perceived behavioural

control and social norms. Thus, information treatments may affect attitudes that act as

precursors to WTP but the affect may be moderated by other variables causing apparent

insensitivity of WTP to information treatments.

The current research aimed to explore the affects of information provision on

relevant attitudes and the moderating affect of perceived behavioural control and social

norms on WTP. It did this by using an experimental split sample design comprising

three text treatments and three photographic treatments combined with measures of

attitude toward relevant target objects and behaviours.

1.3.2 Attitude-behaviour models in contingent valuation experiments

In Chapter 4 the role of attitudes as predictors of behaviour is discussed and a

number of models that have attempted to represent the attitude-behaviour relationship

are reviewed. Ajzen’s (1985) theory of planned behaviour is one of the most widely

used and empirically tested models of this type but still appears to have three conceptual

limitations as a tool in explaining behavioural intention in a contingent valuation study

of environmental values. First, there is no acknowledgement in the theory of planned

behaviour of the role of previous related behaviour or habit as proposed by Triandis

(1980). Second, the concepts of expected utility of outcomes and attitude toward the

target are combined in one composite measure described as attitude toward the

behaviour and do not allow for detailed exploration of the roles of each of these

individual components. This is problematic in a contingent valuation experiment where

the behaviour of interest is payment for a proposed change and it is quite conceivable

that respondents may appreciate that they will gain substantial utility from the change

but still be opposed to paying for it for a variety of reasons. Third, the theory of planned

behaviour focuses on the more proximal determinants of behaviour and ignores more

distal influences, such as the general environmental values held by an individual, which

may be relevant in exploring valuation of an environmental good.

Eagly and Chaiken (1993) attempted to overcome some of the deficiencies of the

theory of planned behaviour in their proposed composite attitude-behaviour model. The

7

composite model introduced the concepts of habit and self-identity outcomes and

separated Ajzen’s (1985) single dimension of attitude toward the behaviour into three

separate dimensions: attitude toward the target, expected utility of outcomes and attitude

toward the behaviour. One of the major contributions of this model was to differentiate

between attitudes toward targets and attitudes toward behaviours. However, Eagly and

Chaiken’s (1993) model was offered as a conceptual model only and was not based on

the results of empirical testing. In addition, the dimension of perceived behavioural

control, which had been defined as an independent dimension in the theory of planned

behaviour (Ajzen, 1985), was combined with other aspects of attitudes toward the

behaviour to form a composite dimension labelled attitude toward the behaviour. Thus,

there was some loss of definition in the attitude domains that were most proximal to the

behavioural intention.

1.4 Research methods and design

Given the aims and rationale for the research described above, this section starts

by describing the broad research methods adopted in the current study. It introduces an

attitude-behaviour model that provided the conceptual framework for the investigation

of the affects of information on attitudes and WTP, and of the relationship between

attitudes and WTP. The central research questions are discussed and an overview of the

research design is provided.

1.4.1 Research methods

The research methods used in this study were predominantly quantitative.

Survey instruments were developed to test abstract theories in the context of an

environmental valuation exercise. The core of the study is a contingent valuation

experiment in which individuals were asked to indicate how much income they would

be willing to give up in return for a specific environmental good. Measurement scales

were developed to investigate the relationship between attitudes toward relevant targets

and WTP in the contingent valuation experiment. In addition, a split-sample

experimental design was employed to test the affects of various types of information on

attitudes toward relevant targets and WTP for the good. Data were collected using a

random sample survey of households and inferential statistical techniques, such as

ANOVA, regression and structural equation modelling, were used to test previously

conceived hypotheses.

8

1.4.2 The conceptual attitude-behaviour framework for the research

The research aimed to test three alternative attitude-behaviour models in the

context of a contingent valuation experiment where the dependent variable, behavioural

intention, is revealed in respondents’ stated WTP for an environmental good. The three

models were Ajzen’s (1985) theory of planned behaviour, a model based on Eagly and

Chaiken’s (1993) composite model, both described in Chapter 4, and a proposed

augmented model based on the other two and presented in Figure 1-1.

The proposed augmented model identifies attitudes toward beach erosion (V3)

and beach protection (V4) as separate domains. In many contingent valuation studies

participants are asked to place a value on a proposed solution to an environmental

problem such as impaired river flows (Loomis, Kent, Strange, Fausch and Covich,

2000) or coastal flooding (Penning-Rowsell et al., 1992). This implies two attitude

targets: the problem and the solution. Literature on attitude specificity and compatibility

(Eagly and Chaiken, 1993; Fazio, 1989) suggests that attitudes toward these two targets

may form discrete domains.

Figure 1-1 The proposed augmented attitude-behaviour model

V1General

environmental values

V2Habit

V3Attitude towardbeach erosion

V4Attitude toward

beach protection

V5Expected utility of

outcomes

V6Subjective norms

V7Perceived

Behavioural Control

V8Attitude toward payingfor beach protection

WTPBehavioural

Intention

9

The augmented model shown in Figure 1-1 also proposes a role for general

environmental values as an antecedent to previous environmentally related behaviours

and the more specific attitudes. Vining and Ebreo (1992) showed that past research into

this relationship has been inconclusive, and Scott and Willets (1994) found only a weak

to moderate relationship between general attitudes toward the environment and

environmentally related behaviours. The inclusion of this variable in the current

research allowed the relationship between general environmental attitudes and specific

target related attitudes and behavioural intention to be investigated.

Eagly and Chaiken’s (1993) model proposed that attitude toward the behaviour

was the immediate precursor to behavioural intention. In a contingent valuation

experiment it is not possible to observe the actual behaviour of paying, thus the

dependent variable in the proposed model is the reported WTP which is analogous to a

behavioural intention in theory of planned behaviour (Ajzen, 1985). The immediate

precursor to behavioural intention is the respondent’s attitude toward the action of

paying (V8) and this may reflect a range of protest attitudes toward being asked to pay

for the proposed change.

1.4.3 The research questions and hypotheses

The current study had two broad aims. The first was to investigate the affects of

information provided in the contingent valuation scenario on attitudes and WTP. The

second was to investigate the relationship between attitudes toward relevant targets and

WTP. These broad aims led to development of three central questions and 15 related

hypotheses that the research aimed to address.

The first research question related to the affects of information on attitudes and WTP

and was as follows:

Question 1: What affect does information provided in the contingent valuation scenario

in the form of visual images and text descriptions have on attitudes toward and

willingness-to-pay for a proposed environmental good?

The first four hypotheses deal with the a priori expected affects of visual information

provided in the contingent valuation scenario in the form of photographs on attitudes

and WTP. The attitude target objects and behaviours were identified from the proposed

attitude-behaviour model in Figure 1-1. They included attitudes toward beach erosion

(the problem), attitudes toward beach protection (the proposed solution), attitude toward

10

payment for beach protection (the target behaviour) and behavioural intention in the

form of stated WTP. Thus, the hypotheses are described as follows:

H1: Respondents provided with images depicting severe levels of beach erosion

followed by images of well nourished beaches will indicate greater concern toward

beach erosion (the problem) than subjects provided with images depicting mild levels of

erosion followed by images of well nourished beaches and subjects provided with no

images at all (a control group).


followed by images of well nourished beaches will indicate more positive attitudes

toward beach protection (the proposed solution) than subjects provided with images

depicting mild levels of erosion followed by images of well nourished beaches and

subjects provided with no images at all (a control group).



toward paying for beach protection (the target behaviour) than subjects provided with

images depicting mild levels of erosion followed by images of well nourished beaches

and subjects provided with no images at all (a control group).


followed by images of well nourished beaches will indicate higher willingness-to-pay

values than subjects provided with images depicting mild levels of erosion followed by

images of well nourished beaches and subjects provided with no images at all (a control

group).

The next four hypotheses deal with the a priori expected affects of information

provided in the contingent valuation scenario in the form of text description on attitudes

and WTP. These hypotheses effectively repeat the propositions made in the first four

hypotheses and are described as follows:

H5: Respondents exposed to text descriptions containing explicit information about the

benefits of the proposed beach protection program will indicate greater concern toward

beach erosion (the problem) than subjects exposed to descriptions that lack explicit

benefit information and subjects provided with no text description at all (a control

group).


benefits of the proposed beach protection program will indicate more positive attitudes

11

toward beach protection (the proposed solution) than subjects exposed to descriptions

that lack explicit benefit information and subjects provided with no text description at

all (a control group).



toward paying for the beach protection program (the target behaviour) than subjects

exposed to descriptions that lack explicit benefit information and subjects provided with

no text description at all (a control group).


benefits of the proposed beach protection program will indicate higher WTP values for

the beach protection program (behavioural intention) than subjects exposed to

descriptions that lack explicit benefit information and subjects provided with no text

description at all (a control group).

The second aim of the current research was to investigate the relationship between

attitudes and WTP in the context of a contingent valuation experiment. The nature of

these relationships was addressed in two stages. The second major research question

considered the direct relationship between attitudes and WTP. The third question

addressed the more complex issues of relationships between attitudes and the

effectiveness of attitude-behaviour models in explaining respondents stated WTP.

The second question was as follows:

Question 2: Are attitudes toward the environment generally, relevant targets (beach

erosion and protection) and the related behaviour (paying for beach protection)

effective predictors of stated willingness to pay in a contingent valuation experiment?

The relevant predictor variables were identified from the proposed model illustrated in

Figure 1-1 and four hypotheses were identified relating to this question which deal with

the a priori expected relationships between the predictor variables and the dependent

variable WTP. The hypotheses were as follows:

H9: Strong pro-environment attitudes will be associated with high levels of willingness-

to-pay for beach protection programs.

H10: High levels of concern related to beach erosion will be associated with high levels

of willingness-to-pay for beach protection programs.

12

H11: More positive attitudes toward beach protection programs will be associated with

high levels of willingness-to-pay for beach protection programs.

H12: More positive attitudes toward the behaviour of paying for beach protection

programs will be associated with high levels of willingness-to-pay for beach protection

programs.

The third and final research question considered the complex inter-attitudinal structures

and the efficacy of attitude-behaviour models in explaining the WTP responses

provided by participants in a contingent valuation study:

Question 3: Can behavioural intention in the form of stated willingness to pay for a

proposed good be adequately explained by expectancy-value forms of attitude-

behaviour models?

Two alternative expectancy-value attitude-behaviour models were identified in the

literature and, based on these and the literature reviewed in Chapter 4, a third model was

proposed to incorporate variables relevant to the contingent valuation decision. The

proposed model is illustrated in Figure 1-1 and this provided the conceptual model upon

which the research instruments were developed. Thus, three hypotheses were related to

the final question:

H13: Attitude data collected in the contingent valuation experiment will provide an

acceptable fit to a model based on Ajzen’s (1985) theory of planned behaviour.


acceptable fit to a model based on Eagly and Chaiken’s (1993) composite attitude-

behaviour model.


acceptable fit to the proposed augmented model presented in Figure 1-1.

The research design used to investigate these questions and test the hypotheses is

outlined below.

1.4.3 An overview of the research design

The research design for this study is summarised in Figure 1-2. The final

contingent valuation survey included instruments designed to test information effects

and to measure attitudes toward beach protection and various related target objects and

behaviours. These two major components were developed independently and brought

13

together in the pilot survey for testing and this process is reflected in the design

summary.

To commence the research a literature review was conducted to ground the

research objectives theoretically. The literature provided a strong foundation on which

to construct instruments to measure attitudes to relevant environmental targets and

behaviours, and for development of the information treatments that formed part of the

contingent valuation scenario.

The draft survey instrument was tested in a pilot experiment designed to test the

attitude measurement scales and the information treatments, and to establish rough

parameters of WTP values for the proposed environmental good. An experimental split

sample design, using a convenience sample of undergraduate students, was used to test

seven different information treatments. Analysis of the data from this experiment was

used to refine the survey instrument in preparation for the major study.

Figure 1-2 An overview of the research design

Data for the major study were collected via a contingent valuation survey of

randomly selected households in the region of interest. This was a mail survey and used

a modified Total Design Method (Dillman, 1999). Attitude measures and WTP for an

environmental good were collected from all participants. An experimental split sample

Literature review

Development of contingent valuation instrument

Development of information treatments

Development of attitude measurement scales

Pilot experiment

Main contingent valuation experiment

14

design was used to test the effects of seven different information treatments on attitudes

toward relevant targets and WTP for the good.

1.5 Summary and chapter structure of the thesis

This chapter has introduced the aims of the research described in this thesis and

has provided a rationale for the research. It also introduced a proposed expectancy-value

attitude-behaviour model which provided the conceptual model for the research design

and analysis. The broad aims of the research were translated into three research

questions and 15 hypotheses were formulated. Finally, it provided an overview of the

research design that was used to test the hypotheses.

This research draws upon theoretical concepts from environmental economics

and cognitive psychology and the structure of the literature review provided in Chapters

2, 3 and 4 reflects this. In Chapter 2 questions about why and how humans attach

economic values to environmental resources are addressed. This chapter shows how

individual preferences are translated into consumption choices that place an economic

value on environmental resources and it introduces the valuation techniques used to

estimate economic values for non-market goods. The introduction to the contingent

valuation method provided in Chapter 2 is extended in Chapter 3 with a detailed review

of current research directions. These include research activities intended to investigate

the reliability and validity of the technique, and investigations relating to formation of

economic values. This part of the review focuses on the effects of information presented

in the contingent valuation scenario on attitude formation and stated WTP. Chapter 4

completes the literature review by introducing the major concepts and models from

cognitive psychology that relate to this research. The role of attitudes in decision

making in general, and in the context of a contingent valuation experiment specifically,

are discussed. The links between attitudes, behavioural intention and actual behaviour

are explored and the mechanism of attitude change and the role of information in this

process are discussed.

Chapter 5 forms a bridge between the literature review and the results chapters

that follow. It describes the geographic, political and legislative context in which the

contingent valuation experiment was conducted. It shows that the contingent market

approach was valid in relation to the good being valued, the population surveyed, and

the current political and legislative environment of beach management on the Gold

Coast.

15

Chapters 6, 7 and 8 describe the detailed design of the research and the results of

the pilot experiment and then of the main contingent valuation experiment. Chapter 6

describes the detailed design adopted for the research, the instrument development, and

the pilot experiment conducted to test the instrument. It describes how the attitude

measurement scales and information treatments used in the survey instrument were

developed and tested. Finally, it describes the results and analysis of the pilot

experiment and the refinements made to the survey instrument prior to the main study.

Chapter 7 describes the design and sample statistics of the main contingent valuation

experiment. The reliability of the attitude measurement scales is evaluated and these

measures are then used to explore the issue of protest responses. Chapter 8 is dedicated

to addressing the three major research questions and the related hypotheses that this

research set out to address. Analysis of variance, regression analysis and structural

equation modelling were used to test the hypotheses and the results of these tests are

discussed.

Chapter 9 is the final chapter in this thesis and describes the implications,

limitations and conclusions of the research. It identifies the implications of this research

for public authorities and researchers using the contingent valuation technique, and

identifies future research opportunities.

16

CHAPTER 2

DEFINING AND MEASURING ENVIRONMENTAL VALUE

This chapter provides an introduction to the economic principles that underlie

the techniques used to value non-market goods, like ocean beaches, and a framework

for assessment of non-market values. It starts by examining the links between the

environment and the economy, and the categories of services that the environment

supplies. Market failure is common for environmental goods and this chapter reviews

the main causes of this failure. Concepts of value are fundamental to the current study

and this chapter examines the meaning of economic value and the role of consumer

choice in value formation. This chapter concludes with a brief review of revealed and

stated preference methods used to estimate economic values for non-market goods and

provides a rationale for the use of contingent valuation method in this investigation of

values for a beach protection program.

2.1 Economics and the environment

Environmental economics is an applied field of the economics discipline that is

concerned with the interactions between the environment and the economy (Kolstad,

2000). Hanley, Shogren and White (1997, p.1) described the economy as “…the

population of economic agents, the institutions they form and the interlinkages between

agents and institutions” and the environment as the “biosphere, the atmosphere, the

geosphere and all flora and fauna”. In this context, Pearce and Turner (1990) identified

three economic functions of the environment: resource supply, waste assimilation, and

direct supply of utility. The environment supplies energy and raw material inputs for the

production sector of the economy. The environment is also the ultimate repository of

wastes produced as a result of industrial production and domestic consumption. Some of

this waste is assimilated by the environment and converted back into harmless or

ecologically useful products. Finally, the environment contributes to human welfare by

directly supplying utility in the form of aesthetic and spiritual experiences. Pearce and

Turner (1990, p.41) used the First Law of Thermodynamics, which states that matter

and energy cannot be created or destroyed, to illustrate the fact that, on a global level,

the flows between the economy and the environment are part of a closed ‘materials

balance model’.

17

The functional concept of the environment was expanded by de Groot (1994)

who identified 37 individual functions that could be attributed to natural ecosystems.

These functions were classified as regulatory functions, carrier functions, production

functions, and information functions. Regulatory functions include those services

supplied by the natural environment that regulate essential ecological processes that, in

turn, contribute to the maintenance of a healthy environment and provide clean air,

water and soil. Carrier functions depend on the ability of the natural environment to

provide a suitable substrate for habitation, cultivation and recreation activities.

Production functions describe the natural environment’s ability to supply food, raw

materials and energy as inputs for industry and domestic use. The natural environment

supplies information functions through opportunities for cognitive development,

spiritual enrichment and aesthetic experiences.

The functional approach to environmental goods was also adopted by Bingham

et al. (1995) who identified seven categories of services provided by environmental

resources: (a) naturalistic and outdoor recreation services, for example, bird watching or

observation of other wildlife, walking or trekking through natural environments; (b)

ecological services such as nutrient cycling; (c) existence services, for example,

knowing that a species or ecosystem exists even though you never intend using it; (d)

scientific services that describe the potential of the resource to increase human

knowledge about the world; (e) aesthetic services describe the utility derived by humans

from seeing beautiful scenery or particular species of flora and fauna; (f) utilitarian

goods or services including fish production, agricultural products and medicines; and,

(g) cultural, symbolic, moral and historic services which, in Australia, might be

symbolised by the Australian indigenous population’s attachment to important cultural

and historic sites or the symbolic significance of unique fauna.

The services that are supplied by the environment are part of the economy

because they have positive economic value; that is, if they were traded individuals

would be willing to forego other goods and services in order to get them. However,

since markets for environmental services are either non-existent or imperfect, in so

much as they fail to reflect the true cost of production, market price for them is, at best,

a poor indicator of their economic value. Thus, establishing policies that determine the

optimum level of supply for environmental goods (and ‘bads’ such as pollution) has

been problematic. Recognition of this problem in the 1950’s and 1960’s was one of the

major influences behind the development of the field of environmental economics.

18

Kolstad (2000) suggested that one of the major contributions of the field has been in

developing non-market valuation methods that have enabled more informed policy

debate.

2.2 Environmental goods and market failure

Efficient markets ensure that goods are used in the way most valued by society.

A market system is said to be efficient if it results in an allocation of resources such that

no individual in the economy can be made better off without making somebody else

worse off; this is the Pareto optimality (Hanley et al., 1997). The first theorem of

welfare economics states that, in a competitive economy, the market equilibrium is

Pareto optimal (Kolstad, 2000). However, achievement of a perfectly competitive

market requires that four conditions be satisfied: (a) a complete set of markets with well

defined property rights must exist that allow for free exchange of all assets; (b)

consumers and producers behave competitively by maximising benefits and minimising

costs; (c) market prices are known by all producers and consumers, and; (d) transaction

costs are zero (Hanley et al., 1997). Clearly, many markets do not satisfy these pre-

requisites and failure is common in markets for many types of goods and especially in

those for environmental goods.

Environmental goods exhibit a number of characteristics that make it very

difficult to establish and maintain efficient markets for them. The characteristics of

excludability and rivalry are particularly important. Excludability describes the extent to

which it is physically possible and economically viable to exclude those who do not pay

for the good from deriving benefits from it (Tisdell, 1991). Rivalry describes the extent

to which one person’s enjoyment of a good diminishes another person’s ability to enjoy

the same good (Tisdell, 1991). Pure private goods, for example a chocolate bar, are both

excludable and rival and efficient markets can be formed. But, for environmental goods

such as clean air it is impossible to exclude any part of the population from consuming

the good and one individual’s enjoyment of the good does not reduce the benefits

accruing to others in the community. Goods for which consumption is both non-

excludable and non-rival are described as pure public goods (Hanley et al., 1997). For

other environmental goods, such as access to national parks or ocean beaches, it may be

physically possible to exclude those who choose not to pay for access but not

economically viable or politically acceptable. To some extent these goods are also non-

rival because large numbers of people can use the good at the same time. However, it

19

has also been shown that high levels of use, resulting in asset degradation and over

congestion, reduce the benefits derived by users of wilderness areas (Cicchetti and

Smith, 1976) and beaches (McConnell, 1977).

According to Gustafsson (1998) environmental goods fail most of the critical

pre-requisites for establishment of efficient markets. Firstly, markets for environmental

goods are incomplete because institutions, in the form of well-defined property rights to

natural resources, are absent or difficult to establish because they are difficult to

enforce. The costs and rewards associated with trading environmental goods, such as

clean air and water, across international boundaries are difficult to administer.

Information about environmental goods is generally poor, expensive to acquire and not

easily understood by consumers. These problems would result in very high transaction

costs for environmental goods even if the markets were established. Thus, absence of a

market means that the true value of an environmental asset is not recognised and the

resulting overuse leads to what Hardin (1968) described as ‘The Tragedy of the

Commons’.

2.3 The meaning of economic value

This thesis examines methodological issues related to attaching economic values

to public ocean beaches using the contingent valuation method. It is important to clearly

define the term value in this context since value means different things to different

discipline groups and individuals. The concept of economic value is an anthropocentric

concept in which value only exists because humans are there to assign it and objects

have no intrinsic value by virtue of their existence. Economists are not the only ones to

whom the term value is important. Bingham et al. (1995) identified philosophical

concepts of value encompassing utilitarian, aesthetic and moral assessments, and social-

psychology concepts of value that attempt to describe the reasons, feelings and beliefs

people express in regard to the environment. Economists may prefer to express

environmental values in monetary terms but, according to Bingham et al. (1995, p.75),

to the average citizen value means “…the general importance or desirability of

something”. However, these alternative interpretations of value are not incorporated in

economic values (Green, 1992).

Green (1992) described both economic values and costs as relative, subjective

and sacrificial. Economic values are subjective in the sense that individuals assign them

and different individuals may have different preferences for a good, and therefore assign

20

different values to it. Economic values are relative measures of utility based on

consumer’s preference or choice of one alternative over another. Thus, economic values

are ordinal in that they indicate a preference order for alternative consumption choices

but are not directly measurable on an interval scale. Finally, economic values can be

described as sacrificial because they measure the rate at which individuals would give

up one consumption alternative for another. Monetary values are not the same as

economic values but, in a reasonably competitive market, prices give economists a

measure for comparing values assigned to objects (Green, 1992).

2.3.1 The Total Economic Value (TEV) model

Environmental resources such as beaches are capable of supplying a number of

different services, some more tangible than others (de Groot, 1994; Bingham et al.,

1995). The value people assign to a public good depends on the individual’s preferences

and the nature and extent of the benefits that they perceive will be accrued to them. A

comprehensive assessment of the economic value of an environmental good must

consider all of the benefits derived by a community from a change in provision of the

good. This concept is embodied in the notion of Total Economic Value (TEV) described

by Pearce and Turner (1990). The TEV model, presented in Figure 2.1, provides a

classification of values that may be assigned to an environmental good. On the first

level it distinguishes between use and non-use values. At the second level the

framework takes into account the individuals motives for valuing an asset (Bateman and

Langford, 1997). It is this classification on the basis of motivation that makes it

different from the functional classifications described by de Groot (1994) and Bingham

et al. (1995).

21

Figure 2-1 The Total Economic Value (TEV) model

Total Economic Value

Use Value

Non-use Value

Direct Use Value

e.g. walking,

hunting or fishing

Indirect Use Value

e.g. appreciation of aesthetics

via stored images

Option Value

e.g. value for future personal

recreation

Bequest Value

e.g. future generations recreation

value

Vicarious Use Value

e.g. appreciation

of other’s enjoyment

of the resource

Existence Value

e.g. preserving

wildlife habitat

Source: Adapted from Bateman and Langford (1997) and Turner (1999).

Use values are attributed to individuals who use an environmental asset for

recreation activities or who indicate a desire to have the option to use it for recreation in

the future (Pearce and Turner, 1990). Bateman and Langford (1997) add an indirect use

category to this framework to describe those who do not physically visit the site

themselves but derive benefits by looking at photographs or film of an environmental

asset. Together the direct, indirect and option use values comprise the instrumental total

use value of an environmental asset. In some cases researchers are able to value direct

use benefits by observing consumers response to market prices for things like hunting or

fishing permits that give access to the asset. More often, for environmental resources

such as beaches or public space, there is no market indicator of value and researchers

must use alternative non-market valuation methods to value the benefits users derive

from the asset. These methods are reviewed in the final section of this chapter.

Non-use values are attributed to individuals who do not currently use, or intend

in the future to use, an environmental asset but still indicate that they would feel a loss if

the asset were damaged or lost completely. According to Turner (1999), non-use values

do not have well defined boundaries since the existence value components may be

defined in different ways depending on ones motivation. Some observers may see non-

use values in terms of anthropocentric instrumental values only while others may accept

22

that environmental resources have intrinsic values of their own right. Turner (1999)

identified three motives that contribute to anthropocentric instrumental values; intra-

generational altruistic motives, inter-generational altruistic motives, and motives

associated with stewardship.

The intra-generational altruistic motivation involves the desire to conserve

resources so that others may benefit and the associated vicarious use values obtained

from watching or just knowing that others are benefiting from the resource, and the

moral satisfaction of knowing that one has contributed to a cause that is considered

worthwhile. These values are captured in the vicarious use value component of the TEV

model. The inter-generational altruistic motivation involves the desire to conserve

resources for future generation’s use and is captured in the bequest value component of

the TEV model. Finally, the stewardship motivation is based on the belief that humans

have a responsibility to conserve resources for all species and values associated with

this motive are captured in the existence value component of the TEV model. Pearce

and Turner (1990, p. 130) describe these existence values as fuzzy values not related to

human use that “…reflect people’s preferences and include concern for, sympathy with,

and respect for the rights or welfare of non-human beings”.

Non-use values seem to overlap both instrumental and intrinsic value categories

but as one moves from instrumental to intrinsic motivation, the neo-classical economic

concepts of self interest through utility or welfare maximisation become less effective in

explaining stated preferences (Turner, 1999). Since non-use benefits of a resource do

not involve direct contact with the resource or indirect consumption of derived products,

their values cannot be estimated by observation of human behaviour and economists

have resorted to stated preference methods via direct questioning to estimate values. In

the current study it was anticipated that non-use values would comprise a significant

proportion of the total value assigned to the beach.

2.4 Consumer choice and formation of economic values

Economic value is a theoretical construct and monetary measures of economic

value are inferred from observing the choices consumers make. Thus, choice is an

essential part of the process of assigning value to an object. Individuals and households

make decisions about consumption of non-market goods as well as marketed services

and commodities. The behaviour resulting from the decision making process is

observable through recreation choice, selection of accommodation and choice of

23

employment. For these reasons, the principles underlying consumer choice are equally

relevant to any discussion of consumption of non-market goods as they are to discussion

of consumption of market goods.

2.4.1 Utility and consumer preferences

The concept of utility is central to our understanding of consumer choice.

Consumers are said to derive satisfaction or utility from consumption of tangible goods,

services and activities, and also from abstract concepts such as beauty, truth and justice

(Lesser, Dodds and Zerbe, 1997). Utility is usually regarded as an ordinal measure used

to rank preferences rather than as an interval indicator of the strength of the preference

(Deaton and Muellbauer, 1980).

An individual’s total utility is a function of the goods and services they

consume. Lipsey et al. (1985, p.177) showed that this utility function can be written in

the general form as:

U = ∑u (X1, X2, …, XN) (2.1)

where X1, X2, …, XN represents the mixture of goods and services available to the

individual, ∑u represents the sum of the utilities derived from each of the individual

goods and services and U represents total utility. Whenever consumers choose one

activity or one product over another they provide an indication of the relative utilities

that they expect to gain from the options available. Rational consumers are expected to

consume the combination of goods and services that provide them with maximum

utility. The relative levels of utility derived from various baskets of goods may be

represented by indifference curves that show all combinations of commodities that yield

the same level of utility.

2.4.2 Constraints and consumer choice

Indifference maps describe a person’s preferences for combinations of goods but

they cannot explain all of their behaviour. In the real world consumers are not free to

consume as much of a product as they would like because their behaviour is subject to

constraints, such as available income or time, that limit the choices they can make.

The circumstances in which choices are made are also critical and this is

particularly important in the context of a contingent valuation survey. According to

24

Kopp and Pease (1997), for consumers to make a rational informed choice they need to

know: (a) the consequences or nature of the trade-off’s involved in the choice; (b) the

specified rights to be gained, and; (c) details of the mechanism through which the

individual must exercise the choice. Thus, a consumer’s actual behaviour is determined

by a combination of their preferences, the price of the goods, constraints imposed by

budget, time and social norms, and the perceived conditions of the trade-off offered to

them (Hardwick et al., 1999). Chapter 6 describes how the contingent market scenario

used in the current study was designed to communicate these conditions in relation to

the proposed beach protection program.

2.4.3 Consumer choice and demand for non-market goods

The choice that a consumer is faced with when deciding whether to consume a

non-market environmental good is different in a number of respects to that faced when

selecting private goods traded through markets. For private goods the consumer’s

choice is that of a trade-off between the desired object and the other goods foregone in

order to purchase it. Private property rights are likely to provide secure ownership with

an ability to exclude others from using the good and rights to transfer ownership

(Hanley et al., 1997). Finally, the mechanism of choice for traded private goods is a

financial transaction through the market system. For a public good the circumstances of

the trade-off may be much more complex. For a proposed clean air program the trade-

off’s may include increased taxes resulting in a reduced standard of living or reduced

employment opportunity for the individual being asked to make the choice or their

family members. The mechanism of choice may be a political one involving voting for a

particular party or candidate and this may also imply certain trade-off’s in terms of

foregone policies proposed by other candidates. Finally, the trade-off decision does not

result in any property rights over the public good.

Since there are no markets to signal demand for most environmental goods,

policy makers must make decisions about supply based on imperfect information. The

aggregate quantity of an environmental good or bad supplied can be calculated, for

example in terms of area of national park supplied or mass of sulphur oxides discharged

as pollutants, but the individual consumers expenditure or valuation of the good cannot

be directly measured and aggregated to estimate community values. Kolstad and Braden

(1991) point out that for other types of public goods, like national defence or public

education, the cost of supply is known and the consumers and policy maker’s choice is

25

to weigh the benefits against the known costs. Kolstad and Braden (1991, p. 18) claim

that measuring demand for this type of public good is at least assisted by the “…well-

defined relationship between expenditures and quantity provided”. But, the true cost of

supplying many environmental goods is not known because the opportunity costs of

alternative uses for the amenity are not easily estimated. Thus, for environmental goods,

policy makers are left to weigh largely unknown costs against largely unknown benefits.

2.5 Measuring environmental values

Kula (1994) claimed that since the early 1970’s there has been a growing

interest among both the public and policy makers in environmental and natural resource

issues. A recent analysis of the major environmental economics journals showed that,

during the preceding five years, nearly fifty per cent of the applied economics papers

were concerned with valuing individual preferences for environmental goods (Oates,

1994, cited in Bateman and Langford, 1997). A significant focus of this debate has been

the range of benefits that environmental resources generate and the ability of various

techniques to accurately capture all of the values that individuals assign to those

benefits (Bishop, Champ, Brown and McCollum, 1997). Four techniques have emerged

as useful tools in valuing environmental goods: Travel Cost Methods (TCM); Hedonic

Pricing Methods (HPM); Contingent Valuation Methods (CVM), and; Random Utility

Modelling (RUM) using conjoint analysis. This chapter will describe the basic

principles of each of these techniques, their application, strengths and limitations.

Finally a rationale for use of the contingent valuation method in valuing beach

protection programs will be provided.

The four methods described in this chapter can be categorised as either revealed

preference measures or stated preference measures (Adamowicz, Boxall, Louviere,

Swait and Williams, 1999). Revealed preference measures use observations of actual

choices made by consumers to develop economic models of choice that can be applied

to both market and non-market goods. Consumer behaviour in relation to marketed

environmental goods can be observed through their acceptance or willingness to pay

entry fees for amenities such as national parks. Where there are no market prices for the

good it may be possible to observe users consumption of complementary goods such as

travel services involved in accessing the resource or prices paid for real estate which

allow the property owner to capture some of the benefits of the resource. Revealed

preference techniques have some important limitations that mean they are unsuitable for

26

many applications. First, they are only applicable to ex-post analysis and do not enable a

researcher to investigate how a community would value a future change in resource

provision. And second, since non-use values are not reflected in observable behaviour,

revealed preference methods can only be used to estimate use values and researchers

have to resort to stated preference methods to estimate non-use values (Flatley and

Bennett, 1996).

Stated preference methods essentially ask consumers what they would be willing

to pay for a change in supply of an environmental resource. Respondents state that,

given a set of circumstances described in a hypothetical market scenario, they would

behave in a particular way but the individuals are not actually required to make any

behavioural changes. Contingent valuation methods have been used widely to estimate

non-use values and a number of researchers have also experimented with the use of

random utility models and conjoint analysis techniques for this purpose (Adamowicz et

al., 1999).

2.5.1 Travel cost methods

Travel cost methods are the most widely used methods for estimating recreation

use values of sites (Smith, Desvousges and Fisher, 1986). This section will provide an

overview of the principles and the major methodological issues of the travel cost

method.

Origin and principles of the travel cost method

The travel cost approach to estimating consumer surplus for recreation sites was first

proposed by Hotelling in 1947, but it was Clawson and Knetsch (1966) who

operationalised the concept in studies of the economics of outdoor recreation. The

method relies on the observation that site visitation decreases as distance and associated

travel costs increase, revealing a downward sloping demand curve for the site (Kula,

1994). Researchers use surveys to collect trip expenditure and frequency data and place

of origin from site visitors.

The early travel cost models were zonal models in which demand for a site was

expressed in terms of visits per unit of the population for a given zone of origin (Garrod

and Willis, 1999). Bennett (1996, p. 304) showed that, in its simplest form, the zonal

travel cost model can be written as follows:

27

Vij / Ni = ƒ(Pij) (2.2)

where Vij is the number of trips from zone i to site j; Ni is the population of zone i; and

Pij is the travel cost incurred by visitors from zone i to site j.

The basic model can be extended to incorporate other variables that have been

shown to influence recreation site choice. These have included measures of travel time

to the site, household income and other socio-economic characteristics of the household

and, on occasions, measures of recreation quality at the site in question and variables

relating to substitute sites (Cameron, 1992). However, in a zonal model the values in the

model are represented by average values for the zone of origin and this results in

reduced predictive ability of the model (Bennett, 1996). Furthermore, zonal models are

unsuitable where origin populations are unevenly distributed, or where geographic or

transport features, or the shape of the recreation site itself, impose different travel costs

on visitors within the same distance zone (Garrod and Willis, 1999).

Many of the problems of the zonal model can be overcome by using individual

data in the model to estimate a demand curve from which aggregate consumer surplus

can be calculated. Willis (1990, p. 16) provided an example of the extended individual

travel cost model as follows:

Vij = ƒ(Pij, Tij, Yi, Sj, Ak) (2.3)

where Vij is the visit rate to site j for individual i; Pij is travel cost for individual i to site

j; Tij is travel time for individual i to site j; Yi is income of individual i; Si represents a

vector of socioeconomic characteristics for individual i, and; Ak represents some

measure of the attributes of substitute sites k.

A number of important assumptions underlie the travel cost method. Brown,

Sorhus, Chou-Yang and Richards (1983) suggested that the most critical of these is that

site visitors will react to a user fee in the same way that they will react to an increased

cost of travelling to the site. The validity of this assumption was questioned, though not

tested, by Cheshire and Stabler (1976) on the grounds that a fixed user fee declines as a

proportion of travel cost with increasing distance from the site. Bennett (1996)

identified three other assumptions on which travel cost methods are based: first, that all

visitors derive the same benefit from the site and this is equal to the travel cost of the

most distant user; second, that the consumer surplus of the most distant user is equal to

28

zero; and finally, that people in each region take the same quantity of visits at the same

monetary cost.

Design issues and applications of travel cost models

Despite the fact that travel cost models have been used on many occasions, a

number of theoretical issues relating to valuing travel time and handling multiple

destination visits have yet to be resolved (Bockstael, McConnell and Strand, 1991).

Another lingering concern relates to bias caused by not including information on

substitute sites in the model. Frequently, information on price and quality of substitute

sites is not included in the travel cost model because it is not available or because the

variables are too highly correlated to be used as separate variables. Kling (1989) found

that omission of prices for substitute goods resulted in biased estimates if: (a) the price

of the omitted good and the included good are correlated; or, (b) if there are changes in

price or quality at multiple sites even if the omitted price and included price are not

correlated. The degree of this bias is dependent on the scale of the cross price elasticity

between the two goods. Kling (1989) also found two conditions under which omission

of prices for substitute goods did not introduce bias: (a) for a single site price or quality

change when the omitted price is not correlated with the included own price; and, (b) in

a multiple site price or quality change when the omitted price is perfectly correlated

with the included own price. The implication of these finding are that researchers using

travel cost methods to value proposed or actual changes to a recreation site need to

consider the effects of price or quality changes at the study site on demand for substitute

sites to avoid bias in the welfare estimates.

Consumer surplus in the travel cost model is estimated by regression but the

choice of the functional form of the model is critical. The most popular forms are linear,

quadratic, semi-log and double log. Using visits to a recreational forest in the UK,

Hanley (1989, cited in Hanley and Spash, 1993, p. 91) demonstrated that each of these

forms of the model gave quite different consumers’ surplus, ranging from 0.32 pounds

per visit for the quadratic form to 15.13 pounds for the double log form. Hanley and

Spash (1993) recommended two approaches to model selection. One approach is to

transform the dependent variable by dividing each observation by the mean of the series

then regressing the resulting series against the independent variables and selecting the

form of the model with the lowest residual sum of squares. Another alternative is to use

only log transformations of the dependent variable using semi-log and double log

29

models and comparing the R-squared values of each. Finally, Willis and Garrod (1991)

suggested that functional forms should be compared based on their ability to predict

visitor numbers across a range of sites and the most accurate form selected.

One of the strengths of the travel cost method is that it is a revealed preference

method based on observed market behaviour and, on this basis, Smith et al. (1986)

claimed that most economists prefer it to stated preference methods like contingent

valuation. However, this feature of the travel cost method is also a limitation as the

method is only able to measure those benefit categories associated with use values for a

resource. Thus, while travel cost method could be used to measure use values associated

with the proposed beach protection scheme in this study it would not capture any of the

non-use values that may be associated with the scheme.

2.5.2 Hedonic pricing methods

The hedonic pricing method is a revealed preference method that uses surrogate

markets such as real estate markets to derive values for non-market goods. The method

is based on the characteristics theory of value proposed by Lancaster (1966), and

developed later by Rosen (1974), which states that any unit of a particular commodity

class can be described by a vector of its characteristics. Thus, if the commodity class is

housing, and the unit is a particular house, the price for which that house can be sold is a

function of the characteristics that describe the house. The first application of this

approach to valuing environmental goods was by Ridker (1967) who used residential

property values to try to estimate the value of changes in environmental variables such

as air pollution.

The word hedonic means pleasure. Property owners or renters value

environmental amenities such as views and access to parkland because they derive

pleasure from them. Likewise, they value the absence of characteristics such as traffic

congestion and crime because they derive negative pleasure from these (Lesser et al.,

1997). Although there are no markets for views of the ocean or noise pollution caused

by aircraft movements over a suburb, the effects of these public goods can be seen in

the price of real estate affected by them. Thus, Ridker (1967, p. 25) reasoned that; “…if

the land market were to work perfectly, the price of a plot of land would equal the sum

of the present discounted streams of benefits and costs derivable from it”.

30

Design issues in hedonic pricing.

The variables to be included in the hedonic pricing model and its functional

form have been identified as critical factors (Pearce and Turner, 1990; Rasmussen and

Zuehlke, 1990). The residential property value function (PV) would be expected to

depend on a vector of house characteristics (H), such as number of rooms, age, and

construction; an accessibility factor (A), related to the property’s location in relation to

schools, shops and transport; neighbourhood characteristics (N) that might include

ethnic composition and crime rates in the area, and; environmental characteristics (E),

such as air quality, noise levels, and proximity to a park or beach. The affect of

individual variables on property price can be separated statistically by estimating a

hedonic price function using multiple regression analysis. Kula (1994) represented the

basic form of the model as follows:

PV = ƒ (H, A, N, E) (2.4)

Identifying the key independent variables in a hedonic pricing model may be

difficult because so many variables affect real estate or labour markets and only limited

amounts of data may be available. Exclusion of any relevant variable will bias the

estimates of value obtained for the variables that are included (Hanley and Spash,

1993). Pearce and Turner (1990) identified three main approaches to data collection for

a property value model; data can be collected from a small number of similar properties

over a number of years (time-series data) or from a large number of different properties

at a point in time (cross-section data) or a combination of both (pooled data).

The functional form adopted for the model is also important, with alternative

forms giving significantly different results from the same data set (Rasmussen and

Zuehlke, 1990). Milon, Gressel and Mulkey (1984) recommended simpler functional

forms such as linear, semi-log, double log and Box-Cox linear. In fact, Hanley and

Spash (1993) argued that the relationship between property value and the revealed WTP

for the environmental good, for example air quality, is unlikely to be a simple linear

relationship. A linear relationship would imply constant marginal utility of the good but

marginal utility would be expected to fall as air quality improves and, therefore, the

marginal WTP for the change in supply of the good would also fall. This still leaves the

problem of choosing between non-linear forms of the model. Cropper, Deck and

McConnell (1988) noted that different functional forms perform better on different

31

selection criteria and that functional forms that predicted changes in house prices in

response to an environmental change efficiently did not necessarily provide sensible

interpretations of all the parameters for which estimates were required. Hill and Tisdell

(1999) explored the issue of functional form in some detail and concluded that the

choice is primarily a matter of obtaining the best fit and is frequently not known a

priori.

A number of key assumptions underlie the hedonic pricing method. The most

crucial of these are that: (a) the market for property is in competitive equilibrium; (b)

purchasers have adequate information about relevant environmental factors and prices

of property in the market, and; (c) purchasers are free to exercise choice and buy

anywhere in the market (Freeman, 1995). In practice distortions commonly occur in real

estate markets. Information available to buyers, particularly in relation to complex

issues such as air pollution or proposed developments in an area, may be poor and the

costs of selling and buying property, such as agent’s fees, state taxes and removal

expenses, act to delay achievement of market equilibrium. In many cities in the world

public ownership of property, class, racial or religious boundaries effectively limit an

individual’s freedom to choose where they live in the urban area.

Palmquist (1991) identified a number of data issues that have proved

problematic in hedonic pricing. The first of these relates to how environmental

attributes are specified in the hedonic model and the way in which residents interpret

environmental attribute data. Environmental attributes are commonly expressed as a

single objective measure in the hedonic model. Air quality, for example, can be

expressed objectively in terms of total suspended particles per cubic meter or parts per

million of nitrus oxide (Brookshire et al., 1982). However, Palmquist (1991) suggested

that residents do not think of environmental attributes in purely objective terms and may

focus their subjective assessment on one particular dimension of air quality such as

visibility. There is some support for this from risk evaluation studies that show that

people tend to ignore objective probabilities of being exposed to earthquake and flood

damage and resort to subjective assessments that consistently result in them over

valuing very low probability events and consistently under valuing very high probability

events (Kask and Maani, 1992). Hedonic models that specify the environmental

attribute in terms of only one or two measures may fail to capture the resident’s

subjective assessment of the attribute. Lang and Jones (1979) investigated this issue by

comparing hedonic models using objective measures of neighbourhood amenities with

32

resident’s subjective assessment of amenity provision and found a slight improvement

using the subjective measures approach. Palmquist (1991) described a number of studies

that have used several measures of environmental attribute quality and concluded that

aggregate measures had proved useful in many of these.

Hanley and Spash (1993) raised the issue of how expected changes in

environmental characteristics may lead to model misspecification. Since the hedonic

price model is based on ex post data it assumes current levels of environmental quality

determine property prices but the model does not usually take into account future

expected changes. For example, where residents expect construction of a by-pass to

reduce environmental noise levels caused by traffic, property values may be inflated and

the implicit price of the traffic noise variable estimated through the model would be a

poor indicator of the costs of the current traffic noise levels. Hanley and Spash (1993)

suggested that if residents have expectations about changes in specific independent

variables then the expectations should be included in the hedonic model.

Another significant problem in hedonic pricing methods relates to data

requirements. Applications of hedonic pricing methods require large amounts of real

estate data or labour market data to be compiled from various sources. According to

Kula (1994), centralised data on real estate values and labour are available in developed

economies but not in most developing economies and this has posed a significant

limitation to researchers wishing to use hedonic pricing methods in less developed areas

of the world.

Finally, Palmquist (1991) raised concerns related to multi-collinearity of

independent variables in hedonic models. Frequently, variables in the model are

correlated, for example one would expect that variables such as carbon monoxide levels

and traffic noise would be strongly correlated for properties lining a busy road. In the

studies of the effects of beach width on property values by Pompe and Rinehart (1995

and 1999), described later in this chapter, width of the beach at high tide would be

expected to correlate strongly with beach width at low tide. According to Hanley and

Spash (1993), inclusion of both strongly correlated variables can cause high standard

errors in coefficient estimates, wrong signs on variables, instability in parameter

estimates and, if serious, can reduce the confidence attached to model predictions.

33

Applications of hedonic pricing methods

Hedonic pricing methods have been applied to problems involving air and water

pollution (Randall and Kriesel, 1990), road and aircraft noise (Pommerehne, 1988);

social infrastructure (Cummings, Schulze, Gerking and Brookshire, 1986); climate

(Freeman, 1984); and earthquake risk (Brookshire, Thayer, Tschirhart and Schulze,

1985). A small number of studies have attempted to apply hedonic methods to valuing

open space, including public beaches, where the primary values are associated with

recreation and aesthetics. This introduction to hedonic pricing methods will conclude by

reviewing some of those studies that are most relevant to the study of beach values.

Problems of erosion of public beaches have led to a number of cost-benefit

investigations of protection measures for this amenity, particularly in the United States,

and hedonic pricing methods have been used to value the services provided by the

beach. Edwards and Gable (1991) used data from 343 properties sold in Rhode Island,

USA, between 1979 and 1981 to estimate values local residents attached to beach

recreation. Fifteen independent variables relating to the property itself and its location in

relation to significant amenities and alternative recreation sites were collected for each

property. A Box-Cox linear model revealed effects that were significant and in the

expected direction for variables that described the property’s location and

environmental amenities such as distance from the nearest beach, distance to the local

university campus, and view of the ocean or inland waterway. Based on average

household incomes in the town, Edwards and Gable (1991, p.44) estimated an average

annual household consumer surplus of $US 1,643 for all forms of beach recreation. Of

course, loss or damage of a single beach due to erosion or pollution does not imply

complete loss of the beach recreation opportunity for coastal residents. In the case of the

community investigated by Edwards and Gable (1991, p. 50) there were a number of

substitute beach sites available but the lost annual consumer surplus implied by

travelling to the nearest alternative beach was approximately $US 37 per household.

Pompe and Reinhart (1995) investigated the effects of beach width on 385

residential property values and 169 vacant building sites along a sixty-mile stretch of

coastline in South Carolina, USA. In this case the Box-Cox transformation process was

used to examine the double log functional form of the ordinary least squares model.

This model revealed effects that were significant and carried the expected sign for the

variable ‘width of the beach at high tide’ indicating that wider beaches were associated

34

with increased property values. Pompe and Reinhart (1995, p. 151) showed that

increasing the beach width at high tide from 79 to 80 feet resulted in an increase in the

market value of oceanfront homes of approximately $US558. This benefit diminished as

beach width increased, for example an increase from 119 to 120 feet resulted in

increased property value of only $US371. Also the value of increased beach width

decreased with distance of the property from the beach with properties half a mile from

the beach only increasing in value by $US254 when the beach increased from 79 to 80

feet. This study showed that beach quality, as defined by beach width at high tide, is

also a significant determinant of the value local residents attach to the amenity.

Pompe and Rinehart (1999) also used hedonic pricing methods to estimate

consumer surplus from beach nourishment operations on 3.5 miles of private beach

belonging to an exclusive residential community in South Carolina. Selling prices for

238 developed properties and 297 vacant building lots over six years were regressed

against a number of independent variables including width of beach at high tide. Over

the period of the study the width of the private beach varied considerably as a result of

storm damage and beach nourishment work and this allowed the researchers to

investigate the effects of beach width on property values. Box-Cox transformations and

the double log functional form of the model indicated significant effects for most

variables in the model and the expected signs. Width of the beach at high tide was

significant and positively related to property price in both models. Pompe and Rinehart

(1999) speculated that these increased values reflect purchaser’s expectations of

increased flood protection and recreation services provided by the wider beaches.

Hedonic pricing methods were unsuited to the current study primarily because

current property prices on the Gold Coast would not reflect the values associated with

the proposed future beach protection program.

2.5.3 Random Utility Models

Random utility models have been used widely in marketing, psychology and

transport research for over twenty years (Green and Srinivasan, 1990) but until recently

the method had rarely been applied to non-market valuation problems (Morrison and

Bennett, 1999). The specific technique used most frequently is conjoint analysis, which

is actually a family of stated preference techniques that includes contingent ranking,

contingent rating and choice modelling (Morrison and Bennett, 1999). These methods

35

allow researchers to investigate consumer’s response to multi-attribute goods through a

hypothetical market similar to that established in a contingent valuation scenario.

Origins and principles of Random Utility Models

Respondents in a random utility experiment are presented with a number of

alternative commodity descriptions or program outcomes each with different attributes.

They are then asked to rank or rate the desirability of the different attribute packages.

This process may require respondents to rate the desirability of a large number of

attribute packages on an integer scale, say from one to ten, as described by Roe, Boyle

and Teisl (1996). Adamowicz, Louviere and Williams (1994) introduced a modified

form in which respondents were presented with only three attribute packages at a time,

the current situation and two possible alternatives, and were asked to select their

preferred option from this choice set. This part of the experiment is repeated a number

of times with different attribute packages, but on each occasion the respondent is

required to select only their preferred attribute package from the choice set. Research in

marketing has shown that respondents can reliably evaluate large numbers of choice sets

but providing more than six alternative attribute packages within a choice set reduces

reliability (Batsell and Louviere, 1991).

To apply conjoint analysis methods to an environmental valuation problem,

respondents would be provided with a preliminary description of the site or the problem,

and then with a number of descriptions of the possible outcomes. Attributes might

include changes to water quality, number of organisms preserved or lost, number of

visitors, and the costs that the respondent would be expected to pay for the proposed

change. Adamowicz et al. (1994) and Opaluch, Swallow, Weaver, Wessel and Wichelns

(1993) provided examples of choice sets that have been used in experiments designed to

investigate values in recreational fishing and selection of a land fill site respectively.

Table 2-1 provides an example of the type of choice set that might be presented to

respondents in an experiment designed to investigate values associated with national

park attributes. Respondents would be presented with a scenario describing the choice

conditions, including time and budget constraints, and asked to identify which site they

would prefer to visit under the conditions described.

36

Table 2-1 Choice sets in a park valuation exercise

Attribute Site A Site B Site C

Distance from home. 120 km 40 km 80 km

Walks - number 15 + 6 10

Signage Limited signage Good Signage Good Signage

Access fee $2 $6 $5

Services on site None Café & shop. Café & shop.

Camping facilities Yes No Yes

Random utility theory is used to examine the choice process. Adamowicz (1995,

p. 150) showed that each of the alternative attribute packages (i) in the choice set has an

associated utility level (U) comprising an objective component, or the indirectly

observed utility (V) and an error component (ε) representing elements affecting the

choice that are not observed by the researcher, such that:

Ui = Vi + εi (2.5)

Selection of one alternative (Ui) rather than another implies that the utility of that option

is greater than all the other options (Uj) in the choice set. Since utility is an ordinal

concept and the error terms are random, according to Adamowicz (1995, p.150), one

can only analyse the probability that one package (i) is chosen over all others (j) in the

choice set (C), that is:

Pr{i chosen} = Pr{ Vi + εi > Vj + εj ; ∀ j ∈ C} (2.6)

The parameters of the utility function described in equation 2.6 are estimated

using the multinomial logit model (Morrison and Bennett, 1999). In a choice modelling

experiment the levels of the attributes in each attribute package, including changes in

prices, are varied systematically during repeated measures. Because of this, the

multinomial model is able to estimate values associated with the individual attributes of

change as well as the value of the overall change (Adamowicz, 1995).

37

Design and application of random utility models in environmental valuation

Although choice modelling is a relatively recent innovation in environmental

economics, there have been a small number of published empirical applications. Lareau

and Rae (1989) used contingent ranking to estimate WTP values for reductions in diesel

odours from motor vehicles. Viscusi, Megat and Huber (1991) used the paired

comparison approach to investigate household’s willingness to make trade-offs between

air quality and risks of respiratory disease. Opaluch et al. (1993) used eleven paired

comparisons to investigate resident’s preferences and WTP for alternative locations of a

proposed land fill site. Adamowicz et al. (1994) presented respondents with sixteen

choice sets of three alternative packages, each with nine attributes, to determine

preferences for attributes related to water based recreation. This data was then combined

with revealed preference data from a travel-cost model based on information from the

same respondents to give a more complete picture of recreation preferences and WTP

for site attributes. In an investigation of the environmental values of wetland sites in

New South Wales, Australia, Morrison and Bennett (1999) also presented respondents

with three alternative outcomes comprising five attributes, including a project cost

described in terms of increased household rates. Using a variety of tests for content

validity they found ‘some support’ for the hypothesis that the benefit estimates derived

using choice modelling were valid in this case (Morrison and Bennett, 1999, p. 15).

A variation of the ranking or direct choice approach to choice modelling

involves respondents rating the desirability of various attribute packages. Roe et al.

(1996) asked anglers to rate proposed salmon stocking programs on a one to ten scale.

Each respondent was presented with four scenarios, each of which comprised six

attributes including trip cost. This enabled the researchers to estimate utility values for

each attribute level and WTP for each of the proposed programs. In addition, the use of

the ratings approach allowed the researchers to compare the results of four different

model specifications (linear tobit, non-linear tobit, ad hoc ranking logit, and linear

binary logit) by converting the interval ratings scale into ordinal ratings difference, rank,

and binary choice scales.

Summary of Random Utility Models

As a direct survey technique, random utility models suffer from many of the

same problems that beset the contingent valuation method but Morrison and Bennett

(1999) and Adamowicz et al. (1999) described a number of advantages that random

38

utility models have over contingent valuation. First, they provide researchers with an

opportunity to estimate values for a range of attributes associated with an environmental

good that cannot be determined from revealed preference data due to problems with

collinearity. Second, they have advantages for policy makers because they provide

richer information on the values of attributes in multi-attribute packages and, in many

cases, this is more realistic than considering discrete changes in environmental quality.

Third, they allow for better framing of the valuation question because the researcher is

able to include substitute goods within the valuation exercise. Forth, they may avoid

problems associated with embedding as scope tests can be built into the choice sets

presented to respondents. Fifth, there is reduced incentive for strategic behaviour

because the cost of the proposed project is only one of the attributes in the package

being considered. Sixth, protest responses may also be reduced as the significance of

each of the individual attributes, including price, is reduced when considered as part of a

package. Finally, they may be less susceptible to what Desvousges, Hudson and Ruby

(1996) described as ‘yea-saying’ as respondents are not presented with a ‘take-it-or-

leave it’ question of the type used in the dichotomous choice elicitation format used in

contingent valuation questions.

Adamowicz et al. (1994) showed that it is possible to combine conjoint analysis

results with travel cost data to give a better understanding of consumer preferences and

improve the quality of the results of the revealed preference model. Thus, there appear

to be some strong arguments for the use of conjoint analysis methods in valuation of

non-market goods but, as Morrison and Bennett (1999) pointed out, the benefits need to

be subjected to a series of stringent empirical tests before they can be claimed with

confidence.

2.5.4 The contingent valuation method

The contingent valuation method is a stated preference method in which

respondents are asked directly to value a non-market good contingent on the creation of

a market or other means of payment for it (Bishop, Champ and Mullarkey, 1995). Since

it is a stated preference method it is capable of measuring both use and non-use values

and, as such, it is able to overcome some of the limitations of the revealed preference

approaches. This method has been used widely in environmental valuation exercises

since the 1970’s (Hanemann, 1995) and has received qualified support from major

government agencies in the United States such as the National Oceanic and

39

Atmospheric Administration (Arrow et al., 1993). However, it has also attracted

criticism from economists such as Diamond and Hausman (1994) who claimed that

hypothetical questions yield hypothetical answers that bear little resemblance to true

construct value. This introduction to the contingent valuation method will describe the

early development and basic principles of the technique and will discuss the major

methodological issues.

Origin and principles of contingent valuation methods

The origins of contingent valuation method can be traced to Ciriacy-Wantrup’s

suggestion, in a paper on the economics of soil conservation in 1947, that direct

interviews could be used to measure the values associated with natural resources

(Hanemann, 1995). However, according to Portney (1994), the first applications of the

method were not until the early 1960’s when Davis (1963) used direct interviews to

estimate outdoor recreation values. The small number of studies conducted during the

1970’s were largely characterised by efforts to refine and standardise the methodology

(Randall, Ives and Eastman, 1974; Brookshire, Ives and Schulze, 1976; Bishop and

Heberlein, 1979). However, the 1980’s and early 1990’s witnessed what Boyle and

Bergstrom (1999, p.183) described as an ‘explosion’ of studies in the United States as

growing interest in environmental issues, and later in measuring values for

environmental damage claims, stimulated applications and research into the technique.

Contingent valuation methods have been applied to a broad range of non-market

valuation problems. They have been used to explore recreation values of public parks

and nature reserves (Lee and Han, 2002; Bateman and Langford, 1997), outdoor

recreation values (Cammeron and James, 1987; Willis and Garrod, 1999), pollution

control (Carson et al., 1992; Jorgensen and Syme, 2000), public health programs

(Gyldmark and Morrison, 2001; Shackley and Dixon, 2000), and, in studies that are

particularly relevant to the current research, contingent valuation has been used to

investigate values of beach nourishment (Judge et al., 1995) and beach maintenance

(Smith et al., 1997).

There have been a number of significant milestones, particularly in the United

States, in the acceptance of contingent valuation as a technique that can contribute

toward environmental policy formation. In particular, the U.S. Department of the

Interior recognised contingent valuation as an approved method of assessing

environmental damage values in the Clean Water Act of 1977, the Comprehensive

40

Environmental Response, Compensation and Liability Act of 1980 and the Oil Pollution

Act of 1990 (Diamond and Hausman, 1993). This institutional recognition has helped to

establish the contingent valuation method as a widely used technique in environmental

economics.

The 1980’s and early 1990’s saw intensified interest in the methodology of

valuing non-market goods. Kopp and Pease (1997) identified a number of factors that

contributed to increased attention and controversy surrounding the contingent valuation

method during this period. These included; the increasing number of environmental

damage assessment cases in North America; greater scrutiny of damages valuations; the

Exxon Valdez oil spill in 1989, and; the 1992 Cambridge Economics Inc. Conference

on Contingent Valuation sponsored by the Exxon oil company. The results of

contingent valuation studies frequently resulted in very large non-use values being

attached to environmental resources and large damage claims against defendants in

environmental damage cases. Not surprisingly, corporate entities fought back by

attacking the contingent valuation methodology, particularly its ability to estimate non-

use values (Randall, 1996). Exxon directly funded or encouraged a number of

investigations that were highly critical of the contingent valuation method and led to

renewed debate on the validity of the technique in the literature (Desvousges, Hudson

and Ruby, 1996; Diamond and Houseman, 1994; Houseman, 1993; Portney, 1994).

In Australia, a significant milestone in the use of contingent valuation method

was its application in the Resource Assessment Commission’s Kakadu Conservation

Zone Enquiry (Imber, Stevenson and Wilks, 1991). Other significant studies have

included studies of the National Estate Forests in southeast Australia (Carter, 1992), and

of forest preservation values in East Gippsland (Lockwood, Loomis and De Lacy,

1993). Recently it has been used to value damage to wetlands in South Australia

(Bennett, Blamey and Morrison, 1997) and to value environmental improvements

associated with wastewater treatment (Gillespie and Bennett, 1998).

The contingent valuation studies conducted in the 1970’s and early 1980’s were

largely direct applications of the method, concerned with refining data collection

procedures and improving reliability of instruments. However, since the early 1990s the

research emphasis has shifted from straightforward applications to experimental

investigations that seek to test the validity and reliability of the methodology. A

41

bibliography produced by Carson, Wright, Alberini, Carson and Flores (1995) listed

over 1600 contingent valuation studies.

Two assumptions are implicit in the consumer theory on which contingent

valuation is based. First, that economic agents (individuals, households, or firms) are

able to identify a preference for one bundle of goods over another and, secondly, that

those agents act to maximise their utility or satisfaction. The consumer derives utility by

consuming a combination of market goods and non-market goods. Thus, where X is a

vector of market goods and Z is a vector of non-market goods, the consumer’s utility

function was summarised by Fisher (1996, p. 20) as follows:

u (X, Z) (2.7)

According to Carson et al. (1998, p.315) the consumer’s problem is to maximise

utility in market goods (X) subject to the constraints imposed by the price (p) of market

goods, the budget constraint (y) and a constrained supply of non-market goods (Z*), i.e:

max u (X, Z) s.t. p * X ≤ y and Z = Z* (2.8)

Blamey (1991, p.2-1) showed that this constrained optimisation problem yields ordinary

or Marshallian demand functions of the form:

xi = hi (p, z, y) (2.9)

where xi is the quantity of good i that a consumer (h) desires at a given level of price

and income.

In reality the utility function (u) is known to the consumer but not to the observer and

has to be estimated indirectly. Thus, the indirect utility function (v) for the vector of

non-market goods was defined by Fisher (1996, p.20) as:

v (p, z, y) = u [h(p, z, y), z] (2.10)

In a contingent valuation survey, consumers are presented with two or more

alternative expenditure functions and asked to indicate their preference. The results of a

contingent valuation survey represent the consumers’ choice between two expenditure

functions. Fisher (1996, p.20) demonstrated that if one element of the z vector is

increased from z0 to z1 giving increased utility with no change in any of the other

elements this can be represented as;

42

u1 = v (p, z1, y) > u0 = v (p, z0, y) (2.11)

The compensating variation measure (C) for this utility change represents the amount of

money that could be taken from the economic agent and leave them as well off as before

the change, i.e. according to Fisher (1996, p.20):

u1 = v (p, z1, y - C) = u0 = v (p, z0, y) (2.12)

The compensation variation measure can also be considered to be the ‘willingness-to-

pay’ (WTP) for the change and is the value that a contingent valuation survey attempts

to estimate. If z0 and z1 in equation 2.12 represent two different levels of provision

(either quality or quantity) of a public recreation good, say national park access, the

consumer would be willing to pay $C for the change in access implied by a shift from z0

to z1.

In most cases the good in question is a public good, and individual responses to

the contingent valuation question are aggregated to give a total value for the relevant

population.

2.6 Summary

This study explores information effects in the contingent valuation method using

local residents’ valuation of a proposed beach protection program as the vehicle for an

experimental treatment. The scenario implies that ocean beaches provide services to the

local population that they will be able to assign economic values to. The classification

schemes based on functions (de Groot, 1994; Bingham et al., 1995) and human motives

(Pearce and Turner, 1990) are both useful in identifying the reasons that people may

attach a value to public beaches. From a functional perspective, ocean beaches can be

seen to provide carrier functions in the form of recreation services; information

functions in the form of education, cultural, symbolic and aesthetic services; and,

regulatory functions in the form of support for natural ecosystems and protection from

the force of the ocean (de Groot, 1994).

The anthropocentric TEV model (Pearce and Turner, 1990) suggests that people

may assign an economic value to a beach protection project because they believe it will

enhance their direct use value of the beach for recreation. If they are not current users of

the beach they may still value its maintenance so that they have the option to use it in

the future. In addition to these use values the TEV model proposes non-use values

43

which might include assigning a value to beach protection because it will increase the

bequest value of the asset or its existence value as a habitat for flora or fauna. A

significant value category for beach protection in this region might be values that

residents assign to the project because they know that many tourists value it highly and

they or friends and family are employed in the tourism industry. This is probably best

classified as a vicarious use value since it does not involve direct use of the amenity but

may reflect an anticipated indirect economic gain, or protection against economic

losses, as a result of the project.

There is evidence around the world that ocean beaches provide a good example

of market failure in environmental goods (Bockstael, 1995; Penning-Rowsell, 1992).

Public beaches in the United States, United Kingdom, Japan and the Atlantic coast of

Europe are degraded by erosion that often goes unchecked until it becomes critical. The

causes of market failure described by Gustafsson (1998) are particularly relevant to

ocean beaches in southeast Queensland. The long beaches with multiple access points

make it very difficult to exclude any sections of the public, thus the recreation benefits

of beach protection programs are non-excludable. In addition the capacity of the

beaches in this region to carry recreational users is quite large, particularly in the wider

nourished condition, so to some extent the amenity is non-rival. It is worthwhile noting

that the non-excludability conditions that allow market failure with respect to public

beaches in southeast Queensland are significantly different to those faced in some

international beach communities. In Hawaii and on the Mediterranean coast of Europe it

is common for beaches to be owned by hotels and smaller beaches with reduced access

make it feasible for the hotel or local authority to charge a small user fee (Seal, 1992;

Wiegel, 1995). Pompe and Rinehart (1999) described a private beach community in the

USA in which it was possible to charge the beneficiaries of beach protection works

through increased maintenance levies on property in the community.

The challenge for policy makers is to measure the consumer surplus generated

by non-market environmental services so that the economic benefits of projects like

beach protection can be estimated and weighed against the costs of supply. A number of

approaches have been developed for estimating the economic values of non-market

environmental goods. This chapter has reviewed the alternative methods for estimating

non-market values and the features of these are summarised in Table 2-2. Revealed

preference measures such as travel cost and hedonic pricing have the benefit that they

are based on observed behaviour but this also means that their applications are restricted

44

to measurement of use values only. Only the stated preference measures such as

contingent valuation and random utility models can capture the non-use values that

individuals may attach to non-market environmental goods.

Table 2-2 An overview of non-market valuation methods Values measured

Use Values Non-Use Values

Revealed Preference Travel Cost

Hedonic Pricing

Stated Preference Contingent Valuation

Random Utility Models

Contingent Valuation

Random Utility Models

The current research used the contingent valuation method to estimate local

resident’s WTP for beach protection programs because the change was a proposed

change that was not measurable through observed behaviour. In the process of

investigating this aspect of consumer’s surplus the study contributes to understanding of

the contingent valuation method by investigating the effects of information provision on

respondent’s attitudes toward relevant targets and stated WTP for a change in supply of

beach services.

Because the main focus of this thesis was on a methodological aspect of the

contingent valuation method it is important to extend the brief review of the contingent

valuation research literature that has been provided in this chapter. The following

chapter will review in more detail the major strands of research that have sought to

investigate and improve reliability and validity in the contingent valuation method and

to improve our understanding of how individuals form economic values for

environmental resources. It will particularly focus on those research efforts that have

investigated the effects of the style, quality and quantity of information provided on

respondents stated WTP.

45

CHAPTER 3

RESEARCH DIRECTIONS IN CONTINGENT VALUATION

The immense volume of literature related to the contingent valuation method

that has developed over the last forty years renders a comprehensive review beyond the

scope of this thesis. Instead this chapter aims to provide an overview of the main

research strands and then to focus in detail on the issues related to formation of

construct values and the role of information provided in the contingent market scenario

on value formation and expression.

This chapter begins by describing a conceptual model for classifying the major

strands of research into non-market valuation techniques that serves as a framework for

the literature review. A brief review of research relating to validity and reliability of the

contingent valuation technique generally, and of design issues related to instrument

reliability, provides the context for the current research design. The literature review

then focuses on the role of information provided through the contingent market scenario

in formation of construct values. Information in the scenario may be conveyed via

combinations of text descriptions and visual representations, and research that has

attempted to evaluate the effects of using alternative communication methods is

considered separately. Finally, this review examines research that has attempted to

interpret and classify the responses to contingent valuation surveys and particularly

those responses that appear to be motivated by the participant’s desire to protest against

some aspect of the contingent market scenario.

3.1 A framework for reviewing contingent valuation research

Recent reviews of the contingent valuation method by Bateman and Willis

(1999) and Boyle and Bergstrom (1999) have commented on the volume and diversity

of empirical studies undertaken in this field during the last two decades. The literature is

extensive and a review needs some framework around which to develop. The classic

reviews of the contingent valuation method written in the 1980’s by Cummings et al.

(1986) and Mitchell and Carson (1989) described strands of research largely in terms of

efforts to investigate instrument bias. However, Green and Tunstall (1999, p. 214)

cautioned against the ‘promiscuous’ use of a value-laden term like bias which, they

suggested, has been used in this context to describe both effects that are not explainable

46

by neoclassical economic theory and effects that are predicted by theory but are deemed

undesirable. Many of the issues related to instrument effects, while not necessarily

resolved, have been extensively investigated and recent research efforts have moved on

to issues that are not easily classified within the schemes proposed in the 1980’s

(Cummings et al., 1986; Mitchell and Carson, 1989). Thus, there is a need to find a

broader model within which current contingent valuation research efforts can be

classified.

In their summary of current research needs, Bjornstad and Kahn (1996, p. 264)

argued for a research agenda that “…should embrace the scientific method and organise

research sequentially in ways that would lead to formal hypothesis testing with the goal

of developing maintained hypotheses as building blocks for further enquiry”. Bjornstad

and Kahn (1996) proposed a conceptual model that they suggested might be used to

categorise the various strands of research into the contingent valuation method. Their

model is organised around the relationships between consumer preferences, the

consumers true or construct value and the measured values produced by stated

preference and revealed preference techniques. These relationships are illustrated in

Figure 3-1.

Figure 3-1 Bjornstad and Kahn's contingent valuation research model

Source: Bjornstad and Kahn (1996, p.268)

However, stated and revealed preference techniques are intended to measure

construct values, not preferences directly, as implied by the direction of the arrows on

lines B and C in Bjornstad and Kahn’s (1996) model. Furthermore, some of the research

Preferences

Stated values

Construct value

Revealed valuesD

B C

B C

A

47

in contingent valuation, such as that which has sought to interpret values and reconcile

them with neo-classical economic theory, is not easily classified within this model.

Figure 3-2 presents an alternative conceptual model representing the relationship

between Bjornstad and Kahn’s (1996) four components but with the addition of

economic theory as part of the model. The advantages of this model are that it places

construct values at the centre of the model and more accurately reflects the intentions of

stated and revealed preference methods in measuring construct values. It also provides

for classification of research that aims to investigate theoretical construct validity and

research that aims to interpret the results of both stated and revealed preference values.

Figure 3-2 A conceptual model of research in non-market valuation

This model identifies four primary goal driven strands of research into non-

market valuation methods. Specifically it identifies research that has aimed to

investigate; formation of construct values, measurement of values, validation of the

methods, and interpretation of the values obtained.

The first strand comprises research that has investigated the mechanisms by

which consumer preferences are formed into ‘true’ or construct values (labelled A in the

Preferences

Construct Value

Stated Value Revealed Value

Economic Theory

Value FormationA

Interpretation

BC

Reliability ofValue Measurement

(Stated Values)

Reliability ofValue Measurement(Revealed Values)G

F

D

E E Validation(Theoretical)

Validation(Theoretical)

Validation (convergence & criterion)

48

Figure 3-2). In contingent valuation studies, respondents are frequently asked to value

goods for which they do not have a previously well-defined utility function. Thus, the

information provided by the contingent valuation scenario, and the context in which it is

provided, are important in assisting the respondent to form construct values for the good

in question. At the same time this means that there is ample opportunity for

miscommunication and misunderstanding. Research strands exploring this relationship

include studies that explore the affects of attitudes (Ajzen and Driver, 1992; Jorgensen

and Syme, 2000), amenity definition (Boyle, Welsh and Bishop, 1993) and context

(Blamey, 1998) on value formation. Research that has explored the affects of

information provision on value formation can be seen as a sub-section of this research

strand and, because it is the central theme of this thesis, will be discussed extensively in

this review.

The second strand comprises research that has sought to investigate reliability of

stated value techniques used to measure construct values (labelled B in Figure 3-2) and

revealed value techniques (labelled G in Figure 3-2) in measurement of construct

values. Research has investigated the extent to which stated values may be influenced

by aspects of the contingent valuation method. Studies exploring this relationship have

been the most numerous in the field of contingent valuation research and include those

that have focused on instrument reliability issues such as survey mode and context

(Bateman and Mawby, 2004), elicitation method (Hackl and Pruckner, 1999), payment

vehicle (Bishop et al., 1995) and response incentive effects (Lunander, 1998) on stated

WTP.

The third research dimension describes research that has considered how we

might interpret the responses to studies of stated values (labelled C in Figure 3-2) and,

to a lesser extent, revealed values (labelled F in Figure 3-2). Observations that some

contingent valuation results appear to contradict accepted economic theory led

researchers such as Schkade and Payne (1993) to question what the responses actually

reveal. Studies that have sought to use follow-up questions and formal measures of

attitude toward relevant targets to investigate protest (Jorgensen, Syme, Bishop and

Nancarrow, 1999; Lindsey, 1994) and strategic response behaviour (Bohm, 1972;

Rowe, d’Arge and Brookshire, 1980) fall into this category of research.

The fourth research strand comprises studies that have sought to investigate the

criterion, convergent and theoretical validity of non-market valuation techniques

49

(labelled D and E in Figure 3-2). Critics of the contingent valuation method, such as

Diamond and Hausman (1994), have argued that contingent valuation studies produce

results that are inconsistent and sometimes appear to contradict traditional economic

theory. Thus, a substantial amount of research has investigated validity of contingent

valuation results by comparing them with revealed market values (Bishop and

Heberlein, 1979 and 1986; Dickie, Fisher and Gerking, 1987) and the results of other

non-market valuation techniques such as hedonic pricing (Brookshire et al., 1982 and

1985) and travel cost methods (Hanley, 1989; Sellar, Stoll and Chavas, 1985).

3.1.1 Structure of the literature review

Critics of the contingent valuation method have questioned the very validity of

the technique and have used inconsistencies in results caused by minor changes in

application of the methodology as further evidence that the technique cannot be trusted

to produce reliable estimates of non-market values (Diamond and Hausman, 1993).

These criticisms of the technique are serious and the extensive research that has

addressed these issues demands some attention. Thus, although the focus of this thesis is

on information effects and attitudes on value formation, this review will commence with

an overview of literature that has sought to investigate validity and reliability of the

technique in general, and of contingent valuation instruments specifically, in Sections 3-

2 and 3-3 respectively. This serves both to provide a defence of the method and the

context for the research design adopted in the current research.

The central questions that this thesis aimed to address relate to the relationship

between attitudes and contingent values and the effects of information on attitudes and

reported values. As such, the thesis draws upon literature from the disciplines of

behavioural psychology and environmental economics. Research that has investigated

the effects of information and alternative communication devices on value formation

and reported WTP is evaluated in detail in Section 3-4. Psychological concepts relating

to attitude structure and change and the attitude-behaviour relationship are described in

Chapter 4.

In the current research the contingent valuation experiment was combined with

scales designed to measure attitudes toward a range of relevant targets. This enabled the

researcher to take a novel ‘decision tracking’ approach to investigate the phenomenon

of protest responses. Thus, the literature related to interpretation of contingent valuation

50

responses, and particularly that which has investigated protest responses, is evaluated in

Section 3-5.

3.2 Validity and reliability of contingent valuation method

Critics of the contingent valuation method, led by Diamond and Hausman

(1993; 1994), have attacked the validity and reliability of the technique (McFadden and

Leonard, 1993; Kahneman and Knetch, 1992). Thus, experimental investigations of the

validity and reliability of the contingent valuation method have been a major focus of

academic research and debate in environmental economics during the last decade as

supporters and critics have attempted to strengthen their respective cases.

Face and content validity represent the most basic kinds of validity and are

generally assessed informally. According to Schuman (1996, p. 77), in contingent

valuation an instruments face validity describes the extent to which “…the questions

appear to be sensible ways of asking people to estimate passive use values”. Content

validity relates to the extent to which the instrument adequately reflects the domain of

the market and the description of the amenity (Mitchell and Carson, 1989). Significant

misspecification of the amenity, for example scenarios that leave the reader with the

impression that they are valuing a national environmental program when the aim is to

derive values for only one State or Territory, should be identified at this stage of the

instrument assessment.

Face and content validity are as important in development of contingent

valuation survey instruments as they are in any other type of survey work and there is

little of a contentious nature here. The battle for credibility of the contingent valuation

method has been fought at the higher levels of criterion and construct validity. Neuman

(1997, p. 141) described the process of establishing validity for measures in the social

sciences as “… a dynamic process that grows by accumulated evidence over time”. This

section will review some of the accumulated evidence relating to validity and reliability

of the contingent valuation technique.

3.2.1 Criterion validity

Criterion validity describes the extent to which the measure obtained from the

survey instrument can be correlated with other measures or criteria of the same concept

(de Vaus, 1991). A contingent valuation instrument is intended to measure the

maximum amount of money the respondents would actually pay for a public good if a

51

market for that good existed so the most meaningful criterion against which to assess

the values obtained would be the revealed market price for the good. Of course the

research effort and expense involved in conducting a contingent valuation survey is

usually only justifiable where there is no revealed market value for a public good.

However, there have been a small number of experimental investigations of criterion

validity using both private and public goods some of which will be described here.

Tests of criterion validity using private goods examine the correlation between

stated WTP and the observed values revealed through subsequent auctions of the good

in question. Tests using private goods have the advantage that the good is well defined.

It is also easier to eliminate ‘free-rider’ bias caused by individuals strategically

underbidding in the expectation that others will be willing to pay enough to ensure

provision of a good from which everybody will benefit (Byrnes, Jones and Goodman,

1999). Studies using private goods have produced mixed results that have only served to

fuel the validity debate. Bohm’s (1972) study of WTP to see a television program was

the first reported attempt to assess criterion validity of contingent valuation measures. In

an experiment designed primarily to investigate free-rider behaviour, Bohm (1972)

found no significant difference between the stated WTP in a hypothetical context and

the actual values that individuals bid in an auction of the rights to a private screening of

the television show. In a similar experiment Dickie, Fisher and Gerking (1987) also

found a less than one percent difference between stated value in a hypothetical market

for strawberries and the revealed value when offered the opportunity to actually

purchase the good. However, studies by other researchers have not all been as

supportive. Two studies by Bishop and Heberlein (1979 and 1986) produced mixed

results. Their experiment with goose hunting permits revealed a significant difference

between stated WTP for a hunting permit and the revealed price that hunters who

already had permits were willing to sell it for (Bishop and Heberlein, 1979). However,

the author’s interpretation of the results of this study was criticised by Mitchell and

Carson (1989) on the grounds that subsequent research in contingent valuation has

shown that the willingness-to-accept compensation measure is not an appropriate

criterion against which to compare measures of WTP. Later experiments by Bishop and

Heberlein (1986) using deer hunting permits as the private good found that under most

of the conditions they tested there was no significant difference between stated

hypothetical values and actual values revealed through auction mechanisms.

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Testing for criterion validity using public goods is much more difficult but a

number of studies have attempted to simulate markets for planting trees in public parks

(Brookshire and Coursey, 1987); reduction of acid rain (Kealy, Montgomery and

Dovidio, 1990); wildlife protection (Seip and Strand, 1992); and wilderness restoration

(Brown et al., 1996). In each of these studies stated WTP was significantly higher than

the actual amount raised through donation or auction mechanisms. Byrnes et al. (1999)

claimed that the evidence provided by these and other studies supported their hypothesis

that the values obtained through contingent valuation methods consistently overestimate

the payments that people are actually prepared to make. Byrnes et al’s (1999) own test

of criterion validity using WTP higher utility prices for an electricity company’s

renewable energy program also produced a significant difference between hypothetical

WTP and actual financial commitments. While 73 per cent of respondents in this study

indicated they would be willing to pay an additional small amount of money to support

the program, only 13 per cent actually committed to it (Byrnes et al., 1999, p. 155).

Among those who said they were willing to contribute to a renewable energy program,

mean WTP under hypothetical conditions was $1.63 but fell to $0.16 when asked to

make an actual payment commitment (Byrnes et al., 1999, p. 158).

There is a growing body of evidence that suggests that contingent values

consistently overstate actual WTP and this casts some doubt on the criterion validity of

contingent valuation techniques. Both Schulze et al. (1996) and Byrnes et al. (1999)

provided reviews of studies that have compared hypothetical WTP with actual

payments. A number of explanations have been proposed to explain the discrepancy.

Loomis, Brown, Lucero and Peterson (1996) suggested that it may be caused in part by

free-riding behaviour and Smith (1993) suggested that respondents might be uncertain

about the benefits they would receive from actual payment. Champ, Bishop, Brown and

McCollum (1997) suggested that actual donations and hypothetical commitments might

be interpreted as upper and lower bounds of the desired welfare measure. But Chilton

and Hutchison (1999) warned that even actual donation mechanisms that were

associated with a strong a warm glow effect of private giving, as opposed to forced

taxation, might over estimate the lower bound of the desired Hicksian measure.

The NOAA, whilst recognising the role that contingent valuation methods had to

play in measuring values for environmental goods, also recognised the tendency for

hypothetical values to overstate true WTP and noted the need to find ways in which

hypothetical values could be calibrated prior to aggregation (Arrow et al., 1993).

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3.2.2 Theoretical construct validity

Theoretical construct validity considers the degree to which the results of a study

are consistent with theoretical expectations (Hanley and Spash, 1993).

One aspect that theoretically should have an effect on WTP is the quantity and

quality of the resource being valued. Conventional economic theory indicates that

people should be willing to pay more for additional units of a desirable good. If this

expected relationship is violated in the reported WTP for different levels of amenity

provision the survey fails this ‘scope’ test of theoretical construct validity. A number of

studies have cast doubt on the ability of contingent valuation methods to produce results

that conform to conventional economic theory in this respect (Desvousges, Johnson,

Dunford, Boyle, Hudson and Wilson, 1993; Diamond et al., 1993; Navrud, 1992; Siep

and Strand, 1992) and this has become one of the most hotly debated issues in the

literature.

The term ‘embedding’ was first applied by Kahneman and Knetsch (1992) and

according to Schulze, McClelland, Lazo and Rowe (1998, p.163) it describes the “…

notion that respondents to contingent valuation questions often value more than the

researcher intends”. Research into theoretical validity of contingent valuation has

concentrated on two sources of the embedding problem described by Carson and

Mitchell (1995, p. 163) as ‘symbolic bias’ and ‘part-whole bias’ and these will be

discussed here.

Individuals frequently attach strong emotions to symbolic amenities such as

clean water and air or access to public space. As respondents to a contingent valuation

survey they may be guided by these strong emotions and rely on judgmental heuristics

(Chaiken, 1980) when placing a value on the amenity rather than on careful analysis of

the precise benefits described in the contingent market scenario. For example, a

contingent valuation scenario relating to preserving school playing fields may elicit

responses that reflect the symbolism of children’s health rather than a carefully

considered response to the actual benefits to be generated by the proposed project.

Many people would attach a high symbolic value to any amenity associated with

children’s health and fitness and the symbolic links between school physical education

programs and health have been reinforced by health authorities on many occasions.

When asked to place a value on preservation of a relatively small area of school playing

field a respondent may apply judgmental heuristics and overlook the description of the

54

marginal effect that the change in amenity provision will have on the school’s physical

education program.

Studies of the effects of symbolism on contingent valuation responses have

produced mixed results. Kahneman (1986) found that independent samples of

respondents to a telephone survey reported almost identical WTP values for two clean

water programs despite the fact that one of the proposals was far more geographically

extensive than the other. This led him to express concern that respondents were unable

to differentiate between the symbolism embodied in a clean water program and the

limitations of the proposal in a contingent market scenario. In contrast, contingent

valuation studies of local clean water programs by Desvouges, Smith and McGivney.

(1983) and of national clean water proposals by Mitchell and Carson (1985) both found

that respondents placed higher values on more geographically extensive programs.

These results seem to indicate that people can separate the symbolism of a program

from the specific benefits to be provided if the benefits are clearly explained.

Carson and Mitchell (1995) claimed the embedding problems caused by ‘part-

whole bias’ result from misperceptions relating to the geographical distribution of the

good, the extent of its benefits, and the policy package of which it is part. As a result of

this misperception respondents may assign some of the value that they hold for the

whole to the part and thus distort the true values. However, investigations of the part-

whole contribution to the embedding problem have also produced inconclusive results.

For example, Desvousges et al., (1993) found no significant difference in WTP for

programs that would preserve 2,000, 20,000 or 200,000 migratory birds or for

emergency response services that could counter either small oil spills only or all oil

spills in a region. In contrast, Smith and Osborne (1996) found a positive and

statistically significant relationship between scope of proposed clean air programs and

WTP in a meta-analysis of five studies conducted in the United States.

In conclusion, Carson and Mitchell (1995) have argued that embedding involves

a well recognised class of misspecification biases that are indicators of poor survey

design rather than of an inherent flaw in the methodology and that, to a large extent,

they are avoidable with careful attention to the design phase of a study. However,

Schulze et al. (1998) argued that the misspecification arguments do not account for all

of the observed embedding problems and that other unavoidable problems need to be

considered such as: the purchase of moral satisfaction; problems related to

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substitutability of goods and income effects when summing independently valued

goods; and, formation of mental models by some respondents that imply joint, and

inseparable, production functions for goods such as endangered species and the habitats

in which they live. Thus, it seems likely that studies of the theoretical construct validity

of the contingent valuation technique, and particularly tests of sensitivity to scope, will

continue to be a prominent feature of research in this field.

3.2.3 Convergent construct validity

Convergent construct validity considers the extent to which the measure is

correlated with other measures of the same construct (Hanley and Spash, 1993).

Mitchell and Carson (1989) argued that the tendency by some researchers to treat travel

cost or hedonic price measures as criterion values against which to compare stated

values is inappropriate since one cannot be sure that these measures are any more

accurate than those obtained from contingent valuation. A more appropriate use of these

revealed preference measures is in assessment of convergent validity and results that are

correlated strengthen the credibility of both measures.

Assessing convergent validity requires a substantial amount of judgement to be

exercised by the researcher. Many decisions have to be made about data treatment when

applying a non-market valuation method. For example, decisions must be made about

how to treat missing data and protest responses in a contingent valuation study, and it is

common to produce a number of different values based on different sets of assumptions.

Which value should be selected and how close do two values have to be to be

considered convergent? Cummings et al. (1986) provided some guidance in relation to

what might constitute accuracy in value measures for public goods. They concluded that

values obtained from both revealed and stated preference methods were likely to be no

better than ± 50 per cent accurate in reference to the unknown true value. Thus, when

comparing values obtained using different methods, convergence would be supported if

the ranges represented by the ± 50 per cent guideline overlap at any point. Cummings et

al. (1986) reviewed fifteen tests of convergent validity and found that using the ± 50

percent guideline they were only able to reject the hypothesis that the contingent

valuation measures and the revealed preference measures were the same in two of the

comparisons.

Tests of convergent validity have been a major focus of contingent valuation

research to the extent that Carson et al. (1996) were able to conduct a meta-analysis of

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83 studies. Five examples will be described briefly here as illustrations of the types of

studies that have been conducted. The examples described include the first reported

study of convergent validity and two comparisons each between contingent valuation

and hedonic pricing and between contingent valuation and the travel cost method.

The first reported test of convergent validity was conducted by Knetsch and

Davis in 1965 (cited in Cummings et al., 1986, p.74) and used contingent valuation,

travel cost and a measure based on stated willingness-to-drive to estimate recreation

values of a site. The gross recreation values obtained for the site using the three methods

varied by only 12 per cent and this was taken as an indication that the methods at least

showed an acceptable level of convergent validity as a means of estimating recreation

values.

One of the most widely cited comparisons of values obtained using hedonic

pricing and contingent valuation is that conducted by Brookshire et al. (1982) when

investigating values of air quality improvements in Los Angeles. Brookshire et al.

(1982, p.175) estimated a monthly benefit of $45.92 in moving from regions of the city

with ‘poor’ air quality to regions with ‘fair’ air quality using hedonic pricing methods

while contingent valuation methods revealed a monthly benefit of $14.54 for the same

change. Using Cummings et al’s (1986) ± 50 per cent guideline the acceptable ranges of

these two estimates do not overlap and, therefore, fail to provide support for

convergence. However, a later study of the value to households of avoiding earthquake-

prone zones by Brookshire et al. (1985, p.385) produced valuation estimates using

hedonic pricing methods that varied by only 22 per cent from those produced using

contingent valuation methods and provided some support for convergent validity of the

two techniques.

Studies comparing values obtained from contingent valuation methods with

those obtained from travel cost methods have been more common than comparisons

with hedonic pricing and these studies have frequently been conducted in the context of

estimating recreation values. An example of this type of study is provided by Hanley

(1989, cited in Hanley and Spash, 1993, p.120), who estimated user benefits at a forest

park using travel cost and contingent valuation methods. Hanley produced a range of

estimates using travel cost methods but the preferred method (using a semi-log form and

ignoring any costs of leisure time) generated an estimated value that varied from the

contingent valuation value by slightly less than 12 per cent. In a similar study, Sellar et

57

al. (1985) produced a range of travel cost and contingent valuation estimates for

recreation services at multiple sites. They found strong evidence to support convergent

validity between the dichotomous choice elicitation format of the contingent valuation

method and travel cost with two out of the three comparisons showing a high degree of

convergence. However, values obtained using the open-ended elicitation format

produced values significantly different to those estimated using travel cost (Sellar et al.,

1985).

What conclusions can be drawn from the many studies that have attempted to

investigate convergent validity in measures of non-market value? Cummings et al.

(1986), Mitchell and Carson (1989), and Carson, Flores, Martin and Wright (1996),

have all conducted reviews of the available contingent valuation studies. Cummings et

al. (1986, p.99), having reviewed fifteen tests of convergent validity concluded that,

although the results at that point did not establish the validity of contingent valuation

measures beyond all doubt, it did appear that the values obtained fell within the range of

“reference accuracy” established by their ± 50 percent criterion. Mitchell and Carson

(1989, p.206) came to a similar conclusion and indicated that, after allowing for the fact

that there are subtle differences between what is measured using these different

approaches, the results of the various studies they reviewed indicated “… reasonably

strong convergent validity for CV”. Carson et al’s. (1996) meta-analysis of 83 studies

showed that contingent valuation estimates were generally slightly smaller than

estimates provided by revealed preference measures. Based on this analysis they

suggested that calibrating contingent valuation results by arbitrarily discounting them by

a factor of two or more, as suggested by Diamond and Hausman (1994), would actually

result in contingent valuation estimates that diverge from revealed preference values.

3.2.4 Reliability of the contingent valuation method

Reliability in contingent valuation describes the extent to which WTP estimates

are reproducible and stable over time (Carson, Flores and Meade, 2001). According to

de Vaus (1991), sources of unreliability in surveys include poor wording in

questionnaires, interviewer bias, inconsistencies in coding responses, and questions that

encourage ill considered responses because the subjects don’t have enough information

and or time to formulate a stable opinion. With a reliable instrument we can be

confident that differences in measures obtained at different times or from different

populations reflect genuine differences or changes in the subject of measurement and

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are not attributable to inconsistencies in the instrument or the way in which it is

administered.

Tests of contingent valuation reliability have adopted a test-retest approach

either using the same subjects (Loomis, 1989; McConnell, Strand and Valdes, 1998) or

samples drawn from the same population (Carson et al., 1997). However, Carson et al.

(2001) warned that such tests should be interpreted cautiously since participants may

base their responses on unintended cues in the instrument or rules of thumb rather than

careful consideration of their preferences causing responses to be reliable (i.e.

repeatable over time) but still not reflect preferences. Furthermore, Oppenheim (1992)

claimed that experiments using test-retest methods with the same subjects can meet with

resistance from participants and are subject to a ‘practice effect’ that effectively means

the conditions under which the instrument is administered change between test and

retest. Despite these concerns McConnell et al. (1998, p.358) reviewed 10 studies of

temporal reliability of contingent valuation estimates which they claimed showed

reliable results “…irrespective of the type of good being valued (public or private), the

time elapsed between surveys, and the tests used to assess reliability”.

Two extensive field studies have provided support for the reliability of the

contingent valuation method. In the first, Carson et al. (1997) repeated the Alaskan

Exxon Valdez survey using the original damage assessment survey instrument. Using a

new sample of households two years after the original survey they found that “…the

values per household and the coefficients on the two regression equations predicting

those values were almost identical to those of the original sample” (Carson et al., 2001,

p.195). In a similar study, Whitehead and Hoban (1999, p.459) repeated a survey of

WTP for air and water quality improvements with a new sample from the same

population five years after the original survey and found that the valuation function was

unchanged and that WTP estimates were “…temporally reliable when holding constant

factors affecting demand that change over time” such as income.

The growing amount of support for the validity and reliability of the contingent

valuation method is based on the accumulated evidence of individual studies but the

validity and reliability of individual survey instruments is determined by the skills of the

researcher. Thus, the basic principles of design leading to instrument validity and

reliability will be discussed in the next section.

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3.3 Design issues and instrument validity and reliability

Instrument validity and reliability is highly sensitive to design issues and various

authorities including Cummings et al. (1986), Mitchell and Carson (1989) and the

NOAA (Arrow et al., 1993) have attempted to establish design standards for contingent

valuation surveys. However, there is still substantial debate about many of the proposed

standards and Bjornstad and Kahn (1996) have suggested that, since much of the

criticism of the contingent valuation method relates to the effects that subtle changes in

scenario design, presentation and bid elicitation method have on validity and reliability

of responses, there should be a more structured approach by the research community to

investigating these methodological issues.

The most commonly used method of assessing theoretical validity of an

individual contingent valuation study is through analysis of the theoretically relevant

predictor variables in the regression model to see if they conform to expected signs and

magnitudes (Bennett, Morrison and Blamey, 1998). The relevant predictor variables

will vary from study to study but may include household income, education levels, age,

number of children in the household, membership or involvement with environmental

organisations, and distance from the asset being valued. Utility theory would lead us to

expect that, all other things being equal, WTP for a public good would be positively

related to household income. In the absence of any logical explanation, results that

failed to conform to this expectation would cast doubt on the theoretical construct

validity of the instrument.

The following sections will examine five design issues related to contingent

valuation survey instruments that have attracted a substantial amount of research

attention. These include the choice of welfare measure, the contingent market design,

the value elicitation question, the payment vehicle, question order effects, and response

incentive effects.

3.3.1 Choice of welfare measure

The contingent valuation scenario can be framed in terms of the respondent’s

willingness-to-pay (WTP) for a utility gain or their willingness-to-accept (WTA)

compensation for a loss. According to Carson (1991), choice of the most appropriate

form for any given set of circumstances has been one of the most enduring controversies

in stated valuation methods. Consumer theory suggests that WTP and WTA are

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equivalent measures if income effects are small or if close substitutes exist for the

commodity being valued (Boyle and Bergstrom, 1999). However, even when these

conditions are met, the evidence from contingent valuation studies indicates that WTA

measures consistently produce values significantly higher than those elicited using a

WTP format (Carson, 1991; Brown and Gregory, 1999; Vatn and Bromley, 1995). A

review of twenty-three studies by Brown and Gregory (1999, p. 325) revealed that

WTA values are frequently two or three times greater than WTP values, with ratios of

over fifty-to-one observed in two studies. Horowitz and McConnell (2002) reviewed 45

studies of the WTA / WTP disparity. They found that the WTA / WTP ratios were

higher for public goods than for ordinary private goods, and that real experiments

involving actual trade-offs did not yield significantly different ratios than hypothetical

surveys. Thus, they concluded that the WTA / WTP discrepancy was not grounds for

questioning the validity of the contingent valuation method.

Economic and psychological explanations have been advanced to explain the

discrepancy between WTP and WTA values. Brown and Gregory (1999) claimed that

the most obvious economic explanation is the income effect caused by the fact that

WTP for a good is constrained by income but WTA is not. Hanemann (1991) showed

that the theoretical difference between an individual’s WTP and WTA is determined by

both the income elasticity for the good and the availability and price of perfect

substitutes for the good. He demonstrated that WTP and WTA are equivalents when

there are perfect substitutes available but when there are no substitutes for the public

good individuals may express a finite WTP for an increase in the good but an infinite

WTA compensation for its loss (Hanemann, 1991). Income effects are likely to be an

important contributor to the WTP / WTA disparity in rare or unique environmental

resources.

Explanations for the WTP / WTA disparity have been proposed from

psychology in the form of Prospect Theory (Kahneman and Tversky, 1979). Prospect

Theory was developed to explain risk related behaviour but has been adopted by Thaler

(1980) and Knetsch and Sinden (1984) to explain consumers’ buying and selling

behaviour. Thaler (1980) proposed the endowment effect to describe the observation

that people show a reluctance to sell goods over which they believe they have

ownership. This is consistent with the principles of loss aversion from Prospect Theory

that indicate that losses and gains are treated differently by individuals and that the

value function for losses is steeper than for gains (Tversky and Kahneman, 1986). The

61

principles of loss aversion are likely to be an important contributor to the WTP / WTA

disparity when environmental resources, for which people feel a strong sense of

ownership, are threatened or where the proposed sale is involuntary.

Difficulties in explaining the discrepancy between WTP and WTA values led

the NOAA panel to recommend use of the more conservative WTP function in

contingent valuation studies (Arrow et al., 1993). However, Boyle and Bergstrom

(1999) argued that where an individual has suffered a loss through destruction or

damage to a natural resource the WTA form is the correct welfare measure since this is

the amount required to return the individual to their pre-loss utility level. Choice and

justification of the correct form is a pre-requisite for design of other elements of the


3.3.2 Elicitation method

The elicitation question in the contingent valuation scenario asks the respondent

to indicate how much they are willing to pay for the good or how much they would be

willing to accept in compensation for its loss. The format used for this question has been

found to have significant effects on response rates and reported WTP (Bateman,

Langford and Rasbash, 1999; Schulze et al., 1996). The four major approaches to the

elicitation problem that have been used include; open-ended formats, iterative bidding

games, payment cards and dichotomous choice methods. This section will provide a

description and critique of each of these formats. The major advantages and

disadvantages of the four methods are summarised in Table 3-1.

Table 3-1 Summary of elicitation methods in contingent valuation studies

Elicitation method Main advantage Main disadvantage

1. Bidding games Identifies consumer surplus for each individual.

Starting point bias.

2. Open ended Identifies consumer surplus for each individual.

Respondents find the decision process difficult this results in low item response rates

3. Payment card As for open-ended but provides an aid to decision making resulting in higher response rates

Possible centering and range (‘truncation’) bias.

4. Dichotomous choice

Simplifies decision process for respondent

Inefficient estimator - large sample sizes needed.

Possible ‘yea-saying’ bias.

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The first applications of the contingent valuation method in the early 1960’s

used an iterative bidding process (Davis, 1963). This method simulates an auction by

asking respondents if they are willing to pay a randomly assigned price for a good then

repeatedly offering them a higher or lower price dependent on the response until the

maximum bid is achieved. The major problem encountered here is that a respondent

may interpret the opening bid as an indication of the goods approximate true value,

causing them to fix or anchor their stated WTP on this value (Herriges and Shogren,

1996). While Brookshire, d’Arge, Schulze and Thayer (1981) found no evidence to

support starting point bias, the majority of investigations of this problem indicate that

the bidding format suffers from unacceptable levels of starting point bias (Boyle,

Bishop and Welsh., 1985; O’Connor, Johannesson and Johansson, 1999).

The open-ended elicitation format simply asks respondents for the maximum

they would be willing to pay for the proposed improvement. However, many

respondents find it difficult to explore their utility function without some form of

prompting or further guidance and the open-ended elicitation method has been found to

produce high levels of non-response or protest zero responses, particularly in mail

surveys (Mitchell and Carson, 1989). The NOAA panel (Arrow et al., 1993, p.20)

concluded that “…experience and logic suggest that responses to open-ended questions

will be erratic and biased” although they failed to provide empirical evidence to support

this.

Concerns over starting point bias in iterative bidding games and apparent

deficiencies in the open-ended elicitation format led Schultz et al. (1983) to propose the

use of payment cards. Payment cards are an aid to decision making that present each

respondent with a range of prices that cover the expected WTP values, as determined

through an initial pilot study. Prices on the card start at zero and increase in regular

increments. Survey respondents indicate which of the values on the card most closely

represents their maximum WTP for the good in question. Donaldson, Thomas and

Torgerson (1997) found that a payment card format resulted in higher response rates to

the WTP question and fewer zero values than an open-ended format. Mitchell and

Carson (1989) and the NOAA expert panel (Arrow et al., 1993) questioned whether the

payment card format might simply replace starting point bias with range and centering

bias. However, Rowe, Schulze and Breffle (1996) used a mail survey to test four

versions of a payment card with different ranges and centre values and they found no

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evidence for range or centering bias except where the payment card did not present the

upper end of the value distribution that some respondents wanted to select.

The dichotomous choice or ‘referendum’ elicitation method was first proposed

by Bishop and Heberlein (1979) and has been adopted as the preferred method by

influential bodies such as the NOAA panel (Arrow et al., 1993). Using this method the

researcher designs a series of prices that bracket the expected maximum WTP,

determined through an initial pilot survey. Respondents are randomly allocated one

price only and asked if they would be willing to pay this price for the proposed change.

The combined binary responses from the total sample indicate the probability of any

given price being accepted and the mean WTP is estimated from the probability curve

estimated from each of the prices offered. The advantage of this approach is that it

simplifies the decision process for the respondent who now only has to make the same

sort of ‘take-it-or-leave-it’ judgement that they are faced with in retail shopping

purchases. Since the mid 1980’s this method has gained in popularity on the grounds

that it most closely represents the types of purchase decisions that consumers make in

real markets (Hanemann, 1994). Because of its simplicity for the respondent this

method is also well suited to mail surveys where there is no opportunity to ask follow-

up questions or conduct bidding games. However, despite Schuman’s (1996) claim that

the dichotomous choice format is incentive compatible, Desvousges et al. (1996)

suggested that there is evidence that the format is subject to a form of compliance bias

that they referred to as ‘yea-saying’. This effect introduces an upward bias on bids.

Notwithstanding this criticism, the major disadvantage of the dichotomous choice

format is that, compared with the open-ended elicitation method, it is inefficient because

it collects one discrete estimator from each respondent and, therefore, requires much

larger sample sizes to estimate maximum WTP.

In an attempt to retain the benefits of the dichotomous choice format and to

improve its efficiency by collecting more data from each respondent, Carson,

Hanemann and Mitchell (1986, cited in Mitchell and Carson, 1989) proposed a

dichotomous choice with follow-up approach. In this variation if the respondent answers

‘Yes’ to the first price they are offered a second price higher than the first. If they

answer ‘No’ to the first price they are offered a second price lower than the first. In this

way two discreet estimators are obtained from each interviewee. Herriges and Shogren

(1996) investigated starting point bias in the dichotomous choice with follow-up format

in a study of proposed improvements to water quality in a lake. Their results showed

64

that starting point bias, or anchoring follow-up bids on the first price offered, was not a

significant problem in a sample of local residents but that it did induce significant bias

in a sample of recreational users stated WTP. Herriges and Shogren (1996, p. 130)

commented that, after controlling for the anchoring effect, “…the efficiency gains from

follow-up questioning were small”.

Ready, Whitehead and Blomquist (1995) proposed a variation on the

dichotomous choice format that was intended to allow participants to express a degree

of uncertainty about their response. Contingent valuation studies have implicitly

assumed that respondents resolve any uncertainty about the position of their

indifference curves but, for some scenarios, respondents may have difficulty

determining which option is preferred. Hoehn and Randall (1987) suggested that, faced

with uncertainty between two outcomes and a “take-it-or-leave-it” option, risk-averse

respondents may select the status quo or base line scenario because they are not given

the option to express any degree of ambivalence or to abstain. Ready et al. (1995)

investigated the issue of respondent ambivalence using a polychotomous choice (PC)

format in which respondents were able to indicate the strength of their preference for the

program on a six-point scale from ‘definitely yes’ to ‘definitely no’. Their results

indicated that conservatism or risk avoidance may influence mean WTP results obtained

using the traditional DC format.

3.3.3 Choice of payment vehicle

In order to appear realistic and reduce hypothetical bias, the contingent valuation

scenario must identify the means by which people would be expected to pay for the

public good. Payment vehicles that have been adopted in contingent valuation studies

include entrance fees, licence fees, increases in utility bills or price of private goods in

the region, increased property taxes, increased sales taxes, establishment of special

funds, or increased income taxes (Bishop et al., 1995). Boyle and Bergstrom (1999)

argued that despite some early evidence that the choice of payment vehicle influences

WTP (Rowe et al., 1980; Greenley, Walsh and Young, 1981; Brookshire, Randal and

Stoll, 1980) this problem has not been addressed thoroughly by researchers. In practice,

the appropriate choice of payment vehicle is context dependent and is most likely to be

guided by the believability and neutrality conditions proposed by Mitchell and Carson

(1989) and the incentive-compatibility conditions proposed by Hoehn and Randall

(1987). Recognition of the potential for payment vehicle bias in a particular situation

65

and appropriate selection of the vehicle is very important to the integrity of the


3.3.4 Question order (priming) effects

Some contingent valuation surveys attempt to elicit values for a number of

policy options. Schuman and Presser (1981) suggested that the order in which questions

are asked may introduce question order bias into surveys. Potential for this exists in

contingent valuation surveys that attempt to elicit several different values for different

levels of amenity provision. If individuals are asked to indicate their WTP for a series of

amenities or levels of amenity they might infer relative values based on the order in

which the questions are asked. Respondents might assume that later levels of amenity

incorporate the earlier ones and that the final offer represents some sort of optimal

arrangement that should be valued accordingly.

In a contingent valuation survey the scenario is usually preceded by questions

relating to the respondents experience with the amenity in question or their attitudes to

conservation or preservation issues. Although these questions are not part of the

contingent valuation scenario and are not intended to influence responses there is a

potential for what experimental psychologists call ‘priming’ caused by instrument

context effects (Mitchell and Carson, 1989). Preceding questions about confidence in

government’s ability to manage environmental issues or the desirability of

environmental quality, without balanced discussion of economic tradeoffs, may lead

respondents to report values lower or higher than their true value. Ajzen et al. (1996)

found that priming of motivational orientation using a sentence unscrambling task

designed to activate altruistic motives prior to the elicitation question resulted in a

significant effect on WTP for a public good but no significant effect on WTP for a

private good. Pouta (2004) also demonstrated that respondents who answered questions

about attitudes toward relevant targets before the elicitation question reported higher

WTP than those who did not have to answer the questions.

3.3.5 Response incentive effects

Aspects of the contingent valuation scenario or the survey mode may provide an

incentive for respondents to misrepresent their true WTP for a good (Lunander, 1998).

This may be a conscious or sub-conscious response to a stimulus. Two main types of

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incentive directed responses are described in the contingent valuation literature;

strategic behaviour and compliance behaviour.

The opportunity for strategic behaviour by respondents when answering

questions about preferences and WTP for goods has concerned economists since the

nineteenth century (Cummings et al., 1986). The strategic behaviour that has caused

most concern in environmental economics is ‘free-riding’ behaviour, described by

Uusitalo (1989, p. 268) as the “…efforts to enjoy collective goods without contributing

oneself”. In the contingent valuation context this might be demonstrated by a

respondent indicating a lower WTP than their true value for the good in the expectation

that others will offer to pay enough for the good to be provided anyway. Alternatively,

respondents may overbid if they believe that they won’t actually have to pay the stated

amount and that by indicating a very high value for the good they may be able to

influence its provision (Milon, 1989).

According to Mitchell and Carson (1989), motivation to reveal true preferences

depends on the extent to which the respondent believes they will actually have to make

the payment and the extent to which they believe the good is likely to be provided

regardless of their response. The expected strategic behaviour under each combination

of these two dimensions is summarised in Table 3-2.

Table 3-2 Strategic bidding in contingent valuation responses Perceived chances of good being provided

regardless of my response Low High

Amount offered

True preference

↓ Underbid

Uncertain amount

↔ Variable

(uncertain direction)

↓ Underbid

Perceived obligation to pay:

Fixed amount

↑ Overbid

↔ Minimise Effort

(random direction) Adapted from Mitchell and Carson (1989, p. 144)

A number of empirical investigations have been conducted of strategic

behaviour in contingent valuation using both field and laboratory studies (Lunander,

1998). A test-retest approach was used by Rowe et al. (1980) to investigate strategic

behaviour in stated WTP for air visibility improvements. After registering their initial

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bid, all the respondents were provided with information about how the rest of the group

had bid and offered the opportunity to revise their own bid accordingly. Rowe et al.

(1980) found a very low incidence of revised bids and interpreted this as an indication

that strategic behaviour was not a significant problem in the study. However, there

appear to be some serious flaws in this rational. The motivation to revise the bid would

depend not only on the respondent’s beliefs about provision of the good and the amount

they would actually be expected to pay, but also on the social norms guiding each

individual’s behaviour and the degree of anonymity provided in the study. There is also

a danger that changing the scenario after the first bid may have caused participants to

lose confidence in the integrity of the scenario and to minimise their effort by not

revising the bid.

Two separate studies by Bohm (1972 and 1984) used split sample approaches

and incentives to act strategically for one half of the sample. In a laboratory experiment

and using real payments Bohm (1972) used WTP for a preview of a popular television

show to investigate strategic behaviour. Different samples of respondents were provided

with incentives to report their true WTP or to act strategically by ‘underbidding’ or

‘overbidding’. Respondents were told that if the groups’ total WTP value didn’t reach a

revealed threshold value the good would not be provided at all. The results of the

various treatments showed no significant difference in WTP for the good despite the

provision of incentives to act strategically and the ‘free-riding’ and ‘overbidding’

hypotheses where not supported by this research (Bohm, 1972). In a study of similar

design but conducted in the field, Bohm (1984) investigated local government units

WTP for detailed statistical housing information. One half of the sample was provided

with an incentive to bid low because they were told they would have to pay a proportion

of the amount that they bid. The other half of the sample had an incentive to bid high

because they were told the most they would have to pay would be a fixed fee. The

results of this study showed no significant difference between the treatments and

“…little evidence of significant misrepresentation behavior” (Bohm, 1984, p.147).

Bishop, Tuchfarber and Oldendick (1986) suggested that respondents might,

either consciously or sub-consciously, reply to contingent valuation questions in ways

that do not represent their true values in order to meet the expectations of a sponsoring

organisation or interviewer. This is called compliance bias and takes two forms. The

potential for sponsor bias exists, for example, when respondents recognise that a survey

is being conducted or financed by an environmental group whose policy is to protect the

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environmental asset that is at the centre of the valuation question. A second type of

compliance bias, interviewer bias, only exists where there is some form of personal

contact between interviewer and interviewee via telephone or ‘in-person’ interviews.

Bishop et al. (1986) suggested that under these conditions respondents may answer in

such a way as to please the interviewer. Interviewers in a study conducted by Mitchell

and Carson (1986, cited in Mitchell and Carson, 1989) reported that some interviewees

looked for guidance from them when attempting to value the good in question.

Bradburn (1983) detected significant differences in the WTP responses obtained by

different interviewers when using inexperienced college students as interviewers. In

order to combat the problem of interviewer bias, Mitchell and Carson (1989) suggested

that interviewers follow a strictly worded script to minimise leading effects but they

acknowledged that a number of studies have shown that this is not always adhered to

even by well trained interviewers.

Finally, it is almost impossible to completely eliminate undesired influence from

the contingent valuation process. No matter how diligently the survey process has been

designed, some respondents might take the very fact that they are being surveyed in

relation to a particular amenity as an indication that the amenity ‘should’ have some

value and cause them to indicate a positive WTP even if their true value for the good is

zero. Mitchell and Carson (1989) described this as a form of compliance bias that

emanates from taking part in the study rather than from a conscious or sub-conscious

desire to please the interviewer.

In summary, there is evidence to suggest that people can be provided with

sufficient incentive to behave strategically in contingent valuation surveys. But, a

primary objective of a well-designed contingent valuation scenario is to minimise the

incentives for strategic behaviour. After reviewing a number of empirical investigations

of strategic bias, Cummings et al. (1986, p. 26) concluded that there was insufficient

evidence to support the “priority position” that had been given to this issue in research

agendas. The conditions under which people will behave strategically do exist but, with

proper care, such conditions are avoidable in a contingent valuation survey.

3.4 Information and value formation in contingent valuation

The contingent valuation scenario aims to encourage respondents to thoroughly

explore their utility function for a non-market good and report their maximum WTP for

it. The non-market good in question may be quite an abstract concept or something for

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which the respondent does not already have a well defined utility function. This section

of the thesis reviews research that has investigated how information provided to

respondents through the contingent market scenario affects formation of construct

values and reported WTP. To some extent this section continues the discussion from

Section 3.2 on the role of information in assessing theoretical validity. We know that

information provided through the contingent market scenario should affect WTP to the

extent that it is relevant and adds to the respondent’s prior knowledge. The emphasis in

this section is on the relative sensitivity of construct values and reported WTP to

different types of information and to different communication devices.

The NOAA panel (Arrow et al., 1993) identified scenario design as a critical

issue in contingent valuation studies and decisions about the amount and type of

information to be included are important factors. Frequently, respondents are asked to

construct a value for something with which they have very little or no first hand

experience and researchers have used a range of communication tools to enhance the

clarity of the contingent market scenario. But, the researcher constructing a contingent

valuation scenario must achieve a balance between providing sufficient information to

give the scenario realism and providing too much information, or information that may

have a persuasive affect on respondents. Ajzen et al. (1996, p.44) argued that

willingness to pay is “a measure of attitude or intention” and that providing information

about the good can be “…viewed as persuasive communication likely to change these

attitudes and intentions”. Too little information in the contingent market scenario may

result in hypothetical bias (Schulze, d’Arge and Brookshire, 1981), a phenomenon

Mitchell and Carson (1989, p.216) preferred to describe as “…random, directionless

error”. Too much information may introduce bias, or result in information overload

causing respondents to lose interest or focus on unimportant elements of the scenario

(Mitchell and Carson, 1989). Hanemann (1995) also drew attention to the complexity of

the problem and warned that respondents are sensitive both to contextual information

provided in the scenario and to the survey or data collection environment.

3.4.1 Elements of the contingent market scenario

Design of the hypothetical market scenario is critical. The main challenge for the

researcher is to make the scenario understandable and meaningful to the respondents so

that they are able and motivated to provide valid and reliable values. The contingent

valuation scenario must clearly communicate the nature and extent of the good being

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valued, the context in which it will be offered, and reminders of alternative goods and

budget constraints (Arrow et al., 1993).

According to Carson (1991) the contingent valuation scenario must be

theoretically accurate, policy relevant and be understood by the respondent as intended

by the designer. Failure to meet these three criteria results in scenario misspecification

and the respondent valuing the wrong thing. The scenario must also be both plausible

and meaningful to the respondent. Failure to meet these two criteria may result in

respondents not taking the survey seriously and a high incidence of protest and ‘don’t

know’ responses to the elicitation question (Carson, 1991).

Blomquist and Whitehead (1998, p. 181) related information provided in the

contingent market scenario to the standard consumer problem:

max u (q1, q2, x) subject to y = px (3.1)

where u = utility, q1 and q2 represent related environmental resources, x is a

vector of market goods, y is income and p is a vector of prices. Research into

information effects in contingent valuation has examined the effects on WTP of

providing information about the amenity being valued (q1 in expression 3.1); about

related environmental resources (q2 in expression 3.1); and, about income and relative

expenditures (y and p in expression 3.1).

Research related to each of these three major components of the contingent

market scenario will now be reviewed.

3.4.2 Amenity definition and value formation

One of the most challenging aspects of the contingent valuation scenario design

is to communicate the precise benefits, and limitations of the benefits, that are being

offered through the hypothetical market scenario. Amenity misspecification problems

involve a failure to clearly communicate the scope of the benefits that are to be valued

and the potential for misspecification is increased where the values being investigated

are predominantly non-use values or where respondents have limited first hand

experience of the good being valued. Boyle et al. (1993) showed that amenity

misspecification can occur even for a well-defined recreational service if the respondent

has little experience with the activity.

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Bergstrom et al. (1990) investigated the effects of different text descriptions of

the environmental services provided by an amenity on WTP for preservation of a

wetlands study area in Louisiana. They hypothesised that many recreational users fail

to consider all of the services or attributes provided by a recreation amenity and,

because of this, underestimate their marginal change in utility caused by the proposed

change in supply. The addition of explicit service information (SI) to the contingent

valuation scenario would affect the perceived marginal utility of the good and the

measure of WTP. Bergstrom et al. (1990) used two versions of a contingent valuation

scenario to survey 230 users of the recreation area by mail. Version A provided no

explicit service information (SI1) while version B explicitly reminded respondents of the

services and attributes being valued (SI2) (Table 3-3). Both versions of the questionnaire

provided identical information on the characteristics of the wetland study area and it

was assumed that the provision of service information did not change perceptions of the

objective characteristics of the good being valued (for example, the size of the area

being protected or the number of species protected).

Table 3-3 Text information treatments for wetland preservation (Bergstrom et al., 1990)

Version A (SI1) Version B (SI2) In the study wetland area, however, management programs could be carried out to reduce the rate of marsh loss. By reducing marsh loss, such programs would help to preserve populations of waterfowl, freshwater fish, saltwater fish, shrimp, and crabs in the study wetland area.

As for version A plus: Preservation of waterfowl, freshwater fish, saltwater fish, shrimp, and crab populations would help to protect your bag or catch of these species. Reduced marsh loss would also help to preserve other attributes of wetlands which you may value; for example: opportunities for viewing wildlife, marsh scenery, and isolated or remote areas where you can experience the outdoors.

Source: Bergstrom et al. (1990, p. 621).

In this study Bergstrom et al. (1990) showed that the inclusion of explicit

service information resulted in the expected increase in WTP. However, the authors

urged caution in interpretation of the results and highlighted the need for respondents to

be provided with accurate and balanced information on the services that will be

provided by a project. They point out that wetland areas also produce less desirable

consumption services such as “…exposure to insects, poisonous snakes, and hungry

alligators” and that inclusion of these in the contingent valuation scenario may induce

reduced WTP values (Bergstrom et al., 1990, p. 620).

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In a similar study Boyle (1989) examined the effects of providing increasing

amounts of information in a mail survey of recreational anglers asked to value a fish-

stocking program. The study used a split sample design and an open ended elicitation

method to evaluate three different information treatments. Group A were provided with

a basic description of the program to be valued; group B were given the basic

description and some information about catches in the region; and group C were given

all the information given to the other groups plus information relating to the costs of the

program (Table 3-4).

Boyle’s (1989) results showed no significant difference in the mean WTP across

the three treatments although the variances did decrease with additional information.

However, this study used recreational anglers with fishing licenses for this region as the

test population and it is likely that they already had access to most of this information

and understood the issues involved in maintaining the fish stocking program. Under

these circumstances Blomquist and Whitehead (1998) claimed that it was not surprising

that the information supplied in the contingent valuation scenario had no significant

effect on WTP.

Table 3-4 Text information treatments for recreational anglers (Boyle, 1989) Group A Group B Group C This last series of questions is designed to determine the economic value of brown trout fishing in southern Wisconsin streams. While answering these questions please keep in mind that we are only talking about trout fishing in southern Wisconsin streams. By southern Wisconsin we mean the area of the state that is south of Highway 33 which runs east-west from Port Washington on the shore of Lake Michigan to LaCrosse on the Wisconsin-Minnesota border.

As for group A plus: Currently, the Wisconsin Department of Natural Resources stocks brown trout in approximately 80 per cent of the streams in southern Wisconsin. In turn, brown trout comprise roughly 70 per cent of the trout caught in southern Wisconsin streams, and the remaining 30 per cent are brook or rainbow trout.

As for group A plus: Currently, the Wisconsin Department of Natural Resources stocks brown trout in approximately 80 per cent of the streams in southern Wisconsin at a cost of about $1.43 per pound of stocked fish. In turn, brown trout comprise roughly 70 per cent of the trout caught in southern Wisconsin streams, and the remaining 30 per cent are brook or rainbow trout.

Source: Boyle (1989, p.59).

Ajzen et al. (1996) examined the effects of strong and weak arguments about the

resource in a contingent valuation scenario on WTP in the context of the perceived

personal relevance of the information supplied. Based on the theory of planned

behaviour (Ajzen, 1991) and the elaboration-likelihood model of persuasion (Petty and

Cacioppo, 1984), Ajzen et al. (1996) hypothesised that: (a) the quality of an argument

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contained in the contingent valuation scenario affects attitudinal judgements and WTP;

(b) the effect of argument quality is stronger when the information is perceived to be

more relevant to the respondent; and, (c) when the information is perceived to be of low

personal relevance, WTP and attitudinal judgements can be influenced by priming of

motivational orientations, such as altruistic versus individualistic orientations, that are

unrelated to the content of the scenario.

Ajzen et al. (1996) sampled 192 students and used an open-ended elicitation

format to investigate WTP for one public good and one private good. Under all

experimental conditions, respondents who read a description of the public good

containing strong arguments indicated significantly higher WTP than those who read a

version containing weak arguments. There was also a significant interaction between

quality of the argument and personal relevance of the good.

Ajzen et al. (1996) also included a number of attitudinal indices designed to

investigate the affects of the attitudinal components described in the theory of planned

behaviour model on WTP. These measures included: attitude toward the product;

intention to pay; attitude toward paying; subjective norms, and; perceived behavioural

control. Correlations between each of these indices and WTP were significant (p < 0.01)

and the effects of argument strength and relevance of information on the attitude indices

were similar to those on WTP (Ajzen et al., 1996, p. 54). Contrary to expectations,

while priming of altruistic or individualistic motivations had a significant effect on

WTP for the public good they had no significant effect on attitudes toward the good.

Ajzen et al. (1996) rationalised that under conditions of low personal relevance and low

motivation to process information about the good, an altruistic motivation can still cause

respondents to report a higher WTP for the good without changing attitudes toward it.

This is consistent with main effect paths proposed in the theory of planned behaviour

(Ajzen, 1991).

3.4.3 Context definition and value formation

The context within which the proposed good is offered in a contingent valuation

experiment provides cues, some intended and some unintended, that may affect

participants construct values (Ajzen et al., 1996; Hanemann, 1995). According to

Bjornstad and Kahn (1996) context includes the way property rights are to be defined,

the intended method of provision and the level of other environmental resources.

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Issues relating to property rights of public goods are controversial. Ownership of

public amenities such as the Great Barrier Reef or World Heritage sites and the extent to

which users and non-users should have to pay for them is an issue that has attracted

public debate in Australia in recent years (Resource Assessment Commission, 1993).

Respondents may perceive that they already have a property right to a particular

amenity and asking them to pay for it ‘again’ could well arouse negative emotions

resulting in high levels of protest behaviour in a survey. This may be particularly

relevant to public recreation amenities like beaches and public parks. Two approaches

to property rights have been used in contingent valuation surveys. The ‘WTP’ approach

requires respondents to indicate how much they would pay to purchase a property right.

The ‘willingness-to-accept’ approach requires people to indicate how much they would

accept in compensation for the loss of a property right. Research has consistently shown

that WTA values are higher than WTP values and in most circumstances the WTP

approach is preferred in contingent valuation studies (Mitchell and Carson, 1989)

The description of the intended method of provision of the good in the

contingent valuation scenario also contributes to the readers’ perceptions about the

reality of the valuation exercise and to perceptions of probability of provision.

According to Mitchell and Carson (1989, p.253) “…provision of a public good by

public charities, like the Salvation Army, tends to evoke a higher WTP than its

provision by some vague government authority or industry”. Selection of an appropriate

and plausible method of provision is important in minimising this method of provision

bias.

Although the NOAA panel (Arrow et al., 1993, p.55) insisted that the elements

of the context of the contingent market should be clearly explained to participants prior

to the elicitation question, few empirical studies have examined the effects of providing

this information. Loomis et al. (1994) tested the effects of providing reminders of

substitute goods and found that this information did not have a significant effect on

WTP for fire hazard reduction strategies using a dichotomous choice elicitation format.

Bohara et al. (1998) tested the effects of providing other context information and found

that respondents provided with information about the costs of a proposed project and the

size of the benefit population reported lower WTP values than respondents who did not

get this information using an open-ended elicitation format. However, this context

information had no effect on reported WTP when using a dichotomous choice format.

Bohara et al. (1998, p.161) claimed that this suggested that the dichotomous choice

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format was less sensitive to context and that the results provided support for the NOAA

panel’s (Arrow et al., 1993) preference for this elicitation format.

3.4.4 Information about income and relative expenditures and value formation

One criticism that has been levelled at the contingent valuation method is that it

produces invalid results because respondents fail to take into account their budget

constraints (Diamond and Hausman, 1994; Portney, 1994). According to consumer

theory, knowledge of an individual’s budget constraint and the price of substitute goods

will affect the demand equation for a good and, therefore, should affect WTP (Loomis

et al., 1994). This issue was recognised by the NOAA panel in their recommendation

that respondents in a contingent valuation study should be reminded of their budget

constraints and substitute commodities “…forcefully and directly prior to the main

valuation question to assure that respondents have the alternatives clearly in mind”

(Arrow et al., 1993, p. 55). Empirical studies by Loomis et al. (1994) and Bateman and

Langford (1997) have tested the effects of adding explicit information to the scenario to

remind respondents that expenditure on non-market goods will affect their ability to

consume market goods but the results of such studies have been inconclusive.

Loomis et al. (1994) used a split sample experimental design to investigate the

effects of explicit reminders of budget constraints on household’s WTP for fire

prevention programs in old growth forest. They found no significant difference in the

‘with’ and ‘without’ budget information treatments and offered three possible

interpretations of this result. One explanation was that respondents to this contingent

valuation scenario did not need reminding of their budget constraints and alternative

consumption possibilities and had already taken these into account when answering the

WTP question. However, it may also be the case that the hypothetical nature of the

scenario meant that respondents did not give sufficient thought to the real dollar

consequences of their responses and reminders of real budget constraints have no

significant effect on commitment of ‘hypothetical dollars’. A third explanation proposed

by Loomis et al. (1994) was that, since participants are unused to thinking about

programs of this type in dollar terms, they may not be able to identify a discreet dollar

value but rather identify a range of values for the good that are equally acceptable to

them. In this context the relatively minor distinctions introduced by information about

substitutes and budget constraints are not of sufficient magnitude to affect the reported

WTP.

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Bateman and Langford (1997) investigated the effects of including reminders of

budget constraints in a contingent valuation study of woodland recreation. They found

that reminders of budget constraints had a significant effect on WTP, though not in the

expected direction. They hypothesised that studies that had failed to find any

relationship between reminders of budget constraints and WTP for a public good may

have done so because respondents were asked to consider the effects of the commitment

on gross income and not on the more relevant recreation budget. A sub-sample of

participants in their study was asked to calculate their annual expenditure on all

recreation goods before they were asked to indicate their WTP for woodland recreation.

Most commentators on the budget constraint effect have assumed that reminders of this

constraint would cause reduced WTP as respondents take into account the other

demands on their budget (Diamond and Hausman, 1994). But the results of Bateman

and Langford’s (1997) study indicated that respondents who calculated their total

annual recreation budget before valuing the public good actually indicated a

significantly higher WTP than those who had no reminders of their budget constraint.

Bateman and Langford (1997) proposed two different interpretations of the

result. In the first they argued that respondents forced to estimate their total recreation

budget find that, on average, it is larger than they had realised and that “…after

considering the apparent importance of recreation in their preference sets such

respondents gave higher WTP sums than would otherwise have been stated” (Bateman

and Langford, 1997, p.1223). If this argument was supported by more extensive

research it would imply that many of the studies of recreation values of public goods

that have not incorporated what Bateman and Langford (1997) describe as ‘explicit

budget constraint questions’ have actually produced conservative estimates of WTP

rather than the inflated values assumed by Portney (1994). An alternative explanation of

these results offered by Bateman and Langford (1997) is that calculation of the annual

recreation budget simply provides an anchor that influences the stated WTP and that

this effect was exacerbated by the use of an open-ended elicitation format in this study.

3.4.5 Visual communication devices in contingent valuation experiments

Visual aids are often regarded as valuable in communicating complex

information and contingent valuation researchers have used communication tools such

as maps and diagrams (Smith and Desvousges, 1987; Loomis and du Vair, 1993);

photographs and drawings (Carson et al., 1992; Drake, 1992); and even video (Opaluch

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et al., 1993; Samples et al., 1986) to enhance the clarity of the contingent valuation

scenario. However, Loomis and du Vair (1993, p. 297) noted that marketers and

psychologists have long recognised that “…alternative methods of conveying

information can have profoundly different impacts in terms of a consumer’s

interpretation and perceptions of the content”. The NOAA (Arrow et al., 1993)

expressed concern about the potential effects of using visual images as communication

devices in contingent valuation surveys and recommended a strict regime of testing

prior to their use. Despite this level of attention, only rarely have split sample

experimental designs been used to investigate the extent to which use of these visual

aids affects responses (Loomis and du Vair, 1993; Navrud, 1997; Samples et al., 1986;

Smith, Zhang and Palmquist, 1997).

Navrud (1997) credited Randall et al. (1974) with being the first to use

photographs to assist communication of changes in environmental quality in a

contingent valuation study. Randall et al. (1974) used photographs to illustrate the

visibility benefits associated with a clean air campaign in California and Mitchell and

Carson (1989, p. 12) described the study as being notable for its “theoretical rigour” and

for having an experimental design that allowed the researchers to examine the effects of

different payment vehicles on WTP. However, Randall et al. (1974) did not attempt to

compare the effects of using photographs in the scenario rather than other

communication devices.

Loomis and du Vair (1993) tested the effects of using different graphical

presentations on WTP for reduced health risks that could be obtained from a hazardous

waste control program in California. According to the authors, risk communication is

difficult for a number of reasons: the information is often highly technical, complex and

uncertain; experts frequently disagree on risk estimates; the public tend not to trust

regulatory agencies; there are different definitions of risk; the public often have strong

beliefs about issues that are resistant to change, and; many people have difficulty with

probabilistic information (Loomis and du Vair, 1993). Loomis and du Vair (1993) gave

half the sample information in the form of a series of pie charts while the other half

received the same information represented as a risk ladder. The risk ladder elicited

significantly higher WTP values than the pie charts at two of the three magnitudes of

risk change tested (i.e. 25 per cent and 75 per cent reductions in risk) but not for the

middle level of risk change (i.e. 50 per cent reduction in risk).

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Smith et al. (1997) tested four different photographic depictions of marine debris

on recreational beaches in New Jersey and North Carolina. Local residents median WTP

for a clean-up program appeared to be consistent with prior expectations, that is

photographs depicting more marine debris were associated with higher WTP values

than photographs depicting less marine debris. However, largely due to the limitations

imposed by a small sample size, the study was not able to confirm that the differences in

WTP were significant.

Recent technological improvements and associated cost reductions in video

technology have led to increased use of this medium in communication of contingent

valuation scenarios (for an example see Opaluch et al., 1993). An important advantage

of this method over ‘live’ presentations of the information is the ability to standardise

every aspect of the message including tone of voice and timing so that every respondent

is exposed to the same message.

In one of the first empirical tests of information effects using the documentary

medium, Samples et al. (1986) investigated the effect of information relevance on

student’s WTP to preserve humpback whales. They claimed that participants who

viewed a 25 minute film about humpback whales reported a significantly higher WTP

for their preservation than a control group who viewed a film unrelated to whales.

However, the mean WTP values were only significantly different at the 0.20 level and

this is outside the normal decision criteria for hypothesis testing (Samples et al.,1986, p.

310).

Navrud (1997) also tested the effects of using video and photographic images in

the contingent valuation scenario on respondent’s attitudes and WTP to protect

wilderness areas in a region of Norway from hydroelectric development. Using a split

sample approach local residents were shown combinations of two different videos and

photographs but the results failed to show a significant relationship between the

communication device and the stated WTP. Navrud’s (1997) explanation for this result

was that the residents of the area where already well informed about the scale and

potential consequences of the project and probably had quite strong attitudes toward it

already so that the communication device did not significantly affect their stated WTP.

This study did not compare the effects of ‘text only’ descriptions with descriptions

utilising visual aids and Navrud (1997, p. 292) concluded that there is a need for more

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research that considers “…the effectiveness and potential problems in using visual aids

in contingent valuation surveys”.

In summary, despite the potential for undesirable information effects recognised

by the NOAA panel (Arrow et al., 1993), there have been relatively few reported

empirical investigations of the effects of providing different types of information using

text descriptions and even fewer that have tested the effects of using alternative visual

communication devices. Studies that have tested the effects of various amenity

descriptions have generally provided support for the theoretical validity of contingent

valuation by showing that increased relevant information results in increased WTP

(Ajzen et al., 1996; Bergstrom et al., 1990) unless levels of previous knowledge were so

high that the additional information did not alter respondents already well formed

preferences (Boyle, 1989). Studies that have investigated the effects of providing

reminders about budgets and substitute goods (Loomis et al., 1994) have also shown a

surprisingly high level of preference stability or effects that ran contrary to the a priori

expected direction (Bateman and Langford, 1997). Finally, and despite the NOAA

panel’s concerns (Arrow et al., 1993), the few studies that have tested the effects of

photographs and video on respondents reported WTP have failed to find significant

evidence of undesirable information effects induced by these devices (Navrud, 1997;

Samples et al., 1986).

3.5 Interpretation of stated values

It has long been recognised that the contingent valuation approach to placing

monetary values on natural resources has the potential to generate powerful emotions in

respondents (Milgrom, 1993). These emotions may be translated into a refusal to

participate in the contingent valuation exercise, a protest zero bid, or some form of

strategic non-zero bid that does not reflect the respondents true values but attempts to

influence the outcome of the study (Jorgensen, Wilson and Heberlein, 2001; Lindsey,

1994). Responses that are not easily explained in terms of the individual’s utility

function have the potential to damage the validity of the contingent valuation method

and have led some critics of the method to question what the WTP responses actually

mean (Milgrom, 1993; Schikade and Payne, 1993). In response the NOAA panel

recommended that further research be conducted to assist in interpretation of protest

responses and that contingent valuation instruments should “include a variety of other

questions that help to interpret the responses to the primary valuation question”

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including questions about prior knowledge of and interest in the site, and attitudes

toward the environment (Arrow et al., 1993, p. 34).

3.5.1 Protest responses

Diamond and Hausman (1993, p.34) defined a protest zero as one given

“…because a respondent wishes to make a protest against the payment vehicle or some

other aspect of the survey, not because the respondent truly places zero value on the

good”. Protest responses have the potential to significantly affect the estimates of

consumer surplus derived from a contingent valuation study and this may have

important consequences in benefit cost analysis of projects (Milon, 1989). According to

Mitchell and Carson (1989) the number of protest zeros may depend on the amenity

being valued and the payment vehicle and can be substantial even in a well structured

and administered survey. For example, Desvousges et al. (1983) classified

approximately half of the zero bids in a study of WTP for improved recreational water

quality as protest bids. Thus, identification and treatment of such bids is critical when

the aim of the study is to generate estimates of aggregate community welfare for a good.

Protest definitions and treatment approaches have varied from study to study,

often with little justification for the adopted approach to the extent that Jorgensen et al.,

(2001) claimed that, at times, this had threatened the validity of aggregate assessments

of non-market values. Indeed, some of the strongest critics of the contingent valuation

method have seized upon the scale of this problem and the lack of a consistent approach

among practitioners as further evidence for the invalidity of the technique (Diamond

and Hausman, 1993). However, it is doubtful whether a universally accepted approach

could ever be agreed upon since each valuation exercise is unique and, as Jorgensen and

Syme (1995, p.401) pointed out, “…protest bids and their nature will vary according to

the resource being valued”. Thus, it is important to develop an accurate picture of the

motives that cause participants in a contingent valuation experiment to respond in a

particular way and formal attitude measurement approaches can assist in this.

3.5.2 Lexicographic preferences

In a contingent valuation experiment respondents are asked what they would be

willing to give up for a gain in a non-market good (or accept as compensation for an

environmental loss). But, many individuals refuse to participate in trade-off decisions

involving environmental goods (Kotchen and Reiling, 2000; Spash and Hanley, 1995).

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One reason for refusal to participate is possession of what Freedman (1986) described

as lexicographic preferences. According to Rosenberger, Peterson, Clarke and Brown

(2001), a variety of motives might cause respondents to express lexicographic responses

but the most common of these is holding deontological or rights-based ethical beliefs

about ecosystems or species. Neoclassical economics assumes that changes in welfare

associated with a change in supply of one good, or one bundle of goods, can be

compensated for by changes in supply of another (Rosenberger et al., 2001) but, for

individuals who hold lexicographic preferences, no amount of financial compensation

can restore the utility lost from the reduced supply of an environmental good. Other

reasons for expressing lexicographic preferences include possession of dual non-

reducible utility functions, ambivalence between values that the respondent finds hard to

compare, an inability to convert environmental values into monetary values, and the

belief that a good is essential to sustain life (Rosenberger et al., 2001).

Spash, van der Werff ten Bosch, Westmacott and Ruitenbeek (2000) argued that

extreme lexicographic positions are rare because of the implied ranking of a goods

value above all else. However, a ‘modified’ lexicographic position might be ascribed to

individuals who, once they have achieved a minimum standard of living in terms of

housing, and food and health, then refuse to trade-off environmental degradation in

favour of greater personal welfare. Milgrom (1993, p. 422) suggested that the frequent

occurrence of protest responses in contingent valuation studies “…tends to confirm that

values based on notions of rights and obligations are prevalent in significant portions of

the population”.

Within the contingent valuation framework, lexicographic preferences may lead

respondents to lodge a protest zero bid, an implausibly high bid or simply refuse to

complete the survey or interview. Evidence of lexicographic preferences exists in the

contingent valuation literature. Rowe et al. (1980) found that over half their respondents

refused to accept any level of compensation to allow air pollution. Stevens, Echeverria,

Glass, Hager and More (1991, p.397) found that 25 per cent of respondents to a survey

of WTP for species preservation claimed lexicographic preferences for wildlife. Spash

and Hanley (1995, p.203) also found that 23.2 per cent of a sample of the general public

in the UK expressed lexicographic preferences when asked to value preservation of

particular species and ecosystems. Finally, Spash (2002, p. 677) found that 14 per cent

of a sample of residents from Jamaica, and 28 per cent of a sample of residents from

Curacao, expressed lexicographic preferences for marine biodiversity.

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3.5.3 Protest definition and the contingent market framework

Lindsey (1994) argued that the definition of a protest response should depend on

whether the contingent valuation question is framed as a private market model or a

political referendum model. In a contingent valuation exercise that attempts to simulate

a private goods market the bid response is interpreted as the ‘true’ value of the good to

the respondent and is assumed to be independent of the measurement process. Thus,

protest responses are defined as those that appear to be motivated by the measurement

process such as objections to the payment vehicle, lack of information in the contingent

valuation scenario and judgements about procedural fairness (Jorgensen et al., 1999).

In the referendum approach the bid is interpreted as an indication of behavioural

intention and, according to Jorgensen et al. (1999, p.132), “…many of the protest

responses are considered to be legitimate influences on actual behaviour”. The critical

measure of central tendency is the median bid, indicating the point at which 50 per cent

of the respondents would vote for the policy, and, since WTP distributions in contingent

valuation studies are usually positively skewed, the median is likely to be a more

conservative value than the mean. McGuirk, Stephenson and Taylor (1989, cited in

Halstead, Luloff and Stevens, 1992, p.162) argued that all protest bids in a referendum

model should be considered legitimate since “…respondents are essentially valuing a

proposed policy, not just a commodity”. A respondent may value a public good highly

but be unwilling to vote for it because they don’t trust government to spend tax

revenues efficiently or according to their own preferences. Because of this, Lindsey

(1994, p.122) suggested that the political referendum model is less stringent in

classification of protest zeros and “…more zeros will be accepted at their face value”.

Table 3-5 provides a summary of the approaches to identifying protest bids in

the private goods and political models. In the political model objections 1, 2 and 3 all

imply that the respondent might have bid differently given more information or if the

question had been presented differently. As such, the practitioner may want to classify

these zero responses as protests or valid zero bids and the prudent approach in benefit

cost analysis would be to estimate consumer surplus using both sets of assumptions and

see if this has any affect on the decision criteria for the project.

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Table 3-5 Summary of identification criteria for protest bids

Classified as protest bid?

Objection / protest: Private goods model

Political market model

1. Can’t or won’t place dollar value (Lexicographic preferences) Yes Perhaps

2. Not enough information in the CV scenario Yes Perhaps

3. Objections to the way the question is presented. Yes Perhaps

4. Objections to the payment vehicle Perhaps No

5. Objections about procedural fairness Perhaps No

6. Objections to government waste Perhaps No

7. Objections to new taxes Perhaps No

8. Others (industry, users etc.) should pay. Perhaps No

9. Can’t afford to pay Perhaps No

Source: Adapted from Lindsey (1994, p. 123) and Jorgensen et al. (1999, p.135).

Lindsey’s (1994) study was the first to attempt a systematic identification and

classification of protest responses. In a contingent valuation study of WTP for storm

water controls, Lindsey (1994) followed the WTP elicitation question with seven

possible reasons for providing a zero response and an eighth option that invited

respondents to provide a reason not listed. Only three percent of those who registered

zero response selected “That is what it is worth to me” from the options available

confirming that they genuinely held zero value for the good. All the others indicated

some form of motive that may or may not be interpreted as a protest depending on the

market context. Of those who reported zero WTP, 47 per cent listed concerns about

government waste and over taxation in general as the reason for their zero valuation

while another 25 per cent indicated that they thought, “Industry should pay”, and only

six per cent of zero bids were explained by concerns with the survey instrument

(Lindsey, 1994, p.123). Using a private market model, Lindsey (1994) showed that

removal of all bids that might potentially be interpreted as protest bids resulted in a

significant increase in the mean WTP for the good. However, the political model was

more robust and removal of all bids that might be interpreted as protest bids in this case

had no significant effect on WTP.

A notable omission in Lindsey’s (1994) study was an opportunity for

respondents to explain a zero bid in terms of a budget constraint or inability to pay for

the good. The question of whether to define zero responses as protests on the basis of a

claimed budget constraint is only problematic in a private goods model when the

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respondent actually holds a positive consumer surplus for the proposed good. However,

Jorgensen et al. (1999) argued that decision rules in relation to claimed budget

constraints have been applied inconsistently by researchers, often with no regard for the

context of the market model and with limited or no justification for the chosen

treatment. Jorgensen et al. (1999) demonstrated that claimed inability to pay was

representative of the same latent dimension as more problematic responses related to

fairness and equity. Furthermore, Jorgensen et al. (1999) and Jorgensen and Syme

(2000) demonstrated that protest responses were not independent of the value elicitation

format used. This led them to conclude that it was difficult to justify censoring one

category of protest belief and not another when they might both be representative of the

same underlying belief construct (Jorgensen and Syme, 2000).

3.5.4 Treatment of protest zeros

Protest bids of one form or another can comprise a substantial proportion of the

responses in a contingent valuation study. Edwards and Anderson (1987) claimed that

this can be anywhere between 10 and 50 per cent of bids depending on the nature of the

good, the information provided and the form of the elicitation question (WTP or WTA).

Responses defined as protests are frequently censored from the analysis but there are a

number of issues and alternative treatments that should be considered before resorting to

this.

The first problem is that while retaining protest bids in the data set can

significantly bias the cumulative WTP estimates, censoring of these bids can itself

introduce sample bias where the protest belief is not independent of WTP (Jorgensen et

al., 2001). Censoring cases that have registered a protest bid essentially treats them as

non-respondents. Halstead et al. (1992) raised concerns with this approach because the

characteristics of non-respondents and protesters to surveys of this type might be

expected to be quite different. In particular, non-response is associated with low interest

levels in the issues (Dillman, 1999) while protest bids may be associated with very high

levels of interest in the issues. There is also some evidence to suggest that respondents

to surveys of this type have higher levels of education and higher incomes than non-

respondents (Halstead et al., 1992). Thus, simply censoring protest cases may deprive

the analysis of useful information relating to the socio-demographic and psychographic

characteristics of a significant number of respondents (Jorgensen and Syme, 1995).

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As an alternative to the two extremes of dropping the cases entirely or including

the cases and treating them as a legitimate bid, Halstead et al. (1992) suggested that the

protest WTP values could be replaced with sample means or adjusted values based on

analysis of the socio-demographic characteristics of each case. This approach has the

advantage of retaining the other information in the case without exerting undue

influence on the overall mean WTP.

3.6 Summary

Growing interest in environmental issues and the controversial nature of stated

preference measures for estimating human values for environmental resources has

ensured that the contingent valuation method has been an important focus of empirical

research over the last three decades. This chapter started by introducing a conceptual

model, adapted from Bjornstad and Kahn (1996), which can assist in classifying the vast

amount of research that has been conducted on the contingent valuation method. While

the focus of this thesis is on information and attitudes in contingent valuation, sufficient

doubt has been cast on the reliability and validity of the method (Boyle and Bergstrom,

1999) to demand that this review open by considering research that has sought to

investigate these dimensions of the contingent valuation method.

Diamond and Hausman (1994) have led the criticism of the contingent valuation

method on the grounds that it produces results that cannot be validated. Since no single

test of validity is available, the process of identifying and reducing systematic error in

contingent valuation instruments has been an ad hoc affair drawing upon various rules

of thumb developed through experience and evidence from a growing number of

published experimental treatments (Mitchell and Carson, 1989). The results of these

tests are, as yet, inconclusive. Contingent valuation methods have consistently

performed poorly in tests of criterion validity on public goods (Brown et al., 1996;

Byrnes et al., 1999). However, meta-analysis of multiple studies by Cummings et al.

(1986), Mitchell and Carson (1989) and Carson et al. (1996) have all found reasonably

strong evidence to support convergent validity of contingent valuation estimates. The

NOAA expert panel, set up specifically to investigate issues of validity and

methodology in contingent valuation, concluded that its use in measuring passive values

was controversial but, that following the guidelines suggested by the panel, it could

produce results that were reliable enough to be the starting point for damage assessment

that included significant lost passive use values (Kopp and Pease, 1997).

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The fourth section in this chapter described research that has investigated the

effects of amenity and context definition, and information provision on formation of

construct values. The results from experiments designed to investigate these

fundamental issues have some important implications for the research in this thesis.

Bergstrom et al. (1990) and Samples et al. (1986) demonstrated the importance of

implicitly describing project benefits in the text of the scenario. Ajzen et al. (1996)

showed that household relevance of the good influences WTP values and that previous

knowledge and formed attitudes toward the target may reduce the affects of visual

stimuli. In investigating information effects on WTP for a beach protection project it

was important to include measures of household relevance, previous knowledge and

attitudes in the survey instrument so that any significant effects they had could be

identified.

It is clear that a large number of respondents to contingent valuation surveys fail

to report their true value for the good in question and this has the potential to threaten

the validity of the method. Thus, the final section in this chapter examined issues related

to interpretation of contingent valuation responses and particularly the role of attitude

measurement in interpreting protest responses. Accurate identification of protest and

strategic responses requires understanding of the respondent’s motives and analysts

have sought to probe these using follow-up questions in interviews and self-completion

mail surveys. The importance of understanding the respondent’s underlying attitudes

and motives is highlighted by Jorgensen and Syme’s (1995, p.401) comment that; “The

validity of contingent valuation estimates will be clearer when we have greater

understanding of the values and perceptions that determine such responses”. Contingent

valuation studies that combine formal measures of attitudes toward target objects and

behaviours with measures of WTP may be able to make a valuable contribution to our

understanding of the motives behind participant’s responses.

The role of attitudes and beliefs in value formation is a central focus of this

thesis and these psychological concepts will be explored in Chapter 4.

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CHAPTER 4

ATTITUDES AND INFORMATION IN CONTINGENT VALUATION

This chapter will review the major concepts and models from social psychology

that are relevant to the contingent valuation response. It will start by considering the

structure and formation of attitudes and their role as determinants of behavioural

intention and behaviour. It continues by reviewing concepts and models that attempt to

explain the role of information in forming and changing attitudes and relates these to the

context of a contingent valuation experiment. Finally, since the current research called

for the development of a number of attitude measurement scales, a brief introduction to

the issues relevant to attitude measurement is provided.

4.1 Decision making in contingent valuation experiments

People find making decisions difficult in many contexts because of the various

uncertainties and conflicts that the alternative courses of action present (Shafir,

Simonson and Tversky, 1997). The contingent valuation scenario provides information

about a good with which the respondent may have limited or no direct experience and

there is evidence from interviewer reports and item non-response rates to suggest that

respondents find the choice process in contingent valuation surveys particularly difficult

(Bishop et al., 1986; Mitchell and Carson, 1989). Respondents may experience conflict

over how much of one attribute (income) they are willing to trade-off in favour of

another (recreation or conservation). They may have doubts about the success of the

project or they may be uncertain about the exact consequences of their response.

It is generally recognised that preconceived attitudes play an important part in

decision-making (Goldstein and Hogarth, 1997). Allport (1935, p. 810), one of the

pioneers of attitude theories, conceived of attitudes as “…exerting a directive or

dynamic influence upon the individual’s response to all objects and situations with

which it is related”. Thus, previously conceived attitudes toward target objects such as

endangered species or behaviours such as recycling may assist respondents to make

valuation decisions quickly when presented with an elicitation question in a contingent

valuation survey. But, attitude structures are dynamic and may be changed by exposure

to information, particularly if the information triggers a strong emotional (affective)

response of the type that may occur if respondents are exposed to visual images of

environmental damage or attractive but endangered species. While the nature of the

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information provided and the communication devices used in the contingent market

scenario have been shown to have effects on WTP (Blomquist and Whitehead, 1998;

Loomis and du Vair, 1993), the path between attitudes and WTP has rarely been

explored (see Ajzen et al., 2004 and Jorgensen et al., 2001 for examples).

Since this research aimed to investigate the effects of information on attitudes

and behavioural intention within the context of a contingent valuation experiment the

next section will review basic concepts of attitude structure and function.

4.2 The structure and function of attitudes

The term attitude has found a place in everyday language to describe our love or

hate, approval or disapproval of things or people. Petty and Wegener (1998, p. 323)

describe attitudes as “…a person’s overall evaluation of persons (including oneself),

objects and issues”. An attitude is an internal state and, as such, is not directly

observable but is inferred from observed responses to stimuli (Eagly and Chaiken,

1998). The observable responses may take the form of verbal and non-verbal behaviour

toward the attitude object which may be tangible, for example a building or a landscape,

or abstract, for example the notion of conservation. According to Hogg and Vaughan

(1998, p. 116) attitudes are widely accepted as a construct that “…precedes behaviour

and guides our choices and decisions for action”. Attitudes, whether pre-conceived or

formed as a result of the contingent valuation process, also guide participant’s responses

to a contingent valuation question.

The functionalist approach to attitudes is that they allow individuals to adapt to

their environment (Eagly and Chaiken, 1998). Attitudes perform important functions by

allowing people to minimise the time and effort required to evaluate a situation. Without

previously formulated attitudes, individuals would have problems understanding events

around them and reacting in ways that maximise opportunities and minimise risks

(Hogg and Vaughan, 1998). Katz (1960) suggested that there are different types of

attitudes serving different functions such as knowledge acquisition, instrumentality,

ego-defence, and value expressiveness.

Following research by Rosenberg and Hovland (1960), later supported by

Breckler (1984), a three-component model of attitude structure, comprising cognitive,

affective and behavioural responses, illustrated in Figure 4-1, has become popular in

social psychology. The thoughts or beliefs that people construct to link an attitude

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object and the attributes that they ascribe to it represent the cognitive component of

attitude structure. The feelings, moods, emotions and sympathetic nervous system

activity that people experience when exposed to the attitude object, and later come to

associate with it, represent the affective component of attitude structure. Finally, a

person’s manifest actions toward the attitude object as well as their intentions to act,

which may or may not be activated at a later time, represent the behavioural component

of attitude structure.

Figure 4-1 The Three-Component Model of Attitude Structure

(Adapted from Petty and Wegener, 1998, p. 326)

Although attitudes can be expressed and formed through cognitive, affective and

behavioural processes, it is not necessary for all three evaluative processes to be

involved in formation of a particular attitude. Attitude formation and structure may be

based primarily or exclusively on any one of the three evaluative processes (Eagly and

Chaiken, 1998). Some attitudes may be formed exclusively through acquiring beliefs

about the attitude object resulting from indirect experiences. However, Zanna and

Rempel (1988) showed that when people have direct experiences with the stimulus,

attitudes are formed via all three processes. The three-component model of attitudes

implicitly links attitude and behaviour, a relationship that is still the focus of

considerable research.

The three-component model of attitude structure is not intended to imply that a

particular attitude structure is static (Eagly and Chaiken, 1998). In fact an individual’s

Affective Processes

Cognitive Processes

Behavioural Processes

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attitude toward a particular object can be different at different times, even when there

has been no additional contact with the object and Higgins (1996) explained this

dynamic nature of attitudes in terms of available and accessible structure. The

availability of a structure describes the extent to which it is stored in memory and its

accessibility describes the structure’s ability to be activated at a particular time. An

attitude can only affect behaviour if it is activated by exposure to the target object or

cues related to it. The ease with which an attitude can be recalled from memory

significantly determines its ability to affect behaviour (Fazio, 1986). Thus, an individual

might have an extensive set of associations relating to a particular attitude object stored

in memory but not all elements of the structure would be accessible and able to

influence responses at a particular time. A range of external situational variables and

internal states might dictate the extent to which elements of the attitude structure

become activated.

4.2.1 Attitudes toward the environment

Public awareness of environmental issues has increased over the last three

decades in almost all developed countries (Barr, 2004; Ritov and Kahneman, 1997).

Media attention on issues such as pollution, global warming, ozone depletion and

species extinction have captured the public’s attention and environmental issues

generate strong responses in public attitude surveys. Surveys conducted among the

general population in USA have found that 63 per cent of respondents identified with

the “environmentalist” label (Ritov and Kahneman, 1997, p.33) and 56 per cent of the

respondents in another survey indicated that environmental protection should be given

priority even over economic growth (Dunlap, 2002, p.12). In Europe, similar population

surveys conducted in 1992 found that 85 per cent of respondents thought that protecting

the environment and fighting pollution were ‘urgent’ problems (Finger, 1994, p.143). In

Australia, 62 per cent of respondents to a survey of the general population indicated that

they were concerned about the environment (ABS, 2001, p.5).

The growing interest in the community in environmental issues has led

researchers to suggest that individuals hold identifiable attitudes toward both general

and specific environmental issues that have important influences on behaviour (Luzar

and Cosse, 1998) and the field of environmental psychology has become a popular one

for researchers. Kaiser, Wolfing and Fuhrer’s (1999, p.1) analysis of the PsychInfo

database revealed that almost two thirds of the papers published in environmental

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psychology in the previous thirty years related to the concept of attitude (847 of the

1361 papers) and over ten percent of the papers specifically explored the environmental

attitude-behaviour relationship. However, relatively few papers have explored the

relationship between environmental attitudes and behaviour in the context of a

contingent valuation study (for examples see Jorgensen and Syme, 2000; Kotchen and

Reiling, 2000). Fewer still have attempted any sort of formal testing of attitude-

behaviour models in the context of a contingent valuation study (one example is Ajzen

et al., 2004). Kotchen and Reiling (2000) conclude that more research integrating the

psychological and economic perspectives might help to improve non-market valuation

methods and interpretation of results.

Evidently the values associated with environmental protection are widely shared

in developed countries but to what extent do these values influence behaviour? The next

section of this review will investigate the attitude-behaviour relationship.

4.3 Attitudes as predictors of behaviour

Inherent in many of the definitions of attitude is an assumption that attitudes

cause people to behave in particular ways. Attempts to model the attitude-behaviour

relationship fall predominantly into two categories. First, the attitude strength and

accessibility theories of the type proposed by Fazio (1986; 1989) have attempted to

explain attitude activation as a function of the strength of related attitudes and the speed

or readiness with which they could be accessed (Eagly and Chaiken, 1993). The second

approach, based on Ajzen and Fishbein’s (1977, p.888) assertion that “…attitude is only

one of the many factors determining behaviour”, have been labelled expectancy-value

theories. Although Fazio (1986) described his approach as an alternative to expectancy-

value theories the two are not incompatible and Eagly and Chaiken (1993, p.204)

argued that the former “…should be regarded as a very useful supplement to”

expectancy-value models.

Expectancy-value models attempt to explain the psychological processes that

intervene between activation of an attitude and a behavioural response. In these models,

attitude toward the behaviour is a function of the value assigned to the perceived

consequences of the behaviour and the subjectively assessed probability of the

consequences actually occurring (Eagly and Chaiken, 1998). The behavioural response

is moderated by the extent to which the individual perceives that they have the resources

and ability to perform the behaviour (Ajzen, 1985). Expectancy-value models have been

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used frequently in analysis of environmental behaviour (Ajzen et al., 1996; Cheung,

Chan and Wong, 1999; Kaiser et al., 1999) and are the analytical framework adopted

for this thesis.

4.3.1 Expectancy-value models of the attitude-behaviour relationship

According to expectancy-value theories a single behaviour may be moderated by

a number of factors in addition to the attitude toward the target object. An individual

may have a very positive set of attitudes toward protection of a particular environmental

site (the target) but, for various reasons such as income constraints or distrust of the

political process, have a negative attitude toward making a financial contribution toward

its protection (the related behaviour). The moderating factors do not need to be taken

into account when forming an attitude toward the object because no action is called for

at this stage. However, they may be taken into account when forming attitudes toward

behaviour relating to the object because this is more proximal to the end behaviour.

The most widely cited expectancy-value models are those proposed by Ajzen

and Fishbein (1980) and later by Ajzen (1985). Ajzen and Fishbein’s (1980) theory of

reasoned action identified three broad constructs of beliefs, intention and action. The

‘intention’ to perform an action was identified as the immediate precursor of the overt

behaviour. Intention was described as a function of one’s attitude toward the behaviour

and the subjective norms that are determined by one’s perception of the expectations of

significant people around us. In the theory of reasoned action all behaviour was

considered to be under the person’s conscious control but, according to Hogg and

Vaughan (1998), in reality people frequently perceive that they have less than full

control over many behaviours. To incorporate this aspect, Ajzen (1985) developed the

theory of planned behaviour by introducing the concept of perceived behavioural

control to the basic model to represent the extent to which people believe it will be

possible for them to perform the action. This variable will be influenced by respondents

past experiences and their assessment of the resources and opportunities that are

available to them. According to Madden, Ellen and Ajzen (1992) the inclusion of the

perceived behavioural control variable significantly improved the predictive ability of

this model in experimental studies of the attitude-behaviour relationship where people

believed they had little control over the behaviour. The theories of reasoned action and

planned behaviour are represented in Figure 4-2.

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Figure 4-2 The Theories of Reasoned Action and Planned Behaviour

(Adapted from: Hogg and Vaughan, 1998; p. 128)

In addition to the variables identified in the theory of planned behaviour (Ajzen,

1985) other researchers (Biddle, Bank and Slaving, 1987; Charng, Piliavan and Callero,

1988) have proposed a category of outcomes, described as self-identity outcomes,

which describe the extent to which the behaviour is expected to “…affirm one’s self-

concept” (Eagly and Chaiken, 1998; p. 298). Triandis (1980) also suggested that some

behaviour is actually the result of well-learned pre-dispositions to respond in a

particular way and Ouellette and Wood (1998) provided empirical support for this

hypothesis by showing that habit is as effective as attitude in predicting behaviour in

frequently encountered choices like wearing a seat belt.

To acknowledge the contribution of these additional variables, Eagly and

Chaiken (1993) proposed a ‘Composite’ attitude-behaviour model (Figure 4-3) which

built on the basic components of the theories of reasoned action and planned behaviour.

The model distinguishes between attitudes toward the target and attitudes toward

behaviour related to the target. The expected consequences of behaviour are divided

into utilitarian outcomes, consisting of direct rewards and punishments, and normative

outcomes, consisting of the individual’s perception of the extent to which significant

Intention Action

Subjective NormsBased on beliefs about:

approval or disapprovalof significant others

Attitude towards thebehaviour

Based on beliefs about:consequences of actionlikelihood of outcomes

Perceived behaviouralcontrol

Based on beliefs about:resourcesopportunities

Behavioural intentionEffectiveness depends on:

corresponding specificitystability over time intervaldegree of volitional control

Behaviour

Beliefs

94

others approve or disapprove of the behaviour. Pre-dispositions to behave in particular

ways are incorporated in Eagly and Chaiken’s (1993) model as habits that may exert a

moderating influence on attitude structure or directly on the associated behaviour.

Figure 4-3 A Composite Attitude-Behaviour Model

(Source: Eagly and Chaiken, 1998; p. 298)

4.3.2 Predicting behavioural intention and behaviour

Early research, notably the classic study by La Piere (1934), demonstrated only a

weak correlation between attitudes and behaviour and caused some to question the

validity of the assumptions made by early attitude theorists (Deutscher, 1966; Wicker,

1969). However, later recognition of the complexity of attitude structures led to research

that produced stronger support for the attitude-behaviour relationship (Fishbein and

Ajzen, 1974; Weigel and Newman, 1976). Of primary importance was the recognition

that attitudes are target specific and an individual’s attitude toward a target object was

different from their attitude toward behaviour relating to the target (Ajzen and Fishbein,

1977).

Habit

Attitude towards target

Utilitarian outcomes

Normative outcomes

Self-identity

outcomes

Attitude toward

behaviour

Intention

Behaviour

95

The expectancy-value models developed by Ajzen and Fishbein (1980) and

Ajzen (1985) have provided the theoretical foundation for many of the empirical

investigations of the attitude-behaviour relationship over the last 25 years. Ajzen’s

(1985) theory of planned behaviour has been used in analysis of attitude-behaviour

relations in, among other fields, health (Reinecke, Schmidt and Ajzen, 1996), leisure

participation (Ajzen and Driver, 1992), dietary choice (Berg, Jonsson and Conner,

2000) and pro-environmental behaviour (Cheung et al., 1999), and a substantial body of

evidence has accumulated to support its validity as a predictive model.

Ajzen (1991) reviewed 19 studies of behavioural intention and 17 studies of

actual behaviour in which a theory of planned behaviour framework was used to predict

the dependent variable. In the models reviewed by Ajzen (1991) the regression

coefficients for behavioural intention and perceived behavioural control indicated that

they were both significant predictors of most types of behaviour. However, for

behaviours where external constraints to behaviour were perceived to be substantial, for

example losing weight and getting a good academic grade, perceived behavioural

control was the only significant predictor. In contrast, for activities where external

constraints to behaviour were few, such as voting behaviour and attending class, only

behavioural intention was a significant predictor of the behaviour.

The theory of planned behaviour model predicted a substantial amount of the

variation in the dependent variable in each of the studies reviewed by Ajzen (1991). Of

the 19 studies of predicted behavioural intention, 18 of the regression models accounted

for between 30 and 88 per cent of the variation in the dependent variable and the mean

R2 value for all models was 0.50 (Ajzen 1991, p. 190). In 14 of the 17 studies of

predicted behaviour the regression models accounted for between 25 and 71 per cent of

the variation in the behaviour and the mean R2 value for all models was 0.26 (Ajzen

1991, p. 187). As expected, the models predicted intention more effectively than actual

behaviour, because of the moderating factors that intervene between intention and

behaviour. Overall this meta-analysis, and the many studies conducted since, has

provided support for the validity of the theory of planned behaviour.

4.3.3 Attitudes as predictors of environmentally related behaviour

There have been few studies of the relationship between attitudes and

environmental behaviour because of the difficulties involved in measuring actual

behaviour rather than intention to behave. Much of the research that has been conducted

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into the environmental attitude-behaviour relationship has focused on general

environmental attitudes rather than specific attitudes and most of the studies of this type

have reported only moderate correlation between attitude and behaviour (Hines,

Hungerford and Tomera, 1986; Kaiser et al., 1999; Vining and Ebreo, 1992). Clark,

Kotchen and Moore (2003, p.243) showed that general environmental attitudes,

measured using a version of Dunlap and van Liere’s (1978) New Environmental

Paradigm (NEP) scale, were significant predictors of participation in a green electrical

program (p < 0.05) but household structure and income, and the desire to behave in an

altruistic manner were stronger predictors. Scott and Willets (1994) found only ‘modest’

correlation between general environmental attitudes, measured using the NEP scale, and

an index of self-reported environmental behaviour. A number of studies have found no

significant relationship between general environmental attitudes and behaviours (Gamba

and Oskamp, 1994; Lansana, 1992; Oskamp et al., 1991).

Various explanations have been offered for the failure to find a consistently

strong relationship between general environmental attitudes and behaviour, and

expectancy-value models provide two strong explanations. First, expectancy-value

models indicate a need for measurement correspondence (Ajzen, 1991). According to

Fishbein and Ajzen (1977) the relationship between attitude, intention and behaviour

will be strongest when the behavioural antecedents, attitudes and norms are measured at

the same level of specificity as the behaviour of interest. Although there have been very

few studies of the relationship between target specific attitudes and related behaviours,

those that have been conducted suggest that this relationship is much stronger than that

between general attitudes and behaviours. Cheung et al. (1999) and Barr (2004)

reported a strong relationship between intention to recycle and a self reported measure

of recycling behaviour and these results are consistent with the concepts of attitude

specificity implied by expectancy-value models (Ajzen, 1991). Second, expectancy-

value models also indicate that social norms would be expected to have significant

affects on behaviour. Where strong social norms are present they may prevent an

individual behaving in a manner that is consistent with their true attitudes and

Newhouse (1990) suggested that this moderating influence might be a contributing

factor to the apparent poor environmental attitude-behaviour correspondence.

In relation to specific environmental actions or causes, van Liere and Dunlap

(1981) argued that individuals may simply choose specific environmental causes

through which they demonstrate their concern and may become involved with one issue

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but not others. Scott and Willets (1994, p. 255) also suggested that, given the amount of

media coverage of environmental problems, people may have “…learned the language

of environmentalism without developing a simultaneous behavioural commitment”, thus

people express strong pro-environment attitudes but these are not translated into specific

actions.

4.3.4 Attitudes toward paying for environmental protection

When respondents indicate a WTP value in a contingent valuation survey they

are indicating a behavioural intention (Barro, Manfredo, Brown and Peterson, 1996).

Brown et al. (1996) and Byrnes et al. (1999) demonstrated that there can be significant

differences between stated behavioural intention and actual payment behaviour and this

failure to perform well in tests of criterion validity has been used as a major criticism of

the contingent method (Diamond, 1996; Portney, 1994). Expectancy-value models can

assist in understanding the influences on actual payment behaviour.

In expectancy-value models, attitudes toward the behaviour of paying for an

environmental good are most proximal to behavioural intention and the actual behaviour

of paying, and are likely to be the best predictors of future payment (Ajzen, 1991). The

strength of this relationship has been supported by empirical research in contingent

valuation of environmental goods. Luzar and Cosse (1998) showed that attitude toward

paying for water quality improvements and subjective norms were significant predictors

of WTP for a proposed change in water quality. Jorgensen and Syme (2000)

investigated the relationship between attitudes toward paying for stormwater

management and stated WTP. They used a six-item scale to measure respondent’s

attitude toward the payment behaviour and found that it was a stronger predictor of

WTP than either the price of the proposed intervention or household income.

4.4 Attitude formation and change

The focus of this research was on the effects of information provided in the

contingent valuation scenario on attitudes and WTP for a good. According to Hogg and

Vaughan (1998) attitudes are learned through a combination of direct experience,

vicariously through interactions with others or as the result of cognitive processes. Petty

and Wegener (1998) argued that there is a growing body of research that suggests that

there is little value in trying to distinguish between the cognitive processes involved in

attitude formation and attitude change. In fact, Fazio (1986) suggested that it is more

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useful to regard attitudes as lying along a continuum from non-attitude to strong

attitude. The factors involved in moving an individual along this continuum from non-

attitude to a position at which an attitude is identifiable (attitude formation) are

essentially the same as the factors involved in moving an individual with a weak attitude

to a position of having a strong attitude (attitude change). Following this rationale any

move along the attitude continuum can be considered ‘attitude change’.

The literature related to attitude change has been categorised as being based on

either behavioural or cognitive approaches (Hogg and Vaughan, 1998). Behavioural

approaches to attitude formation emphasise the importance of learning through direct

experience and observance of others. Cognitive approaches emphasise the importance

of internal processes in building links between multiple beliefs and values to form

attitudes.

4.4.1 Behavioural approaches

Eagly and Chaiken (1993) linked the process of attitude formation with structure

and used the term intra-attitudinal structure to describe attitudes that are formed as a

result of direct experiences and stored as a complex series of links between the attitude

object and the beliefs and emotions associated with it. Continued exposure to the

attitude object would build more associations with it so that the beliefs held by a person

may come to represent summaries of past experiences (Eagly and Kulesa, 1997).

Behavioural approaches may be particularly relevant in explaining formation of

attitudes toward beaches since most people, certainly in the study area, have had direct

contact with the target object.

Direct experience has been shown to affect attitude strength and accessibility

and a number of explanations of this effect have been proposed (Fazio and Zanna, 1981;

Zanna and Rempel, 1988). Probably the most relevant of these in explaining formation

of attitudes toward the attitude targets in this research are the mere exposure effect

proposed by Zajonc (1968) and concepts of classical conditioning.

The mere exposure affect simply suggests that repeated exposure to an object

increases familiarity and positively affects our evaluation of the object, thus repeated

exposure to the beach might be expected to increase familiarity with the environment

and result in more positive attitudes toward this target. The theory of classical

conditioning suggests that if a new stimulus (the unconditioned stimulus) is repeatedly

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associated with a stimulus that already elicits a strong response in the individual (the

conditioned stimulus) the previously neutral stimulus will start to elicit the same type of

reaction (Wegner and Bargh, 1998). In this way, a beach, at which one regularly meets

friends or holidays with family, becomes associated with the positive emotions

surrounding the people.

Other explanations of the effects of direct experiences on attitude formation are

less relevant to the attitude objects in this research but might be more relevant to

formation of other pro-environment attitudes. The theory of instrumental conditioning

suggests that behaviour that results in positive outcomes is reinforced and is more likely

to be repeated than behaviour that results in a negative outcome (Hogg and Vaughan,

1998). This process may be particularly important in the formation of attitudes related to

conservation and environmental degradation in children as parents and teachers can

shape attitudes to a range of stimuli by rewarding or punishing the behaviour associated

with the attitude (Wegner and Bargh, 1998). Closely associated with instrumental

conditioning is the theory of observational learning which views attitude formation as a

social learning process involving modelling behaviour and not one dependent on direct

reinforcement (Hogg and Vaughan, 1998). Thus, young people, in particular, might

model pro-environmental attitudes and behaviours on significant people around them.

4.4.2 Cognitive approaches

Cognitive approaches provide an alternative to behavioural explanations and

present attitude formation as a complex process of building connections between layers

of thoughts and beliefs. As the number of related and connected elements increase some

of them form a general concept or attitude relating to a particular attitude object (Hogg

and Vaughan, 1998). Eagly and Chaiken (1993) described the structures formed by the

cognitive approach as inter-attitudinal structure. Attitudes become linked to one

another as a result of extensive logical analysis or as a result of simply observing a

relationship between two previously unlinked attitude objects to create a ‘molar

structure’ (Eagly and Kulesa, 1997). This inter-attitudinal structure is often hierarchical

in the sense that concrete, specific attitudes are built on more abstract and general

attitudes, sometimes called values (Eagly and Kulesa, 1997). Cognitive approaches may

be more useful in explaining the process of attitude formation toward some of the more

complex attitude objects in this research such as beach protection and the action of

paying for beach protection.

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A group of models, described as cognitive consistency theories, have developed

in social psychology based on the observations that “…people try to maintain an

internal consistency, order and agreement between their various beliefs” (Hogg and

Vaughan, 1998, p. 119). According to cognitive dissonance theory, developed by

Festinger (1957), individuals seek harmony in attitudes, beliefs and behaviours. If an

individual is in possession of inconsistent cognitions or behaviours it leads to

unpleasant psychological tensions called cognitive dissonance. Individuals attempt to

reduce this tension by engaging in cognitive activity designed to change one or more of

the inconsistent elements. Strategies that people adopt to reduce cognitive dissonance

include seeking information and generating cognitions that will make the dissonant

elements consistent or they may attempt to trivialise one or other of the elements by

discrediting the source of the cognition (Petty and Wegener, 1998).

Balance theory, developed by Heider (1946), focuses on the perceptions of

people and objects or events in the individual’s cognitive field (Hogg and Vaughan,

1998). The evaluations or attitudes that a perceiver attaches to these cognitive elements

may be represented as positive or negative. As well as being motivated to change their

attitudes to achieve balance, people seek balance in their life by establishing

relationships in which the individuals agree on their evaluation of attitude objects (Hogg

and Vaughan, 1998). In complex relationships it may be impossible to find a balance in

attitudes to all relevant attitude objects and under these conditions individuals may

modify their behaviour in order to reduce tension (Hogg and Vaughan, 1998).

In summary, cognitive approaches emphasise the role of information and the

cognitive processes involved in processing and making sense of information in attitude

formation. While behavioural approaches to attitude formation may be useful in helping

to explain formation of attitudes toward the beach as a target object, cognitive

approaches may be more useful in explaining attitude formation toward the attitude

targets that are more proximal to the behaviour of interest in the current research.

Formation of attitudes toward beach protection and the action of paying for beach

protection may involve complex cognitive processes of evaluating competing beliefs

and information from peers and the media. In forming an attitude toward beach

protection, a participant might have positive attitudes toward the beach, developed

through direct exposure to the target object, but may have to reconcile those with strong

ecological beliefs, acquired from secondary sources and peer groups, that humans

should not interfere with nature. In forming an attitude toward paying for beach

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protection, another participant might have developed positive attitudes toward beach

protection from reading media reports and talking to peers but have to balance those

with a high level of distrust (negative attitude) of the political process.

4.5 Information in attitude change

The contingent valuation scenario presents participants with information about a

proposed change, and cognitive approaches to attitude change imply that the recipient

evaluates that information in relation to their existing attitudes. According to Petty and

Wegener (1998), variables that influence the potential of information to have a

persuasive affect on attitudes have traditionally been organised into four categories:

information source, the message, recipient characteristics, and the context in which the

communication occurs. The effect of these four variables on the three components of

attitude are summarised in Figure 4-4.

Source variables refer to aspects of the individuals or groups presenting the

message and include perceived credibility, attractiveness, and power. Message variables

refer to the elements of the message itself and include the message topic, the position

and style of argument taken by the source, the message content, and the way in which

the message is organised. Recipient variables include demographic, personality, skill

and previous knowledge variables of those receiving the message. Context variables

refer to the setting in which the communication occurs and include distractions,

audience reactions, forewarning of the position to be taken by the source in relation to

the issue, the message mode, the recipients mood, and levels of repetition of the

message (Petty and Wegener, 1998).

The independent variables represented in Figure 4-4 may act on any

combination of the affective, cognitive and behavioural mediating processes and,

according to Petty and Wegener (1998), almost every combination of these has been

used to explain attitude change in one situation or another. Although the attitude

mediating processes of affect, cognition and behaviour can act independently,

consistency theories suggest that they will usually be interdependent. That is, if an

independent variable causes a change in affective processes, the cognitive and

behavioural processes will change in order to ensure consistency between the mediating

processes (Petty and Wegener, 1998).

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Figure 4-4 Mediating Effects of Independent Variables on Attitude Change

Independent Variables Mediating Process Outcome

(Source: Petty and Wegener, 1998, p. 326)

4.5.1 Recipient variables in environmental attitude change

Petty and Wegener (1998) reviewed the influence on information processing and

attitude change of recipient variables related to: demographics, including gender and

age; personality, including intelligence, self-esteem and the need for cognition, and;

attitude variables, such as strength and accessibility of existing attitudes and levels of

issue relevant knowledge. Of particular interest to the current research is the extent to

which the information about the proposed beach protection programs is perceived as

relevant to the message recipient and the level of previous knowledge that they have of

the issue, since these would be expected to influence motivation to process information

in the contingent valuation scenario and the extent to which the new information will

have to compete with existing knowledge.

Eagly and Kulesa (1997, p.130) suggested that strong intra-attitudinal structures

built on extensive knowledge about issues “…protects people from changing their

attitudes on that issue, in part for the simple reason that the new information must

compete with the beliefs people already hold”. However, knowledge has also been

shown to increase the respondent’s ability to receive new information and to evaluate it

critically. For example, Wood and Kallgren (1988) found that participants with more

environmental knowledge were able to process a counter-attitudinal message more

Source

Message

Recipient

Context

Affective Processes

Cognitive Processes

Behavioral Processes

Attitude Change

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effectively so that they were more influenced by the content of the message and less

influenced by the likeability of the source than participants with less prior knowledge.

Thus, in the current research, individuals with high prior levels of knowledge about

beach erosion and protection would be expected to have strong intra-attitudinal

structures related to these issues and the marginal effects of the additional information

presented in the contingent valuation scenario will probably not have a significant affect

on attitudes or WTP. On the other hand, given the availability of information about

these issues in the region, individuals with low prior knowledge are also likely to be

individuals for whom the information has low relevance. As such, they are unlikely to

expend effort in reading and processing the detailed text information but may be

influenced by visual information in the form of photographic images since these would

require less effort.

4.5.2 Dual-process models of attitude change

A number of dual–process models have been developed that attempt to explain

the processes involved in persuasion and attitude change. Although the terminology

used differs, the elaboration-likelihood model (Petty and Cacioppo, 1984) and the

heuristic-systematic model (Chaiken, 1980) have much in common and, according to

Petty and Wegener (1998, p. 325), they “…can generally accommodate the same

empirical results”. Both models identify two cognitive routes by which people may be

persuaded to change their attitudes to an object.

According to Petty and Cacioppo’s (1984) elaboration–likelihood model,

represented in Figure 4-5, if people attend to the details of a message carefully and the

quality and logic of the arguments dominate the cognitive process they are said to have

followed a ‘central route’. This process may involve a significant amount of effort. On

the other hand, when detailed arguments are not well attended to and peripheral cues

that enable decisions to be made quickly and with minimal effort dominate the cognitive

process they are said to have followed a ‘peripheral route’. An assumption of the

heuristic-systematic model is that individuals can apply both systematic and heuristic

processes to interpretation of a problem simultaneously, and the final evaluation might

be the result of some combination of the two processes (Wegner and Bargh, 1998). The

perceived importance and relevance of the target issues to an individual determine the

extent to which they are motivated to process the message via central or peripheral

routes (Wegner and Bargh, 1998).

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Figure 4-5 The Elaboration-Likelihood model of persuasion Elaboration Route Information

processing Attitude

change

High level Central Careful Depends on quality of arguments

Persuasive message

Low level Peripheral Not careful

Depends on presence of persuasion

cues

(Source: Hogg and Vaughan, 1998; p. 174)

The contingent valuation scenario often has to communicate quite complex

information about the proposed change to resource supply. Researchers have used text

descriptions and visual aids, such as maps, charts, artist’s impressions and photographs

to convey the information. However, this has caused the NOAA panel (Arrow et al.,

1993) to express concern about the relative impacts of different types of communication

devices, particularly when some respondents may not be highly motivated to process

complex information.

Although it is not a major focus of the current research, the manipulation of both

text and visual information treatments in the contingent valuation experiment may be

able to provide some insight into the attitude change route followed by respondents with

high and low motivation to process information. The a priori expectation would be that

respondents with low motivation would be more likely to be influenced by images and

less likely to spend time reading detailed text descriptions. Respondents who are highly

motivated to process information about the issues would be more likely to read the

detailed text information and be influenced by that.

4.6 Developing attitude measures

The current research required the investigator to develop and adapt instruments

to measure each of the attitude and behavioural variables presented in Figure 1-1.

Attitudes cannot be directly observed but are inferred from cognitive, affective or

behavioural responses to attitude targets. Himmelfarb (1993) reviewed a variety of

psychometric survey techniques that have been developed to measure individual’s

cognitive responses to items designed to measure the underlying attribute or attitude.

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The current research adopted the Likert method of summated ratings for its simplicity of

design and for consistency with previous studies that have investigated environmental

attitudes.

Hogg and Vaughan (1998) claim that psychometric scales comprised of a

number of items are preferred because responses to a single item may be affected by

irrelevant or unintended factors, such as question wording, which can create errors.

When responses to a number of items are averaged, the errors in individual items tend to

be cancelled out and a more valid and reliable measure is obtained (Hogg and Vaughan,

1998). The objective of scale development is to create measures that demonstrate

validity and reliability and the principles of scale development are well documented

(Anastasi, 1982; Churchill, 1979; Hinkin, 1995). Hinkin (1995) identified four issues

that are pertinent to the design of the current study; item generation, item polarity or the

use of negatively worded items, the number of items used to construct a scale, and the

choice of response scales. Each of these issues will be discussed in this section.

4.6.1 Item generation

The objective in generating items to form a measurement scale is to ensure

content validity by adequately covering the domain of interest while excluding

extraneous content (Hinkin, 1995). The literature review revealed previously used

measurement scales for four of the eight variables in the proposed model represented in

Figure 1-1. These included scales designed to measure broad environmental attitudes

(Dunlap and van Liere, 1978; Steel, 1996); previous environmentally related behaviour

(Scott and Willets, 1994; Tarrant and Cordell, 1997); subjective norms (Ajzen et al.,

1996; Berg et al., 2000); and perceived behavioural control (Ajzen et al., 1996). Items

used in these studies were adapted to meet the needs of the current research. The

attitude domains represented by the other four variables in Figure 1-1, that is beach

erosion, beach protection, expected utility of outcomes and payment for beach

protection, were unique to the current research project and it was necessary to generate

measurement items, and to test and refine scales for these target specific variables.

In the current research a deductive approach to item generation was adopted

since the models to be tested had been identified in the literature review and the aim was

to tap a previously defined theoretical construct. For each of the attitude domains

identified in Figure 1-1 an item pool was generated from the literature and focus groups.

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Draft measures were synthesised from the item pool and were reviewed for face and

content validity by an expert panel. This process is described in detail in Chapter 6.

4.6.2 Item polarity

Having generated items that covered the content of the domain being measured

the next problem was to ensure response validity. Scale developers have long been

aware of the potential response pattern bias caused by yea-saying, sometimes described

as acquiescence (Schriesheim and Eisenbach, 1995; Ray, 1983). Falthzik and Jolson

(1974) empirically confirmed that item polarity had a significant effect on reported

attitude strength. Herche and Engelland (1994) and Falthzik and Jolson (1974) found

that acquiescence was a more serious problem when investigating sensitive and / or

complex topics, when items were vaguely worded or when respondents were from low

education and income groups. The use of a mixture of positive and negatively worded

items has been recommended to minimise the effects of response pattern bias (Anastasi,

1982; Nunnally, 1978).

In recent years, according to Schriesheim and Eisenbach (1995), a growing body

of evidence has challenged the convention of using positive and negatively worded

items in scales. The convention is based on three assumptions; first, that response bias is

a serious threat to scale validity; second, that negatively worded items can be used

without negative consequences for the instrument; and, third, that alternative wordings

of the same question do actually mean the same to respondents (Schriesheim and

Eisenbach, 1995). In relation to the first assumption, Nunnally (1978), who was one of

the first and strongest advocates of the inclusion of reverse coded items, has

acknowledged that the weight of evidence now indicates that acquiescence is not a

significant problem in attitude measurement. In relation to the second assumption,

studies by Schriesheim, Eisenbach and Hill (1991) and Jackson, Wall, Martin and

Davids (1993) showed that reverse-scored items actually reduced the reliability and / or

assumed validity of scales. Others have shown that they may distort factor-analytic

results by creating an artificial response factor onto which all the negatively worded

items load (Miller and Cleary; 1993; Pilotte and Gable, 1990). Finally, in relation to the

third assumption, studies by Schriesheim et al. (1991) and Schriesheim and Eisenbach

(1995) tested the psychometric properties of alternative wording of items and found

evidence to suggest that respondent’s interpreted alternative formats in different ways.

Schriesheim and Eisenbach (1995, p.1189) concluded that, “…it is extremely difficult to

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produce reverse-scored items which do not change the meanings of the regularly scored

items from which they are derived”. Thus, substantial doubt has been cast on each of the

assumptions underlying the convention of using a mixture of positively and negatively

worded items in scales.

Given the divided opinion on item polarity, this study used negatively worded

items sparingly and did not attempted to produce a ‘balanced scale’ containing equal

numbers of positive and negative statements. The original version of the New

Environmental Paradigm (NEP) scale and the abbreviated version used in this study

both contain reverse coded items and these were retained in this study for consistency

with other studies. A small number of reverse-scored items were used to confirm the

direction of respondent’s attitudes to erosion and protection.

4.6.3 Number of items

Determining the number of items to be used in each measure entails balancing

the principle of parsimony with the need for content and construct validity. Scales with

too many items can lead to respondent fatigue and response bias (Anastasi, 1982).

Scales with too few items may inadequately sample the domain being measured and,

“…lack content and construct validity, internal consistency and test-retest reliability”

(Hinkin, 1995, p.972). According to Carmines and Zeller (1979), adequate internal

consistency can be achieved with as few as three items, and inclusion of additional

items makes progressively less impact on scale reliability. Hinkin (1995) reviewed 75

studies comprising 277 scales and found scales varying in length from one item to 46

items. Thirty per cent of the scales had three or fewer items. Some of the longer scales,

in Hinkin’s opinion, “…appeared to tap more than one conceptual dimension” (1995,

p.972).

The survey instrument designed for the current study had to collect data relating

to respondents beach use and socio-demographic status, measure respondents attitudes

toward a range of general and specific environmental targets, convey information

through visual and text descriptions and, finally, elicit WTP for the good being valued

in the contingent valuation scenario. Thus, the principle of parsimony in design of the

attitude measures was important in ensuring a high response rate. Each of the latent

variables in the attitude behaviour models being tested cover a narrow, clearly defined

domain and this assisted in item design and selection. The final instrument used in this

study included attitude measurement scales with between three and six items each.

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4.6.4 Choice of response scale

The response scale adopted needed to generate sufficient variance among

responses for statistical analysis without being so refined that it simply encouraged

response error (Hinkin, 1995; Cox, 1980). Cox (1980, p.420) argued that an odd number

of response alternatives “…is preferable under circumstances in which the respondent

can legitimately adopt a neutral position”.

Jenkins and Taber (1997) used Monte Carlo simulations to investigate the

effects of the number of response options on measurement scales with increasing

numbers of items. They found minimal benefit from using more than seven response

options for scales with five or more items. However, the benefits of using more

response options did appear to be greater in scales with only two or three items (Jenkins

and Taber, 1997). Schwartz, Knauper, Hippler, Noelle-Neumann and Clark (1991, p.

570) also recommended 7-point scales as the “…best in terms of reliability, percentage

of undecided respondents, and respondent’s ability to discriminate between scale

values”. Finally, Ajzen’s (1991) observation that in most applications of the theory of

planned behaviour belief strength has been assessed using a 7-point scale is of particular

relevance to this study.

Based on this review a 7-point response scale labelled from “1-Strongly

disagree” to “7-Strongly agree”, was adopted for all attitude measurement items in the

current study.

4.7 Summary

This chapter introduced concepts from cognitive and behavioural psychologies

that are relevant to explaining the choices people make in a contingent valuation

exercise. The composite attitude-behaviour model (Eagly and Chaiken, 1993), which

was derived from Ajzen and Fishbein’s (1980) theory of reasoned action, illustrates the

roles that attitudes and expected outcomes play in determining behavioural intention

and actual behaviour. Ajzen and Driver (1992) and Ajzen et al. (2004) have

demonstrated how attitude-behaviour models can be applied to contingent valuation

studies and used to explain the relationship between attitudes and WTP. This thesis

investigated the relationship between attitudes toward relevant target objects and

behaviours and WTP for beach protection programs.

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It is important to recognise that there are a number of attitude objects that are

relevant to this research and attitude formation and change may occur via different

mechanisms for each of them. In relation to the beach as a target object, behavioural

mechanisms related to direct contact are likely to be the dominant mechanism for

attitude formation. Where people have had direct contact with beach erosion and beach

protection measures, as attitude objects, behavioural mechanisms are also likely to

dominate, but for people who have not had direct experiences attitude formation is

likely to follow cognitive mechanisms based on information sourced from friends and

family and the media.

The contingent valuation scenario provides participants with information about

the proposed good and Petty and Wegener’s (1998) model, as shown in Figure 4-4,

indicates that the information source, content and context can have effects on the

affective, cognitive and behavioural components of the attitudes influenced by the

information. Respondents to a contingent valuation question may not have well defined

utility functions for the target good because it is a public good and they are not used to

paying for it and / or the good is an abstract concept like preservation of biodiversity. In

this situation the information provided in the contingent valuation scenario is important

in helping them to explore their utility function. This poses a number of questions. What

information and how much information do respondents process from the scenario? Do

respondents weigh the detailed descriptions and arguments presented in the scenario and

follow a systematic route to attitude change or do they minimise effort and rely on

heuristic paths (Chaiken, 1980). In the current research dual-process models will be

used to interpret the effects of presenting respondents with information in the form of

text and visual images.

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CHAPTER 5

BEACH MANAGEMENT IN AUSTRALIA

The research described in this thesis was conducted in the local government area

of Gold Coast City in Australia and this chapter provides a justification for the

application of contingent valuation in estimating local resident’s values for the proposed

beach nourishment program. The contingent valuation method is sensitive to

hypothetical bias so it is important to demonstrate that the contingent market approach

was valid in the geographic, political and legislative context of the experiment.

The chapter starts by describing the geographic and demographic features of the

region. It provides a brief historical context and an overview of the legislative

framework within which beach management policies have evolved in Australia and

summarises some of the early attempts to develop coastal management policy in this

country. The chapter then describes the recent policy initiatives and legislation

introduced at Commonwealth and State level since the early 1990’s that currently

directs beach management activities. Finally, it describes some of the specific beach

management problems experienced on the Gold Coast and the solutions applied at the

local level. Particular emphasis is placed on the Northern Gold Coast Beach Protection

Strategy pilot project, which was used in the contingent valuation scenario of the current

research to demonstrate the benefits that can be achieved through this type of project.

Beach management is only one component of more broadly defined coastal

management activities. This review will focus on those aspects of legislation and coastal

policy that are most relevant to management of Australia’s beaches and the current

research.

5.1 The study region

This study was conducted on the Gold Coast, which is located in southeast

Queensland on the east coast of Australia (Map 1). The local government area described

as Gold Coast City had an estimated resident population of 469,214 at June 2004 (ABS,

2005) and the region has one of the fastest growing populations in the country. Gold

Coast City recorded the second largest increase in population of all local government

areas in Australia during 2003-04, with an increase of 13,200 people, behind Brisbane,

which increased by 17,600 people (ABS, 2005)

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The natural resources and built infrastructure of this region must serve the

resident population as well as a large number of tourists as the Gold Coast is one of

Australia’s most popular tourist destinations. In 2004 the region hosted some 812,000

international tourists and just over 3.5 million domestic tourists (Gold Coast City

Council, 2005). In addition, this coastal resort is a popular day trip for residents of

Brisbane City (pop. 938,384), Logan City (pop. 171,292) and Ipswich City (pop.

131,747), many of whom live less than one-hour drive from the Gold Coast (ABS,

2005). Tourists and residents are drawn to the region’s sub-tropical climate and natural

features which include 52 kilometres of sandy surf beaches stretching from South

Stradbroke Island in the north to Coolangatta and the New South Wales border in the

south (Tomlinson et al., 2003, p.1).

MAP 1 Southeast Queensland and the Gold Coast Local Government Area

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5.2 The beach and coastal management problem in Australia

Australia has a coastline of over 30,000 kilometres and approximately 60 per

cent of this is comprised of sandy beaches (James, 2000a, p. 149). Approximately 86

per cent of the population live in the coastal zone and a substantial amount of economic

activity is associated with the coast including tourism, fishing and aquaculture, and

transport (Commonwealth of Australia, 1995, p.6). This has resulted in coastal

management assuming exaggerated economic, social and cultural importance to the

extent that Kay and Lester (1997) claimed that management of the coast has become a

politically charged issue in Australia.

The population’s affinity with the coast, and the beach in particular, has led

commentators to suggest that there is a recognisable beach culture in Australia (James,

2000b; Lazarow, 2002). But, beaches are only one part of a complex environmental and

ecological coastal system and policy and legislation that direct beach management

activities are usually part of broader coastal management initiatives. The Queensland

Coastal Protection and Management Act 1995 (Queensland Government, 1995, section

11) defined the coastal zone as “…coastal waters and all areas to the landward side of

coastal waters in which there are physical features, ecological or natural processes or

human activities that affect, or potentially affect, the coast or coastal resources”. Thus,

management of beaches is intimately linked to management of rocky shorelines,

estuaries and tidal waters, coastal wetlands and the land immediately bordering these

features (Commonwealth of Australia, 1995).

Beaches are formed by accumulations of sand on the shore and extend inland to

the limits of the active dune system and seaward to a depth of approximately 15 metres

below mean sea level, beyond which waves of average height are no longer able to

influence sand movement (James, 2000a; Tomlinson, 2001). Beaches and dune systems

are naturally dynamic and move landward or seaward over periods of time under the

influence of wave action or wind. Cyclones can cause severe erosion events in southeast

Queensland and during these events large volumes of sand can be stripped from the

beach and moved into offshore bars where it continues to provide protection for the

coast. Although the sand initially appears to be lost to the system, given a period of

calm weather, it will naturally return to the beach (Tomlinson, 2001). However, this

temporary loss of amenity can have significant social and economic effects where the

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beach and dune systems have been used for intensive, and often poorly planned, human

activity.

Beaches and dune systems are a valuable natural resource providing

opportunities for recreation, a barrier to erosion from the ocean, an aesthetic amenity,

habitat for native plants and animals, and cultural and heritage values (Queensland

Government, 1999). However, increasing population growth in the coastal zone has

resulted in increased pressure on this resource to the extent that the Commonwealth

Coastal Policy warned that there was an urgent need to manage the resource

(Commonwealth of Australia, 1995).

Beach management aims to maintain the beach as a recreational resource and as

a protective barrier against erosion while providing facilities, such as public parks,

toilets and showers, and access and egress ramps to meet the needs of users and

minimise negative human impacts (Bird, 1996; James, 2000a). But, beach management

activities require substantial amounts of public funding and authorities in Australia and

other parts of the world are under pressure to justify the expenditure in terms of the

benefits and costs of projects (Raybould and Mules, 1999). Since many of the benefits

of these projects are non-market benefits, non-market valuation techniques such as

contingent valuation have played an important part in project evaluation in the USA

(Lindsay et al., 1992; Silberman et al., 1992) and the UK (Penning-Rowsell et al., 1992;

Whitmarsh et al., 1999).

Australian’s, pre and post European settlement, have had a strong association

with the coast and continue to do so today (James, 2000a). The coast provides important

services in the form of leisure, commercial fishing and transport but inappropriate

human development around Australia in the last 70 or 80 years has created the need to

manage this resource carefully. Early coastal management policies evolved on a

regional level largely in response to local problems and in a number of regions the most

critical issues related to beach erosion. The Gold Coast was one of these regions. The

next section describes some of the early developments in coastal management policy in

Australia.

5.3 Early development of coastal management policy in Australia

Following European settlement of Australia, colonial governors made grants of

land based on English property law (Gourlay, 1996). However, lands immediately

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adjacent to navigable waterways and the coast were generally retained in public

ownership and where freehold title of land was granted on the coastal strip it extended

only to the high-water mark (Kay and Lester, 1997).

Historically, State and local government coastal management efforts focused on

ports and harbours, as conduits for trade, and on managing residential and recreation

demand. It was not until the 1960’s that management efforts also recognised the

importance of the environmental values of the coastline (Kay and Lester, 1997).

State coastal management policies in Australia evolved in response to issues

such as coastal erosion, land-use conflicts, and failure of various public agencies to

coordinate their activities (Kay and Lester, 1997). Each state developed its own

approach driven by the issues of concern and the political philosophy of the

Government at the time. According to Gourlay (1996), for most of the last century,

individual states and a variety of agencies within the states undertook coastline

management initiatives in an ad hoc manner and there were no coordinated attempts to

manage the coastline in Australia until the late 1960’s.

The first example of a coordinated coastal management initiative was in Victoria

where the pressures of recreation, intensive development and economic activity, and

emerging conservation needs in Port Philip Bay led to the creation of the Port Philip

Authority in 1966. The authority used planning controls to direct coastal development in

ways that were intended to prevent deterioration of the foreshore, improve facilities, and

preserve existing beaches and natural features (Kay and Lester, 1997).

Coastal erosion was a significant driving force behind coastal management

policy in Australia at this time. According to Gourlay (1996), coastal erosion was first

recognised as a problem in Australia in the 1920’s and 1930’s and reached critical levels

in some urban coastal communities in the 1960’s. Erosion is a natural part of coastal

processes but it becomes a problem when combined with development that has been

allowed to occur too close to active beaches and other human interventions, such as

building groynes around river entries, that interrupt the flow of beach sediments

(Tomlinson, 2001) Thus, increased problems with coastal erosion became a driving

force for coordinated coastal management activity.

Each of the major coastal urban centres of Adelaide, Melbourne, Sydney and

Perth had significant erosion problems. However, the worst problems occurred on the

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Gold Coast where a series of storms in 1967 resulted in loss of beach amenity, public

foreshore and parks, and private property (Tomlinson, 2001). This erosion event led to

the passing of the Queensland Beach Protection Act in 1968 and the formation of the

Beach Protection Authority, which was charged with development of coastal

management plans for erosion prone areas (Kay and Lester, 1997). In response to

erosion problems on Adelaide beaches, the South Australian State Government

introduced similar legislation to Queensland in 1972 and established the Coastal

Protection Board which had similar functions to its Queensland counterpart (Kay and

Lester, 1997).

According to Kay and Lester (1997), although other states did not form statutory

coastal protection agencies, most of them established mechanisms for coastal

management during the 1970’s. Western Australia and Victoria established

interdepartmental committees comprising all the state agencies with significant coastal

responsibilities, while New South Wales introduced funding mechanisms for coastal

management initiatives (Kay and Lester, 1997).

During the 1970’s and 1980’s state statutory bodies or informal committees

played a coordinating role between state agencies with coastal management

responsibilities and between State Government and local governments over

development planning approvals (Kay and Lester, 1997).

But, according to Kay and Lester (1997), by the late 1980’s the system of

informal coordination was becoming less capable of managing demands resulting from

increased coastal use, emerging problems such as introduced species and discharge of

ballast water from vessels, public demands for right of access, and increased

environmental awareness among the public.

Haward (1995, p. 87) described the 1990’s as a “watershed” for coastal

management policy in Australia and much of the policy and legislation that currently

directs coastal and beach management activities in Australia emerged during this period.

The main features of the current legislative framework will be reviewed next.

5.4 The current legislative framework for beach management in Australia

The domestic legal framework within which Australian coastal management

activities currently take place is based on the federal system of government established

under the Commonwealth of Australia Constitution Act 1900. Under the Act a

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Commonwealth of six states1 was created and a Commonwealth Parliament was

established in 1901 with powers to enact Commonwealth laws. A third level of

government operates on a local scale through regional councils constituted under State

Acts of Parliament.

Under the Australian constitution, land and resource management matters fall

largely under State Government jurisdiction. Under the constitution the States had

assumed jurisdiction over the seabed from the low water mark to 3 nautical miles

offshore and, although the Commonwealth challenged this in the early 1970’s, the

Offshore Constitutional Settlement confirmed this authority in 1979 (Haward, 1996).

Thus, the Resource Assessment Commission (RAC, 1993, p.54) concluded that, “the

legislative power for management of coastal zone resources lies primarily with state

governments”.

Although Commonwealth legislation takes precedence over State legislation in

disputed matters, Rothwell (1996) argued that the ability of the Commonwealth to

control coastal management issues in Australia has been limited by the constitution’s

failure to confer total power over these matters to the Commonwealth Parliament.

However, the Commonwealth retains a range of powers in relation to coastal areas

associated with defence, transport and navigation, and national heritage that give it the

ability to regulate activities in restricted areas of the coastal zone (James, 2000a). The

Commonwealth can also exert some influence over coastal management activities

through its power to provide grants for natural resource management programs under

section 96 of the constitution (Commonwealth of Australia, 1995, p.10). The

Commonwealth Government has authority and responsibility for ocean areas beyond the

three-mile limit and its objectives and policies in relation to this were outlined in the

recently released Australia’s Oceans Policy (Commonwealth of Australia, 1998).

Although the Commonwealth Government and the State Governments set the

policy and legislative frameworks for beach management, it is the third tier of

government in Australia, the local councils, which are generally responsible for the day-

to-day decision making and the practical administration of on-the-ground beach

management activities (Commonwealth of Australia, 1995; James, 2000a). Throughout

Australia around 230 local governments have management responsibilities for the

coastal zone though not all of these have sandy beaches to manage (Australian Local 1 The States are New South Wales, Queensland, South Australia, Tasmania, Victoria, and Western

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Government Association, 2005). Local government responsibility extends from the low

water mark inland through the coastal zone and to the extent of the local government

authority boundary.

Local government is primarily responsible for zoning of private land and

processing development applications and this power can have significant implications

for coastal zone and beach management (Anutha and Johnson, 1996). Local

governments also acquire and manage coastal lands to protect coastal resources, provide

coastal management infrastructure, manage waterways in the coastal zone, are

responsible for managing water quality through sewage and drainage infrastructure,

provide cleaning of foreshores and waterways, and manage public access to the coast

(Queensland Government, 1999, p.55). However, local councils have limited resources

and, while beach use has increased in recent years as a result of coastal population

growth and increased tourism, funding for coastal management has not increased

commensurately (Resource Assessment Commission, 1993, p.62). Submissions by local

government to the Resource Assessment Commission (RAC) also complained that there

was a tendency for central governments to create programs in response to community

demand then rely on local government to coordinate and deliver the services then, when

politically expedient, to leave “…Local Government to meet raised community

expectations without adequate financial support” (RAC, 1993, Submission 66, p.9).

Thus, the Australian federal system has resulted in a division of responsibility

for coastal management between the Commonwealth Government, State Governments

and local governments and this has been a source of tension in policy development and

funding issues (Haward, 1995).

5.5 Recent policy initiatives

The early 1990’s were a particularly dynamic era of coastal policy development

in Australia and this section provides a brief summary of the initiatives taken at

Commonwealth Government, State Government and local government levels that are

relevant to management of the beaches in the area in which the current research was

undertaken. This includes a review of a pilot beach protection scheme that was

described in the contingent valuation scenario and used to illustrate the benefits that

could be created by this type of project.

Australia

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The increased focus on ocean and coastal policy in Australia at Commonwealth

and State level during the 1990’s was influenced substantially by international

initiatives. The 1982 United Nations Convention on the Law of the Sea entered into

force in 1994 and was the first comprehensive attempt to negotiate a global agreement

on the law of the sea (Rothwell, 1996). The United Nations Convention on the Law of

the Sea dealt with States right over maritime zones, navigation rights, protection and

preservation of the marine environment and it necessitated comprehensive reviews of

these issues and clarification of responsibilities for ocean and coastal management

within Australia. At local government level, coastal management initiatives have been

largely driven by increased pressure on the resource by residential and tourism

development.

5.5.1 Commonwealth Government

International initiatives like the 1982 United Nations Convention on the Law of

the Sea and tension between State and Commonwealth Governments over coastal

management responsibilities led to a number of investigations and reports during the

1980’s and early 1990’s at both State and Commonwealth level (Resource Assessment

Commission, 1993; Haward, 1995). Prominent among these were national reports by

the House of Representatives Standing Committee on Environment and Conservation

(Commonwealth of Australia, 1980), the House of Representatives Standing Committee

on Environment, Recreation and the Arts (Commonwealth of Australia, 1991), and the

Resource Assessment Commission (RAC, 1993). Despite the fact that each of these

reports recommended a national coastal management strategy, successive

Commonwealth Governments met strong resistance to this from the State Governments

that were determined to block the Commonwealth Government from involvement in

State land management responsibilities (Kay and Lester, 1997; Lazarow, 2002). Thus,

according to Kay and Lester (1997, p.274), the recommendations in the earlier reports

“…resulted in no identifiable changes in the relative responsibilities of the state or

federal agencies”. However, the latter report (RAC, 1993) had some influence on the

development of a national coastal strategy.

The RAC (1993) enquiry identified the “ad hoc, multi-layered and

uncoordinated approaches to planning and decision making in coastal areas” as the

major impediment to delivering sustainable coastal management in Australia and the

report recommended “…a much more holistic approach, with a focus on integrated

planning, decision making and implementation” (Graham, 2002, p.121). In response to

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the RAC (1993) report, an Interdepartmental Coastal Working Group comprising

representatives from relevant state and federal agencies was formed in 1994. This

committee was formed to develop a coordinated Commonwealth Government and State

Government response to the RAC (1993) recommendations and to provide feedback on

drafts of a national coastal policy. The Commonwealth Governments Coastal Policy,

Living on the Coast, was finally released in May 1995 (Kay and Lester, 1997).

The major outcome of the Commonwealth coastal policy was the

Commonwealth Coastal Action Program, later renamed the Coasts and Clean Seas

program. This program was administered by an Intergovernmental Coastal Reference

Group of officers from relevant Commonwealth and state agencies and comprised a

suite of initiatives identified by the Interdepartmental Coastal Working Group. The

initiatives included the Clean Seas Program, which focused on protection of coastal,

marine and estuarine water quality from effluent and stormwater discharge; the Marine

Species Protection Program, which focused on conservation of biodiversity; the

Fisheries Action Program, intended to promote sustainable fisheries in estuarine and

marine waters; a Capacity Building Program, designed to improve coastal and marine

managers’ understanding of coastal environments and enhance their capacity to manage

them, and; the Coastcare Program, which provided support for community initiatives

(Harvey, Clarke and Baumgarten, 2002).

Kay and Lester (1997) claimed that the Commonwealth Coastal Action Program

represented a compromise between the State and Commonwealth Governments that

failed to focus on strategies for addressing the most urgent coastal management

problems facing Australia and instead found initiatives that were deemed suitable for

joint action. Nevertheless, it was a first step toward coordinated action and was partly

funded by an allocation of $125 million from the National Heritage Trust scheme with

other funds to come from State and local government (Graham, 2002).

Of the initiatives comprising the Coasts and Clean Seas program the most

relevant to beach management was the Coastcare program (1995-2002) which was

essentially a grants program designed to increase local community involvement in

management and stewardship of the coast. The program received approximately $27.3

million from the Commonwealth government through the National Heritage Trust

scheme and these funds were matched with contributions from State governments

(Harvey, Clarke and Carvalho, 2001, p.165). The Coastcare program was characterised

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by on-ground activities such as re-vegetation, weed eradication, and beach improvement

and access projects funded through its small grants scheme (Clarke, 2004). In 2003 the

Coastcare program was terminated and its activities subsumed in the new

Commonwealth Community grant scheme, Envirogrant.

5.5.2 Queensland State Government

Eighty-five per cent of the Queensland population lives on or near the 9,500

kilometres of coastline and the coastal population centres in Queensland are among the

fastest growing in Australia (Queensland Government, 1999, p.9). In recognition of this

importance, the Queensland State Government released its Coastal Protection Strategy –

Proposals for Managing Queensland’s Coast in 1991. This outlined a coastal strategy

focused on the need to address emerging environmental and social issues along the

Queensland coast such as loss of habitat, declining water quality and public access

(Fisk, 2002). The subsequent Coastal Protection and Management Act 1995 (the Coastal

Act) broadened the regulatory powers of the State Government to coordinate planning

and management within the coastal zone consistent with the overriding goals of

ecologically sustainable development (Fisk, 2002).

The objectives of the Coastal Act were to ensure “…protection, conservation,

rehabilitation and management” of coastal resources and biodiversity; develop state

based policies and strategies that were compatible with the emerging national strategy;

provide a legislative and administrative framework that would ensure ecologically

sustainable management of the coastal zone, and; encourage greater understanding of

coastal resources and human impacts on them (Queensland Government, 1999, p.i).

These objectives were to be achieved by “…co-ordinated and integrated planning and

decision making” (Environmental Protection Agency, 2005, p.1).

To this end, the Coastal Act established 11 coastal management regions, each

with a statutory advisory group to represent key stakeholders, and coastal planning

processes at state and regional level that extended State Government’s regulatory

powers. Initially regulatory powers relating to development assessment and permits in

the coastal zone were retained by the existing suite of State coastal legislation (Harbours

Act 1955, Canals Act 1958 and Beach Protection Act 1968). However, these provisions

were added to the Coastal Act by amendments in 2003 to compliment the provisions of

the Integrated Planning Act 1997 and all earlier coastal legislation was repealed. Thus,

State regulatory powers relating to coastal planning and management are now

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consolidated in the amended Coastal Protection and Management Act 1995 and the

Integrated Planning Act 1997.

The Coastal Act requires development of a State Coastal Management Plan and

regional management plans for each of the 11 coastal management regions established

under the Act. These plans must describe how the policy framework articulated in the

State Coastal Management Plan will be implemented at the regional level and should

identify key sites requiring special management strategies (Environmental Protection

Agency, 2005). These plans must be reviewed every seven years.

In addition to the provisions of the Coastal Protection and Management Act

1995, under the Integrated Planning Act 1977, each of the 41 local government

authorities with a coastal boundary are also required to prepare a coastal planning

scheme which takes into account policies and strategies articulated in the State Coastal

Plan and the relevant regional coastal management plan (Queensland Government,

1999, p. 55)

The lead agency in coastal management in Queensland is the Environmental

Protection Agency (EPA) which is responsible for monitoring the implementation of the

State Coastal Plan and licensing and enforcement of coastal permits under the Coastal

Protection and Management Act 1995 (Queensland Government, 1999). In

administering the provisions of the Coastal Act the EPA is charged with considering the

social and environmental impacts of proposed developments including impacts on

natural coastal processes such as littoral drift, erosion and accretion of sand in the beach

zone and the integrity of dune systems.

5.5.3 Gold Coast City Council

The Gold Coast is one of Australia’s most intensively developed coastal tourism

resorts but the features that make this an attractive destination for tourists, and

especially for surfers, also mean that the region has particularly dynamic ocean beaches.

The beaches are composed of fine to medium grained sediment and experience a high

energy wave climate with regular waves of between 0.7 m and 4.0 m coming

predominantly from the south east (Department of the Environment, 1997). On average

the region is affected by 1.3 cyclones a year and during these events wave heights of

over 11m have been recorded (International Coastal Management, 1998). These

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processes result in a high net longshore transport of sediments northward averaging

500,000 m3 per year (Boak, McGrath and Jackson, 2000)

Gold Coast beaches have always experienced cycles of erosion and accretion

with the earliest written reports made in 1894 (Boak, McGrath, Maffey and Jackson,

2000). However, problems associated with the natural coastal processes in this region

have been exacerbated during the last century by poorly planned human activity.

Intensive tourism development in the region during the 1950’s through to the 1970’s

saw development along the beachfront, including building on what had previously been

the frontal dune of the protective dune system. Natural movement of sand from the

northern New South Wales beaches was also restricted by initial construction of the

Tweed River entrance training walls in 1890 and 1910 and even more so by substantial

extensions of these in 1962/1964 (Boak et al., 2001).

Major storm events and extensive erosion were reported on the Gold Coast in

1936 and 1954 and growing concern about erosion in this area led the Queensland

Government to commission the Delft Hydraulics Laboratory to conduct a study of

coastal processes in 1964 (Boak et al., 2001). It was while this study was being

conducted that the Gold Coast suffered its worst recorded erosion and property damage

caused by a series of seven cyclones in 1967. The Delft Report, published in 1970,

recommended a major initial program of beach nourishment to repair depleted beaches

followed by an ongoing program of smaller nourishment projects to maintain an

effective barrier to storm damage (Boak et al., 2001). Beach nourishment was to be

achieved by dredging and pumping sand from inland waterways and from offshore

deposits. While the Gold Coast City Council was in negotiation with the State

Government over funding of the Delft recommendations, the coast was again struck by

two cyclones in 1972 and two more in 1974 and damage was so severe that the council

was forced to act with minimal support from State Government.

During 1974 and 1975 approximately 3 million m3 of sand was pumped onto

Gold Coast beaches and boulder walls were constructed to protect assets that were in

immediate danger (Boak et al., 2001). Over the last thirty years a boulder seawall has

been constructed in front of approximately 75 per cent of the coastal development and

dunes have been re-established on top of and to the seaward side of the wall so that it

provides a last line of defence against property damage caused by major storms (Boak et

al., 2001; Tomlinson et al., 2003). Developers of beachfront land are now required by

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the council to complete the seawall construction adjacent to the development and re-

establish dune systems (Boak et al., 2001). Since 1974 a number of small beach

nourishment projects have been completed, with major programs conducted in 1985 and

1988/89, and these have proved to be effective in providing a buffer to storm damage

and in speeding up recovery of the beach following storm damage (Boak et al., 2001).

Strategies have also been put in place to reduce the loss of sand from the beach system.

These included construction of a number of small groynes and river mouth training

walls to control sand movement and the construction of the Tweed River entrance sand

bypass in 2001, which ensures that sand is not prevented from entering the Gold Coast

beach system by the Tweed River training wall in the south (Boak et al., 2001;

Tomlinson et al., 2003).

In 1999 the Gold Coast City Council commenced work on the Northern Gold

Coast Beach Protection Scheme which was the largest beach nourishment and

protection project undertaken in the area since 1988 (Boak et al., 2001). This scheme

was designed to protect the Surfers Paradise Esplanade and the area known as Narrow

Neck. Both of these sections of the beachfront are highly exposed during storm activity

and have both suffered extensive damage in the past. The scheme involved widening the

northern Gold Coast beaches by 30 to 50 meters and establishing dune systems seaward

of the seawall that would enable the beach to withstand a 1-in-50 year storm event, and

establishing control points to stabilise the nourished beaches (International Coastal

Management, 1998). More than 1.1 million m3 of sand was dredged from the

Broadwater and deposited on Surfers Paradise beaches to widen the beach and dunes

and provide additional public open space. In addition an artificial reef was constructed

off the beach at Narrow Neck using large sand-filled geo-textile bags, each weighing in

excess of 150 tonnes, to act as a control point for sand and provide a recreation amenity

for surfers (Boak et al., 2000). This project was completed in 2000 and cost

approximately $9 million. As a result of the success of the Northern Gold Coast Beach

Protection Scheme the Gold Coast City Council subsequently commenced a similar

scheme at Palm Beach on the southern end of the Gold Coast (Tomlinson et al., 2003)

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Map 2 The Northern Gold Coast Beach Protection Strategy

Source: International Coastal Management (1998)

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Funding of beach nourishment works has been a point of contention between the Gold

Coast City Council and the Commonwealth and State Governments. An economic study

of the recommendations of the Delft report recommended contributions of 40 percent of

the costs from Commonwealth Government, 40 per cent from State Government and 20

per cent from local government (Maitre and Walker, 1972). However, the

Commonwealth Government and State Government rejected this recommendation and

beach nourishment works conducted during the 1970’s received only a 20 per cent

subsidy from State Government (Boak et al., 2001). Recently approved coastal

protection works in Queensland have received a 25 per cent State Government subsidy

(Tomlinson et al., 2003).

5.6 Summary

The research described in this thesis used a contingent valuation study of local

residents WTP for a proposed beach protection program as the vehicle for investigating

the effects of information and attitudes on WTP. This chapter has shown that the

contingent valuation technique was valid in the geographic, political and legislative

context in which the experiment was conducted.

Beach management is only one aspect of more broadly defined coastal

management and coastal management policy in Australia is shaped by the overlapping

political administrative and legislative interests and responsibilities of Commonwealth,

State and local governments (Haward, 1995). State and Commonwealth Governments

have tended to take the initiative and provide the majority of the funding for generalised

coastal management issues such as pollution control and community based programs

such as Coastcare. However, localised erosion problems, which tend to threaten private

and local government assets first have been left largely to local government to fix with

only small amounts of funding, usually between 20 and 25 per cent of the total project

cost, made available from State Government. Thus, programs such as the Northern Gold

Coast Beach Protection Strategy and similar attempts to nourish and protect beaches are

funded primarily by local ratepayers.

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CHAPTER 6

INSTRUMENT DESIGN, TESTING AND THE PILOT EXPERIMENT

Earlier chapters have provided reviews of non-market valuation methods, the

role of information and attitudes in contingent valuation, and an introduction to the case

study region. Based on these, this chapter describes the instrument design and the

administration and results of the pilot experiment conducted to test the survey

instrument prior to the main study. The chapter starts by providing a detailed account of

the process used to develop the survey instrument. This description focuses on the three

main components of the instrument: the attitude measurement items and scales, the

information treatments, and the contingent market context and WTP elicitation

questions. It then describes the administration of the pilot experiment and presents an

analysis of the pilot experiment results. For each of the three main components of the

instrument, the nature and rationale for any changes made prior to conducting the main

experiment is discussed.

6.1 Instrument development 1: The attitude measurement items and scales

In order to address the research questions and the associated hypotheses

described in Chapter 1, measurement scales were developed for each of the eight

variables in the proposed augmented attitude-behaviour model represented in Figure 1-

1. A pool of measurement items was generated from two different sources. The first

source of items was the literature review which revealed a number of scales that had

been used to measure attitudes toward general and specific environmental targets. It was

possible to adapt some of the items used in these studies to explore attitudes to beach

erosion and protection. Five focus groups of undergraduate students living in the study

region provided a second source of items. The focus groups were conducted primarily to

assist with the initial design of the photographic information treatments, described in

Section 6.2 of this chapter. A series of open questions posed to these groups also raised

some issues that had not been identified in the literature review, such as the positive

aspects of beach erosion. Comments and issues raised by the focus groups are

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summarised in Appendix A. Finally, the draft measurement items were reviewed for

face and content validity by a panel of three experts in beach protection.2

This section describes the development of each of the attitude scales in turn.

6.1.1 General attitudes toward the environment (V1)

A number of instruments are available that claim to measure respondent’s broad

environmental beliefs and these were reviewed in Chapter 4 of this thesis. Dunlap and

van Liere’s (1978) 12-item New Environmental Paradigm (NEP) scale is one of the

most widely used. This was revised by Dunlap, van Liere, Mertig and Jones (2000, p.

434) to form a 15-item scale for which the authors reported a reliability coefficient

alpha of 0.83. Dunlap et al. (2000) claimed that the scale is uni-dimensional and

although this has been challenged by a number of researchers (Albrecht, Bultena,

Hoiberg and Nowak, 1982; Scott and Willets, 1994) no consistent alternative multi-

dimensional structure has been demonstrated.

Steel (1996, p.32) used a six-item abbreviated version of the NEP scale and

claimed a reliability coefficient alpha of 0.82. This scale was adapted for the current

study by making minor language changes to make it suitable for use with an Australian

population. The full text of the six measurement items as they were used in the pilot

experiment is presented in Table 6-1. Item polarities were maintained as they were in

Steel’s (1996) study for purposes of comparison.

Table 6-1 Measurement items for general attitudes toward the environment (V1)

ID Wording Item

polarity

NEP1 The balance of nature is very delicate and easily upset by human activities Positive

NEP2 The earth is like a spaceship with only limited room and resources Positive

NEP3 Plants and animals do not exist primarily for human use Positive

NEP4 Modifying the environment for human use seldom causes serious problems Negative

NEP5 There are no limits to growth for nations like Australia Negative

NEP6 Humankind was created to rule over the rest of nature Negative Source: Adapted from Steel (1996, p.32)

2 This panel comprised the engineer responsible for the Gold Coast City Council’s beach and foreshore protection programs (John McGrath), the Principal Engineer with the coastal engineering consulting group International Coastal Management (Angus Jackson), and the Director of the Griffith University Centre for Coastal Management (Professor Rodger Tomlinson).

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6.1.2 Measures of habit / environmental behaviour (V2)

Triandis (1980) suggested that some behaviour is actually the result of well-

learned pre-dispositions to respond in a particular way. Ouellette and Wood (1998)

provided empirical support for this hypothesis by showing that habit is as effective in

predicting behaviour as attitude. These pre-dispositions were incorporated in Eagly and

Chaiken’s (1993) attitude-behaviour model as habits that may exert a moderating

influence on attitude structure or directly on the associated behaviour.

The measure of habit adopted in this instrument was a self-reported measure of

the frequency with which respondents had engaged in particular environmentally related

behaviours. Scott and Willets (1994) and Tarrant and Cordell (1997) have developed

instruments to measure this phenomenon. Both instruments identify consumer and

political behaviour sub-scales. Scott and Willets (1994) used ten items and a true/false

response format while Tarrant and Cordell (1997) used eleven items and a three-point

frequency of engagement response scale labelled, ‘Never’, ‘Sometimes’ and

‘Frequently’.

The scale used in this study was adapted from Tarrant and Cordell (1997). It was

preferred to the Scott and Willets (1994) scale because it required less rewording to

translate it from American English to Australian English and because of the increased

sensitivity of the three-point response scale. The question stem and item wording for

each of the sub-scales are shown in Table 6-2.

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Table 6-2 Measurement items for environmental behaviour / habit (V2) Question stem: How many times have you been involved in the following activities?

Consumer behaviour subscale:

1. Recycled paper, plastics, or glass.

2. Taken into account the amount of packaging on goods you buy.

3. Switched products because of environmental reasons.

4. Read books or magazines about the environment.

Political behaviour subscale:

1. Written or telephoned a public official about an environmental issue.

2. Subscribed to environmental publications.

3. Attended meetings on environmental issues.

4. Donated money to an environmental group.

5. Voted for a public official because of their pro-environmental stance.

Source: Tarrant and Cordell (1997, p. 626)

6.1.3 Attitudes toward beach erosion (V3) and beach protection (V4)

Because of the specific nature of these two domains there were no pre-tested

scales available. However, attitudes toward other specific environmental issues such as

storm water management (Jorgensen and Syme, 2000), forest management (van

Rensberg, Mill, Common and Lovett, 2002; Tarrant and Cordell, 2002), wetland

conservation (Streever, Callaghan-Perry, Searles, Stevens and Svoboda, 1998), coastal

protection (Goodman, Seabrooke and Jaffry, 1998; Penning-Rowsell et al., 1992),

protection of a natural area (Nunes, 2002), river water quality (Green and Tunstall,

1991), species preservation (Kotchen and Reiling, 2000) have been investigated. Items

used in these studies formed the initial item pool for these dimensions.

Five focus groups were used to pre-test the photographic images used in the

information treatments (described in Section 6.2). They were also used to generate

additional items relating to beach erosion and protection as attitude targets. Content

analysis of the focus group discussions indicated that there might be individual and

communal dimensions to attitudes toward beach erosion. Some of the participants,

while commenting that beach erosion in the specific region was not a problem for them,

recognised that it might result in significant losses for the community generally. The

questions used in the focus groups and a summary of the comments is provided in

Appendix A.

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Five items were designed to measure each of the separate attitude domains based

on the item pool developed from the literature and the focus groups. The full text of

those items is shown in Table 6-3.

Table 6-3 Measurement items for attitude toward beach erosion (V3) and protection (V4)

ID Wording: Items for attitudes to beach erosion (V3) Item

polarity

erosn1 Beach erosion on the Gold Coast is a major problem for me as an individual. Positive

erosn2 Beach erosion is a major problem for the Gold Coast community generally. Positive

erosn3 Beach erosion is something we should only worry about when it happens. Negative

erosn4 Beach erosion reduces the recreation value of the beach. Positive

erosn5 Beach erosion reduces the visual appeal of the beach. Positive

ID Wording: Items for attitudes to beach protection (V4)

Item polarity

prot1 Beach protection improves recreation values of the beach. Positive

prot2 Beach protection improves environmental / ecological values. Positive

prot3 Beach protection improves the appearance of beaches. Positive

prot4 We should not interfere with nature. Negative

prot5 I don’t believe beach protection works. Negative

6.1.4 Expected utility of outcomes (V5)

Eagly and Chaiken (1993, p.209) described utilitarian outcomes as “…those

rewards and punishments that are anticipated to follow from engaging in the

behaviour”. Analysis of the literature and comments from the focus groups were used to

generate measurement items for this domain. These suggested that the most perceptible

benefits of beach protection programs to individuals are recreation and economic

rewards. Comments by some participants in the focus groups also indicated that they

recognised indirect benefits that might be experienced by friends or family members.

Four items were designed to measure the direct and indirect rewards associated with this

domain and the full text of those items is shown in Table 6-4.

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Table 6-4 Measurement items for expected utility of outcomes (V5)

ID Wording

Item polarity

Util1 I do not believe that I will get any direct recreation benefit from beach protection measures on the Gold Coast. Negative

Util2 I do not believe that I will get any economic benefit from beach protection measures on the Gold Coast. Negative

Util3 I do not believe that any of my friends or family will get any recreation benefit from beach protection measures on the Gold Coast. Negative

Util4 I do not believe that any of my friends or family will get any economic benefit from beach protection measures on the Gold Coast. Negative

6.1.5 Subjective norm (V6)

Subjective norms are a product of the extent to which an individual believes the

significant people in their life would approve or disapprove of a particular behaviour

and their motivation to comply (Petty and Cacioppo, 1981). The domain is a key

component of the theory of planned behaviour (Ajzen, 1985) and has been examined in

a range of contexts including: decisions about diet (Berg et al., 2000); intention to

donate to cancer research (Maio and Olson, 1995), and; intention to engage in leisure

activities (Ajzen and Driver, 1992).

In a laboratory based contingent valuation experiment, Ajzen et al. (1996) used

two items to measure subjective norms of participants but did not attempt to measure

their motivation to comply. Berg et al. (2000) measured three aspects of subjective

norms: injunctive norms (the expectations of significant others), descriptive norms (the

behaviour of significant others) and motivation to comply. An index of subjective norm

was calculated by summing the injunctive and descriptive norms and multiplying by the

motivation to comply. Following Berg et al. (2000) three items were designed for the

current study and the full text of the items is shown in Table 6-5.

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Table 6-5 Measurement items for subjective norms (V6)

ID Wording Item polarity

Injunctive norms: Norm1 Most people who are important to me would expect me to be willing

to pay toward the costs of beach protection. Positive

Descriptive norms: Norm2 Most people who are important to me would be willing to pay

toward the costs of beach protection themselves. Positive

Motivation to comply: Norm3 Generally speaking, I try to do what those who are important to me

want me to do. Positive

6.1.6 Perceived Behavioural Control (V7)

An individual’s ability to perform a particular behaviour must, to some extent,

be moderated by non-motivational factors such as opportunity and access to resources

such as time and money. Ajzen (1991) claimed that the individual’s perception of these

constraints is more important in predicting behaviour than the actual level of control.

The concept of perceived behavioural control was incorporated in the theory of planned

behaviour and describes the individual’s perception of how easy or difficult it will be

for them to perform the behaviour of interest (Ajzen, 1991). As a central component in

the theory of planned behaviour, perceived behavioural control has been examined in a

wide range of different contexts including; intention to follow safe sex practices

(Reinecke et al., 1996); intention to recycle waste products (Cheung et al., 1999); and,

intention to purchase genetically modified food (Cook, Kerr and Moore, 2002).

In a contingent valuation study the nature of the perceived behavioural

constraint is likely to relate primarily to ability to pay for the proposed improvement.

Jorgensen et al. (2001) used a single measure of ability to pay for an environmental

good but this measure was not embedded in a theory of planned behaviour framework.

Ajzen et al. (1996) used a theory of planned behaviour framework to explain WTP for

public and private goods and within this they used two items to measure perceived

behavioural control. For the current study two items were adapted from Ajzen et al.

(1996). The full text of the items is shown below in Table 6-6.

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Table 6-6 Measurement items for perceived behavioural control (V7)

ID Wording Item

polarity

PBC1 For me to pay an additional living expense (either rent or rates) to help finance beach protection would be easy.

Positive

PBC2 I believe that I could afford to pay an additional living expense (either rent or rates) to help finance beach protection.

Positive

6.1.7 Attitude toward paying for beach protection (V8)

Attitude toward the behaviour of paying for beach protection (the attitude

object) is the most proximal to the dependent variable (stated WTP) in the proposed

attitude-behaviour model. As such it is likely to be the best predictor of WTP (Eagly

and Chaiken, 1993; Fazio, 1989).

A small number of studies have explored attitudes toward the action of paying

for an environmental good. Jorgensen and Syme (2000) used six items to measure

respondent’s attitudes toward being asked to pay for stormwater controls. Jorgensen,

Wilson and Heberlein (2001) used seven items in an experimental investigation of

respondents’ attitude toward paying and perceived ability to pay for four quite different

environmental goods - biodiversity, Indian spear fishing, water quality, and protection

of wolves. The four items used in the current study were adapted from those measures

with the highest factor loading used by Jorgensen and Syme (2000) and Jorgensen et al.

(2001). The full text of the items is shown in Table 6-7.

Table 6-7 Measurement items for attitude toward paying for beach protection (V8)

ID Wording Item

polarity

Atpay1 It would be unfair to expect local residents to pay more to protect Gold Coast beaches.

Negative

Atpay2 I would be opposed to any proposal that involved me paying extra to ensure protection of Gold Coast beaches.

Negative

Atpay3 It is my right to have protected beaches and not something I should have to pay extra for.

Negative

Atpay4 It is not worth paying money to protect beaches. Negative

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6.2 Instrument development 2: Information treatments and the market context

The contingent market scenario provides participants in a contingent valuation

experiment with information about the good and the hypothetical market that enables

them to explore their own utility functions and provide valid WTP responses (Mitchell

and Carson, 1989). Information about the good that is being valued is frequently

presented using a combination of text and visual formats (Mitchell and Carson, 1988).

The first question that this research aimed to address relates to the effects of visual and

text information provided in the contingent market scenario on attitudes toward and

WTP for an environmental good. Ajzen et al. (1996, p.47) explored the effects of

various text descriptions of a good, and used the terms ‘weak’ and ‘strong’ to describe

text arguments with increasing amounts of explicit service information in them. The aim

of the present study was to compare the relative effects of strong and weak text and

photographic arguments on attitudes and WTP for an environmental good.

According to Bishop et al. (1995) a contingent market scenario must describe

the good, the payment mechanism, and the context of the valuation. This section

describes how these three key components were developed for this study. It starts by

describing the process used to develop and test two alternative text descriptions and

three photographic presentations of the good – the proposed beach protection program.

It then describes the rationale for the choice of payment mechanism and the context of

the valuation.

6.2.1 Text information treatments

Studies that have examined the effects of information on WTP in a contingent

valuation experiment were reviewed in Chapter 3. The present study investigated the

effects of information relating specifically to the quality of the good and services it

supplies. Information relating to other aspects of the contingent market scenario, such as

substitute goods and the respondent’s budget constraints, was held constant in each

information treatment.

The text descriptions developed for the pilot study followed the format used by

Boyle (1989), Bergstrom et al. (1990), and Blomquist and Whitehead (1998). Two

treatments were developed in which respondents were provided with varying amounts

of information about the proposed beach protection program using the pilot Northern

Gold Coast Beach Protection program as an example of what could be achieved. In the

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first version, respondents were provided with basic descriptive and technical

information about the program. In the second, respondents were given exactly the same

descriptive and technical information and in addition some of the expected

environmental and recreational benefits of the program were explicitly described. Thus,

the two treatments were consistent but the second treatment offered additional

information to the reader. The two treatments were assessed for content validity by the

same panel of coastal management experts used to evaluate the attitude measurement

items as described in Section 6.1. The complete text of the two treatments is presented

in Table 6-8.

Table 6-8 Text information treatments used in the pilot study

Information stem common to both treatments:

Gold Coast beaches suffer from erosion resulting from storms, high tides and other natural processes. At times these erosion events have caused extensive damage.

It is not possible to prevent these natural processes but we can minimise the short term and long term damage using a variety of beach protection strategies.

Text Information Treatment 1 - Technical description only:

The Northern Gold Coast Beach Protection Strategy is one example of a program undertaken in recent years.

This program involved beach nourishment through sand pumping, dune re-vegetation and protection, and construction of erosion control points to reduce loss of sand from the beach system.

More than 1.1 million cubic meters of sand was dredged from the Broadwater and deposited on the beaches to widen the beaches in this area by between 30 and 50 meters and increase the volume of sand within the storm buffer. At Narrow Neck an artificial reef has been constructed using approximately 500 sand-filed synthetic bags, each weighing 300 tonnes.

Text Information Treatment 2 - Technical description + Benefits

As for treatment 1, plus:

This program has produced a number of benefits. The wider beaches increase recreation space for beach users and are expected to reduce damage to beaches, dunes, parks, foreshores and private property when storms hit the Gold Coast. Re-vegetated dunes also contribute to storm protection and provide improved habitat for flora and fauna. The artificial reef acts as a barrier to sand migrating north out of the beach system and, in addition, it provides a recreational surfing site and has become a habitat for marine animals and plants.

6.2.2 Photographic information treatments

The aim of this stage of the instrument development was to create visual

equivalents of the strong and weak text arguments used by Ajzen et al. (1996).

Photographs of local beaches in various states of erosion were used to test the effect of

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visual information on respondents’ attitudes toward a range of relevant target objects

and behaviours, and their WTP for beach protection programs.

The marginal improvement produced by the proposed program was depicted

using photographs of eroded beaches and a recently nourished and well-maintained

beach from the pilot Northern Gold Coast Beach Protection Scheme. In the

photographic treatments, participants received images of either mild, moderate or severe

erosion events (the t0 condition) followed by images of well nourished and repaired

beaches (the t1 condition). Thus, the marginal impact of the proposed beach protection

project appeared different in each of the treatments. In the control treatment participants

received no images of beach erosion or repaired beaches. The photographic treatments

are summarised in Figure 6-1.

Figure 6-1 Summary of the photographic information treatments

Treatment and description

Images of beach erosion (to)

Compared with

Images with proposed project (t1)

A – Control No images ↔ No images

B – Mild erosion Images of mild beach erosion

↔ Well repaired beaches

C – Moderate erosion Images of moderate beach erosion


D – Severe erosion Images of severe beach erosion


Photograph selection was critical in ensuring that the intended information was

communicated to survey participants. A two-stage process involving checks for content

validity and pre-testing of the images using student groups was used to select and test

the photographs that were used in the final survey instrument.

Initial selection and preparation of photographs

Approximately 20 photographs depicting a range of erosion levels, from mild to

severe, were selected from extensive private collections of photographs of Gold Coast

beaches held by the principal researcher and by members of the panel of coastal

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management experts described in Section 6.1. These photographs were then assessed for

content validity by the expert panel and a shortlist of 12 photographs was chosen.

Two concerns were raised during this initial stage. The first of these related to

the effect that the presence of buildings or other artificial structures in the photographs

might have on respondent’s perceptions of risk and evaluation of the scene. To examine

this issue four photographs that had a built structure in them were duplicated and digital

photo editing software was used to remove the buildings in the duplicate image. The

edited image was also flipped horizontally to create a mirror image of the original to

reduce the chance of participants in the image pre-test experiment recognising that there

were two different versions of the same photograph. Both the original and the edited

images were retained in the pre-test experiment to create a shortlist of 16 photographs.

These are presented in Appendix B.

The second area of concern related to the choice of colour or black and white

images for the survey instrument. Firstly, although all the digital images were available

in colour they had been taken at different times of the day and in different weather

conditions. This meant that colour saturation was not consistent across all of the images

and there were concerns that this might have an unwanted effect on participant’s

evaluation of the erosion scene. Secondly, because approximately 8 per cent of males

and 0.5 per cent of females in Australia suffer varying degrees of defective colour

vision (Royal Australian and New Zealand College of Ophthalmologists [RANZCO],

2004) use of colour images would have introduced another uncontrollable variable into

the experiment. Finally, the cost of printing high quality photographs in the A4 size

survey booklet was prohibitively high. To control for these issues and to reduce the

costs of survey printing it was decided to use black and white images in all treatments

for the experiment.

Focus group tests of the photographs

The panel of experts had assessed the 16 black and white images in the shortlist

but the aim was to select images that best represented mild, moderate and severe levels

of erosion to members of the general public who were not as familiar with the issue. A

laboratory pre-test experiment was conducted using 77 undergraduate students in 5

focus groups to rate the images in terms of severity of erosion. Following the image

rating exercise these groups also acted as the focus groups for item generation for the

attitude scales described in Section 6.1.

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The image pre-test was done in the form of a slide presentation so that the

duration and conditions of exposure to the images could be controlled. The researcher

read instructions from a script at the beginning of each laboratory session and images

were displayed for 10 seconds each. The complete presentation can be seen in Appendix

B. To minimise the effects of previous knowledge, each group saw all the images once

so that participant’s developed an understanding of the range of erosion effects they

were being asked to rate. On the second showing participants rated each image on a

scale of 1 (least severe) to 10 (most severe) on a response sheet. The results of this

exercise are shown in Table 6-9.

The image rated as most severe (image #8) showed residential buildings under

immediate threat from erosion, fences falling on to the beach and an exposed protective

boulder wall. Other images that were rated highly all showed substantial erosion

escarpments, three with buildings visible (images #6, #9 and #11) and one with no

buildings visible (image #11b). Comparison of the four edited images with the originals

did not provide conclusive support for the hypothesis that the presence of built

structures results in higher risk evaluation and a more severe rating. There were only

significant differences in the means between the two versions of image #6 and image

#3. In the case of image #6, removal of high-rise buildings resulted in a significantly

lower rating but in image #3 removal of a prominent, and apparently threatened,

lifeguard tower resulted in a higher rating. Overall, the results of the image pre-test

experiment confirmed the expert panel’s ranking of the images.

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Table 6-9 Results of the image pre-test Comparison of

edited image with original

Image ID#

Display Order

Description of edit Mean rating

Std. Dev.

t Sig.

1 1 5.26 1.68

2 3 6.29 1.53

3 4 7.03 2.19

3b 8 Lifeguard tower removed from image 3 and replaced with trees. Image flipped horizontally.

7.62 ↑ 1.78 -2.677 0.009

4 5 5.91 1.79

5 6 7.16 2.39

6 9 7.84 1.71

6b 2 High-rise buildings removed from image 6. Image flipped horizontally.

6.62 ↓ 1.63 5.277 0.000

7 10 5.69 1.94


5.57 2.15 .590 .557

8 11 8.42 2.01

9 13 8.19 1.58

10 14 4.04 1.85

11 15 7.69 1.62


7.82 1.82 -.799 .427

12 16 7.27 1.99

Based on the results of this image pre-test experiment, and feedback from the

panel of coastal management experts, two images were selected to represent each of

mild, moderate and severe levels of beach erosion in the information treatments for the

pilot experiment. Thus, the three photographic treatments presented images of varying

levels of erosion. One example treatment of the pilot instrument is presented in

Appendix C and all treatments are available in the digital appendices on the CD

attached to this thesis.

6.2.3 The payment mechanism

The payment mechanism comprises the vehicle through which monies will be

collected, the unit for which values should be expressed (i.e. household or individual

values), the timing of payments and any changes in the price of related goods (Bishop et

al., 1995). It is particularly important that the payment mechanism is plausible to limit

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hypothetical bias that might be introduced at this stage of the scenario (Carson, 1991;

Cummings and Taylor, 1998).

In this study the range of realistic payment vehicles was limited by the nature of

the environmental good. Prevention and repair of beach erosion is primarily a local

government responsibility in Australia, although local councils are sometimes able to

access State Government funds to assist in major projects as described in Chapter 5.

Thus, federal or state based income or sales taxes would not be realistic policy options.

Although paying for access to beaches is common in other areas of the world a user

pays system is also problematic in this case. First, a user pays approach does not capture

any of the value that non-users might hold for the good and non-use values were

expected to be significant. Secondly, because of the role of the beach in Australian

culture (Booth, 2003) it was felt that any suggestion of an access charge would result in

a substantial protest against the payment vehicle. Finally, the logistics of collecting an

access fee along an open 52-kilometer beach would also make this an unrealistic

payment vehicle.

After considering all the options and the relevant literature it was decided to

frame the payment as an environmental levy to be used exclusively for beach protection

programs and collected through local government property taxes called rates. Many

local government authorities in Australia collect special purpose levies, as additions to

the normal household rates, to fund environmental projects, although at the time this

study was conducted there was no such levy in this jurisdiction. The choice of a

household rate levy as the vehicle also identified the household, rather than the

individual, as the appropriate valuation unit. Finally, since beach erosion is an ongoing

problem in this region, requiring constant beach maintenance, the payments were also

framed as ongoing annual payments rather than a one-time payment.

The description of the payment mechanism used in the pilot experiment can be

seen in Section 6 of the pilot survey instrument presented in Appendix C.

6.2.4 Characteristics of the contingent market and the value elicitation question

The valuation context needs to clearly identify the political or market context

through which the good will be offered, whether the measure of value is WTP or

compensation demanded, who the other participants in the market are, and the value

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elicitation device (Bishop et al., 1995). Each of these characteristics of the contingent

market will be addressed here.

The nature of the good tends to dictate the context in which it is offered.

Contingent valuation studies of quasi-private goods such as hunting or fishing permits

have adopted a private goods market model (Adams, Bergland, Musser, Johnson and

Musser, 1989). Mitchell and Carson (1989) argued that a political model was more

suited to goods such as clean air and water for which property rights could not be so

easily defined. Beach protection programs have strong public good characteristics and it

was appropriate to frame the valuation in the context of a political model.

In this study the good being offered through the contingent market was an

improvement to an environmental asset. Beach protection programs had been piloted on

limited stretches of the northern Gold Coast beaches with a high degree of success as

described in Chapter 5. The programs provide improved amenity related values and

reduce the damage risks to the beach posed by major storms. Until recently, beach

repair and protection initiatives have been undertaken only as a reaction to storm

damage. Thus, the proposed program was a new pro-active initiative that would require

additional funds to introduce. In this context WTP, rather than compensation demanded,

was the appropriate measure of value.

A respondent’s understanding of who else benefits from an environmental good

and who else shares in its costs may influence their stated WTP (Bishop et al., 1995).

The target population for the main experiment in this study was limited to homeowners,

and therefore ratepayers, in the Gold Coast local government area. But, they are only

one component of the contingent market. Other significant beneficiaries of the proposed

project include local residents who do not own property in the region, non-resident

direct users of the beach and indirect beneficiaries of the good such as tourism related

businesses. Comments made in the focus groups suggested that there might be a

perceived equity issue in relation to these groups thus the role of these participants was

explicitly described in the contingent market scenario to overcome this. Respondents

were reminded that property taxes would be passed on to renters in the region and that

the rate increases would also apply to commercial properties such as hotels and

restaurants ensuring that tourists would also pay their fair share toward beach protection

costs.

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Following the description of the good, the payment mechanism and the context

for the valuation, the final stage of the contingent valuation scenario is the WTP

elicitation question. The good that respondents were asked to value in this study was

clearly a public good; that is, the benefits of well maintained beaches are both non-

excludable and non-rival. However, the dichotomous choice political referendum model

that has been widely adopted in the Unites States to value this type of good (Mitchell

and Carson, 1989) is not one that Australian residents are familiar with. In addition,

given the need to test a number of different information treatments in this study, the

dichotomous choice referendum format was assessed as infeasible for budget and

logistical reasons. In a similar study of information treatments, Ajzen et al. (1996, p. 49)

argued that “…the referendum format lacks a firm empirical base, at this point” and that

the elicitation mode was largely irrelevant in an experimental study of information

effects. The payment card method was chosen as the value elicitation method for the

final experiment because it has been shown to produce high response rates (Donaldson

et al., 1997) and, unlike the dichotomous choice method, it elicits a maximum WTP

from each respondent.

A two-stage value elicitation process was used. The WTP elicitation question

was preceded by a ‘payment principal’ question (Bateman and Langford, 1997) in

which respondents were asked if they would be willing to pay anything at all for the

good described. The main aim of this question was to minimise protest reactions by

leading respondents gently into the value elicitation question and to assist them with the

value construction process. For the pilot experiment an open-ended value elicitation

question was adopted and the values obtained from this were used to establish the range

of WTP values for a payment card elicitation format used in the main contingent

valuation experiment.

The description of the valuation context and the elicitation device used in the

pilot experiment can be seen in Section 6 of the pilot survey instrument presented in

Appendix C.

6.3 Instrument development 3: Other components of the survey instrument

It has been demonstrated that stated WTP in a contingent valuation experiment

is influenced by socio-economic variables such as education levels and income

(Bateman and Langford, 1997; Hanemann, 1995), relevance of the good (Ajzen et al.,

1996; Berrens, Bohara, Jenkins-Smith, Silva and Weimer, 2004) and previous

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knowledge (Hoehn and Randall, 2002; Tkac, 1998). Thus, most contingent valuation

survey instruments attempt to measure some of these variables to assist in interpretation

of responses. In the current study the relevance of the beach to individuals as a

recreation resource was expected to be an important determinant of their WTP for beach

protection. Judge et al. (1995) demonstrated that individual’s previous knowledge about

beach erosion and protection, and levels of beach use were significantly related to WTP

for beach nourishment projects. In addition, an individual’s previous level of knowledge

about beach erosion and protection was expected to have a moderating influence on the

effects of information provided in the contingent valuation scenario. Thus, it was

important to develop measures of beach use as an indicator of information relevance

and of previous knowledge of beach erosion issues. The measures used to collect

information on socio-economic status, relevance of the good and previous knowledge

will be described in this section.

6.3.1 Information relevance and previous knowledge

Two approaches were adopted to measure the relevance of the good to

respondents and a three-item scale was developed to measure levels of previous

knowledge about beach erosion and protection.

The first two questions in the survey instrument were designed to provide a

subjective measure of the importance of the beach to households and, at the same time,

provide a simple non-challenging start to the survey in order to enhance response rates.

The two questions were:

How important would you say the beach was to your household?

How important is proximity to the beach in your household’s decision about

where to live?

Responses were collected using a seven-point semantic differential scale (1 =‘not very

important’; 7 = ‘very important’).

The second approach to measuring the relevance of the proposed good was a

self-reported measure of beach use. Question 3 of the survey instrument asked

respondents to identify the number of times they visited beaches in the region on

average each month. Since there are approximately 52 kilometres of beaches in the

region the beaches were divided into northern, central and southern beach zones and for

each zone respondents indicated average visitation each month during summer and

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winter. The format of this question can be seen in section one of the pilot survey

instrument provided in Appendix C. This disaggregated question format was adopted to

assist respondents to make accurate estimates of visitation and to provide greater detail

for the analysis.

It was anticipated that most local residents would know something about beach

erosion and protection and that some of them would know a great deal, having followed

the issue through the media and through personal experience. Three items were

designed to measure levels of previous knowledge:

I have read about beach erosion or protection strategies in newspapers or

magazines.

I have seen beach erosion or protection measures with my own eyes.

Beach erosion and protection is something I have thought about.

Responses were collected on a four point Likert scale (1 = ‘Never; 2 = ‘Very rarely’; 3

= ‘Sometimes’; and 4 = ‘Frequently or a lot’). The format of these questions can be seen

in section one of the pilot instrument shown in Appendix C. The responses to the three

items were used to construct a simple additive measure of previous knowledge.

6.3.2 Socio-economic measures

Socio-economic measures are collected in contingent valuation surveys to

enable researchers to compare the sample characteristics with those of the population

and to assist in interpreting the results (Mitchell and Carson, 1989). Socio-economic

characteristics such as age (McFadden and Leonard, 1993), education (Lee and Han,

2002; Lockwood et al., 1993) and income (Kotchen and Reiling, 2000) have been

shown to influence WTP for environmental goods. Lindsey et al. (1992) showed that

household income was a significant determinant of WTP for beach protection in Maine

and New Hampshire, USA.

The pilot experiment was conducted using a sample of undergraduate students

and, because of this, many of the socio-economic measures that would normally be

included in a contingent valuation instrument were not relevant to this stage of the

instrument testing. However, information on gender, age, length of time resident in the

region, postcode and relevant memberships was collected in the pilot survey instrument.

The format of these questions can be seen on the final page of the pilot survey

instrument in Appendix C. Questions about household income data were not included in

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the pilot experiment but were added to the instrument for the final contingent valuation

experiment.

6.4 The pilot experiment

The aim of the pilot experiment was to test the draft survey instrument in a

controlled experiment and to identify any refinements that should be made before it was

used in the main contingent valuation experiment.

There were three specific aims of the pilot experiment. First, to test the internal

consistency of each of the eight scales designed to measure the variables represented in

the attitude-behaviour model introduced in Figure 1-1. Second, to establish the expected

range of WTP values for the proposed good, using an open-ended elicitation format, to

assist in development of a payment scale elicitation format for the main contingent

valuation experiment. And third, to test the text and visual information treatments

provided in the contingent market scenario on attitudes and stated WTP.

6.4.1 Aims and design of the pilot experiment

A split-sample experimental design was used in the pilot experiment to test

seven different information treatments and this is summarised in Table 6-10. The seven

versions of the survey instrument differed only in the information treatments. For

example, treatment 1 contained a contingent market scenario with no text description

and photographs depicting mild levels of erosion compared with photographs of well

nourished beaches following a beach protection initiative. In contrast, treatment 7

comprised the detailed text description, that included explicit descriptions of the

expected benefits of the program, and photographs depicting severe erosion levels

compared with photographs of well-nourished beaches following a beach protection

initiative. For logistical reasons it was not possible to test all twelve cells in the

experimental design, however cells were selected that enabled investigation of a text

information effect (through treatments 1,3 and 5) and a visual information effect

(through treatments 4,5, 6 and 7).

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Table 6-10 Experimental design for the pilot experiment Photographs Level of

information A.

None B.

Mild C.

Moderate D.

Severe

1. None Treatment 1 Treatment 2

2. Brief Treatment 3 Text

3. Detailed Treatment 4 Treatment 5 Treatment 6 Treatment 7

The pilot survey instrument comprised seven sections as summarised in Figure

6-2. A copy of the pilot survey instrument is presented in Appendix C.

Figure 6-2 Structure of the pilot survey instrument

6.4.2 Sample selection and administration

Because a significant sample size was required in each of the seven information

treatments to enable statistical analysis, a pilot study of households in the region was

not possible for budget and logistical reasons. And, since the primary aims of the pilot

experiment were to test the attitude measurement scales and the information treatments,

it was not essential for the pilot experiment to be conducted using subjects from the

intended final population. For these reasons the pilot experiment was conducted using a

sample of undergraduate business students at Griffith University. The seven versions of

the survey instrument were randomly distributed to subjects during four lectures in a

core Bachelor of Business course. Subjects were provided with very brief instructions

prior to completing the survey and asked not to communicate with other people in the

room. They were then given 15 minutes at the beginning of the lecture to complete the

Section 7

Socio-economic questions

Questions about relevant memberships

Section 6

Information about the payment vehicle

Reminders of budget constraints and substitute goods

WTP elicitation question

Section 5

Attitude measurement items for V3, V4, V5, V6, V7 and V8

Section 3 & 4

Text information treatment

Photographic

information treatment

Section 2

Questions about past environmental behaviour (V2)

Questions about general environmental attitudes (V1)

Section 1

Questions about beach importance

Questions about beach use

Questions about previous knowledge of beach erosion

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survey and a cash prize incentive was offered to encourage a high response rate.

Following completion of the survey a short presentation describing the research project

and its aims was made to each group of subjects.

6.4.3 Sample statistics for the pilot experiment

Eighty copies of six information treatments and 75 copies of the seventh

treatment were randomly distributed to subjects giving a total sample size of 555. Under

the controlled conditions the pilot experiment achieved a useable response rate of 95 per

cent overall with the rate varying between 92 per cent and 96 per cent for each of the

seven treatments. Details of response rates are summarised in Table 6-11

Table 6-11 Response rate for the pilot survey Treatment Distributed Useable responses Response rate (%)

1 753 72 96 2 80 76 95 3 80 76 95 4 80 77 96 5 80 77 96 6 80 77 96 7 80 74 92

Total 555 529 95

The sample of students used in the pilot experiment was not intended to be

representative of the population of local homeowners who were the target population of

the main contingent valuation experiment. Nevertheless, a brief profile of the student

respondents to the pilot experiment is provided here in order to provide a context for the

analysis of measurement scales and information effects in the pilot study.

The age of participants in the pilot experiment ranged from 16 to 57 (x̄ = 21.0; s

= 5.41), and there were more women (61 per cent) than men represented. Seventy five

per cent of the participants were Australian nationals and the average length of time

resident on the Gold Coast was slightly over seven years, although a substantial

proportion (17.4 per cent) had lived there for less than one year.

The median number of beach visits per month among the sample was 11 visits

during summer and four visits during winter. Only 2.2 per cent of the sample indicated

that they were not beach users. Ninety per cent of participants had either read about or

3 Availability of subjects meant that only 75 versions of treatment 1 were distributed in the pilot experiment

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seen beach erosion but only 15 per cent indicated that beach erosion was something they

had thought about “frequently or a lot”.

6.5 Pilot experiment results 1: Item analysis and scale formation

Development of valid and reliable scales for measuring attitudes toward the

relevant target objects and behaviours was vital to the research objectives of this study.

This section describes the results and analysis of the pilot study in relation to this

component of the survey instrument.

Principal components and scale analysis was used to investigate the internal

consistency of the draft attitude measures. Prior to analysis and scale formation all

negatively worded items were reversed so that high scores indicated more positive

attitudes toward the target object or behaviour.

6.5.1 General attitudes toward the environment (V1)

Steel’s (1996) scale of six items was used to measure general attitudes toward

the environment. The three negatively worded items were recoded so that high values

on all items represented a biocentric position. Although the scale is generally considered

to be uni-dimensional (Dunlap et al., 2000), exploratory factor analysis of the pilot

experiment data using a Varimax rotation actually generated two components that

cumulatively accounted for 57.6 per cent of the variance. However, the Eigenvalue of

the second component was only just above the 1.0 threshold at 1.14 and close inspection

of the scree plot of the component Eigenvalues failed to provide support for a two

dimensional structure. It is interesting also to note that the first component comprised all

the positively worded statements and the second component all the negatively worded

statements which is consistent with Miller and Cleary’s (1993) observations about the

effects of negatively worded items in scales. Steel (1996) did not report the results of a

factor analysis on his data.

Based on Dunlap et al.’s (2000) recommendation, and in the absence of any

strong evidence to suggest otherwise, the six-item scale designed to measure general

attitudes to the environment (V1 in the model presented in Figure 1-1) was assumed to

be uni-dimensional. Scale analysis of the six items revealed a scale with acceptable

internal reliability (Cronbach’s alpha = 0.68) with no potential to improve the scale by

item deletion.

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A simple summative scale was formed to represent general attitudes toward the

environment (V1) by summing the responses for each of the six items and dividing by

the number of items.

6.5.2 Measures of habit / environmental behaviour (V2)

Variable 2 in the model presented in Figure 1-1 is a self-reported measure of

past environmentally related behaviour. Tarrant and Cordell (1997) identified consumer

and political dimensions of past behaviour and their framework was adopted in this

analysis. Separate scales were formed for the consumer and political dimensions by

summing the responses to the relevant items.

Patterns of reported behaviour on the political dimension were low among the

student sample used for the pilot experiment. For example, only 4.9 per cent of the

sample indicated that they frequently ‘vote for a public official because of their pro-

environmental stance’ and over 75 per cent indicated that they ‘never’ or ‘rarely’ gave

money to environmental groups. In comparison, reported behaviour on the consumer

dimension was higher, particularly in relation to recycling behaviour where 56 per cent

of respondents indicated that they did this frequently.

6.5.3 Measures of specific target-related attitudes (V3, V4, V5, V7 and V8)

A principal component analysis with Varimax rotation was performed on the

remaining 20 attitude items to test their conformity with the conceptual model presented

in Figure 1-1. The analysis resulted in six components accounting for 64.3 per cent of

the variance. Bartlett’s test of sphericity was large and significant (χ2(190) = 3621.1, p <

0.001) and the Kaiser-Meyer-Olkin measure of sampling adequacy was well over the

acceptable threshold of 0.6 (msa = 0.786) indicating that factor analysis was appropriate

(Coakes and Steed, 2001).

The item loadings, communalities, Eigenvalues, and percentage of variance

explained by each factor are presented in Table 6-12. The two items designed to

measure perceived behavioural control (V7 in the model presented in Figure 1-1) loaded

strongly onto component 5. Three of the four items designed to measure expected utility

of outcomes (V5 in the model) loaded strongly onto component 2, with a fourth item

(util4) loading less strongly onto this component. The solution for those items designed

to measure attitude toward erosion (V3 in the model) and attitude toward protection (V4

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in the model) was less satisfactory. The first three items designed to measure attitude

toward erosion (ateros1, ateros2 and ateros3) all loaded strongly onto component 4.

However, the other two items designed to measure attitudes to erosion loaded more

strongly onto component 1, together with the first three items designed to measure

attitudes toward protection. The two negatively worded items (atprot4 and atprot5)

formed a separate component 6.

Table 6-12 Item Loadings, Communalities (h2), Eigenvalues and Percentage of Variance for Principal Components Analysis with Varimax Rotation

Component Label Description 1 2 3 4 5 6 h2 Attitude toward erosion (V3): erosn1 Beach erosion on the Gold Coast is a major problem for me as an individual. .116 .263 -.070 .619 .303 -.205 .605 erosn2 Beach erosion is a major problem for the Gold Coast community generally. .251 .189 -.065 .690 -.075 -.101 .594 erosn3 Beach erosion is something we should only worry about when it happens. .183 .027 -.077 .711 -.009 .274 .621 erosn4 Beach erosion reduces the recreation value of the beach. .759 .106 -.075 .066 -.110 -.044 .611 erosn5 Beach erosion reduces the visual appeal of the beach. .816 .000 -.078 .068 -.052 -.023 .680 Attitude toward protection (V4): prot1 Beach protection improves recreation values of the beach. .674 .165 .019 .131 .049 .191 .537 prot2 Beach protection improves environmental / ecological values. .566 .062 .015 .329 .134 .230 .503 prot3 Beach protection improves the appearance of beaches. .744 .055 -.042 .147 .123 .163 .622 prot4 We should not interfere with nature. .147 .066 -.073 -.146 -.021 .724 .577 prot5 I don’t believe beach protection works. .103 .034 -.055 .171 .073 .709 .552 Expected utility of outcomes (V5): util1 I do not believe that I will get any direct recreation benefit from beach protection measures on the Gold Coast. .138 .463 -.237 .367 .035 .190 .462 util2 I do not believe that I will get any economic benefit from beach protection measures on the Gold Coast. .061 .861 -.093 .101 .119 .015 .777 util3 I do not believe that any of my friends or family will get any recreation benefit from beach protection measures

on the Gold Coast. .170 .646 -.158 .268 .026 .208 .587

util4 I do not believe that any of my friends or family will get any economic benefit from beach protection measures on the Gold Coast.

.071 .893 -.083 .026 .041 -.057 .816

Perceived behavioural control (V7): pbc1 For me to pay an additional living expense (either rent or rates) to help finance beach protection would be easy. .018 .099 -.180 .000 .881 .022 .819 pbc2 I believe that I could afford to pay an additional living expense (either rent or rates) to help finance beach

protection. .018 .055 -.240 .067 .871 .042 .825

Attitude toward paying for beach protection (V8): Atpay1 It would be unfair to expect local residents to pay more to protect Gold Coast beaches. -.141 -.034 .810 -.094 -.149 .000 .708 Atpay2 I would be opposed to any proposal that involved me paying extra to ensure protection of Gold Coast beaches. -.039 -.167 .793 -.119 -.271 -.106 .757 Atpay3 It is my right to have protected beaches and not something I should have to pay extra for. .044 -.125 .819 .042 -.101 -.021 .700 Atpay4 It is not worth paying money to protect beaches. .061 .242 .466 .321 -.039 .342 .501 Eigenvalue 5.1 2.5 1.7 1.3 1.1 1.1 Variance (%) 25.4 12.7 8.5 6.7 5.6 5.4

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For the purposes of the pilot experiment it was decided to use the theoretical

framework adopted for the attitude measures as much as possible and try to identify

ways in which the wording of items might be refined to improve instrument reliability

for the main contingent valuation experiment.

Scale analysis of the five items designed to measure attitudes toward beach

erosion (V3) revealed a scale with satisfactory internal reliability (Cronbach’s alpha =

0.69) with no potential to improve the scale by item deletion. Analysis of the five items

designed to measure attitudes toward beach protection (V4) indicated that the scale

could be strengthened by the removal of two items (atprot4 and atprot5). The resulting

three-item scale showed satisfactory internal reliability (Cronbach’s alpha = 0.76). Scale

analysis of the four items designed to measure expected utility of outcomes (V5) and the

two items designed to measure perceived behavioural control (V7) revealed scales with

good internal reliability (Cronbach’s alpha = 0.79 and 0.84 respectively). Analysis of

the four items designed to measure attitude toward paying for beach protection (V8)

indicated that the scale could be strengthened by the removal of one item (apay4). The

resulting three-item scale showed good internal reliability (Cronbach’s alpha = 0.80).

A simple summative scale was formed for each of the V3, V4, V5, V7 and V8

by adding the items and dividing by the number of items.

6.5.4 Subjective norms (V6)

Following the approach used by Berg et al. (2000), the scale for the

measurement of subjective norm (V6) was formed by adding the injunctive and

descriptive norms (norm1 and norm 2 respectively) and then multiplying by the

motivation to comply (norm3).

6.5.5 Scale validation: The effects of previous knowledge and beach use on

attitudes

Research described earlier by Ajzen et al. (1996) and Hoehn and Randall (2002)

suggests that previous knowledge about and relevance of a proposed good would be

expected to affect attitudes toward relevant targets and WTP in this study. Thus,

analysis of variance using the measures of previous knowledge and beach use was used

as a test of theoretical validity of the measurement scales described above. Exploration

of the eight attitude and behaviour scales indicated that measures of skewness and

kurtosis fell within acceptable limits for all variables (Tabachnick and Fidell, 2001).

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The three items relating to previous knowledge about beach erosion were

summed to create a composite measure and this measure was then re-coded to create

three groups of approximately equal size representing low, medium and high levels of

previous knowledge. The mean scores for each group on each of the eight attitude

variables and WTP were compared using ANOVA. Post-hoc comparisons of means

were conducted using Tukey’s HSD. The results of this analysis are shown in Table 6-

13. Higher levels of previous knowledge about beach erosion were associated with

significantly more positive attitudes toward all but two of the target objects and

behaviours. There was no significant relationship between previous knowledge and

subjective norms (V6) or attitude toward payment (V8). However, higher levels of

previous knowledge about beach erosion were associated with higher WTP for beach

protection.

Frequencies of reported beach use in winter and summer were also summed to

create a measure of total beach use and this measure was re-coded into three groups of

approximately equal size representing low, medium and high user categories. The mean

scores for each user category on each of the eight attitude variables and WTP were

compared using ANOVA. The results of this analysis are shown in Table 6-14. Higher

levels of beach use were associated with significantly higher levels of pro-environment

political behaviour (V2p); greater concern about beach erosion (V3) and stronger

support for beach protection (V4); higher levels of expected utility from beach

protection (V5); and, higher WTP for beach protection. There was no significant

relationship between beach use and general environmental attitudes (V1), pro-

environment consumer behaviour (V2c), subjective norms (V6), perceived behavioural

control (V7) or attitude toward paying for the proposed beach protection program (V8).

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Table 6-13 Effects of previous knowledge on attitudes, past behaviour and WTP

Previous level of knowledge (means) F value

Variable: a. Low b. Medium c. High

V1: General environmental attitudes 5.20 b, c 5.69 a, c 5.92 a, b 27.35**

V2c: Habit – Consumer dimension 2.37 b, c 2.63 a, c 2.85 a, b 26.77**

V2p: Habit – Political dimension 1.36 b, c 1.50 a, c 1.70 a, b 20.12**

V3: Attitude toward beach erosion 5.34 b, c 5.58 a, c 5.88 a, b 20.48**

V4: Attitude toward beach protection 5.93 c 6.03 6.11 a 4.50**

V5: Expected utility of outcomes 4.59 b, c 4.98 a, c 5.34 a, b 16.33**

V6: Subjective norms 14.79 16.05 17.24 2.84

V7: Perceived behavioural control 2.77 c 2.85 c 3.40 a, b 8.65**

V8: Attitude toward paying for beach protection 4.52 4.33 4.36 1.85

WTP: ln(WTP$+1) 2.55 b, c 3.05 a 3.24 a 6.19**

Min N 139 225 155 * p < 0.05; ** p < 0.01; Subscript denotes significant differences between knowledge categories.

Table 6-14 Effects of beach use on attitudes, past behaviour and WTP

User category (means) F value


V1: General environmental attitudes 5.51 5.66 5.71 2.21

V2c: Habit – Consumer dimension 2.54 2.68 2.67 2.78

V2p: Habit – Political dimension 1.44 c 1.52 1.60 a 4.69 **

V3: Attitude toward beach erosion 5.38 b, c 5.70 a 5.72 a 11.83 **

V4: Attitude toward beach protection 5.92 c 6.06 6.14 a 3.41**

V5: Expected utility of outcomes 4.65 b, c 5.13 a 5.18 a 11.60 **

V6: Subjective norms 15.05 16.05 17.11 2.46

V7: Perceived behavioural control 2.84 3.03 3.12 1.66

V8: Attitude toward paying for beach protection 4.48 4.37 4.32 1.40

WTP: ln(WTP$+1) 2.56 b, c 3.20 a 3.17 a 8.32**

Min N 174 160 186 * p < 0.05; ** p < 0.01 ; Subscript denotes significant differences between user categories.

6.6.6 Evaluation and refinement of the attitude measurement scales

The results of the principal components analysis and scale analysis described

above indicated that most of the measurement scales designed for the pilot experiment

performed satisfactorily. However, the items designed to measure attitudes toward

erosion (V3) and attitudes toward beach protection (V4) did not load onto the two

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content dimensions as intended. Strategies used to improve the attitude measures

included rewording items to improve clarity and response validity and development of

new items to improve content validity.

In the general attitudes toward the environment scale (V1) changes were made to

the wording of two items to improve clarity. In the statement ‘Modifying the

environment for human use seldom causes serious problems’ the word ‘seldom’ was

replaced with ‘hardly ever’. The statement ‘Plants and animals do not exist primarily for

human use’ was changed to ‘Plants and animals have as much right as humans to exist’

from Dunlap et al’s (2000) revised NEP scale. The six items in the scale were then

ordered so that item polarity alternated to reduce the incidence of response pattern bias.

The principal components analysis shown in Table 6-12 indicated that the five

items designed to measure attitudes toward erosion (V3) might actually be measuring

two different constructs. However, the scale analysis shows that they form a scale with

satisfactory internal reliability (Cronbach’s alpha = 0.70) with no potential to improve

the scale by removing items. Two new items were developed to improve the content and

response validity of this scale in the final survey instrument. These items were ‘Beach

erosion on the Gold Coast does not concern me or worry me in any way’ and ‘Beach

erosion is a natural process and humans should not interfere with it by trying to impose

artificial solutions’. Both items were negatively worded to produce a more balanced

scale that would force respondents to carefully consider their responses.

In the scale designed to measure attitude toward beach protection (V4) changes

were made to the wording of four items and the statement ‘We should not interfere with

nature’ was dropped from the final instrument. In the factor analysis and the scale

analysis this item was the worst performing of the five items designed to measure this

construct and it appeared that the item might have been tapping into a broader

environmental concern than was intended. In each of the other four items in this scale

the expression ‘beach protection’ was changed to ‘beach protection measures’ to

emphasise that the proposed program comprised a range of strategies.

The items used to measure perceived behavioural control (V7) in the pilot

experiment had been designed so that they were relevant to the experimental population

of students. These items were re-worded so that they were relevant to homeowners who

were the population of interest in the main contingent valuation experiment. For

example, the statement ‘I believe that I could afford to pay an additional living expense

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(either rent or rates) to help finance beach protection’ was re-worded to read ‘I could

afford to pay an additional regional tax or levy to help finance beach protection’. An

additional item with negative polarity was developed to test for response pattern bias; ‘I

have so many other financial commitments at the moment it would be impossible for me

to pay an additional regional tax or levy to help finance beach protection’.

In some items words were underlined to draw the reader’s attention to critical

aspects of the statement. For example, in the statement ‘Beach erosion is a major

problem for me as an individual’ the word ‘individual’ was underlined to emphasise the

fact that respondents should consider the consequences of beach erosion to themselves

only and not the broader community.

No other changes were made to the scales designed to measure habit (V2),

expected utility of outcomes (V5), subjective norms (V6) or attitudes toward paying for

beach protection (V8).

6.6 Pilot experiment results 2: The contingent market and the WTP elicitation

questions

In the pilot experiment the WTP elicitation question was presented in two

stages. First, respondents were presented with a payment principal question, which

asked if they would be willing to pay anything at all for the good. Then they were

presented with an open-ended value elicitation question. The aim of the open-ended

elicitation question was to establish the appropriate range of WTP values for the

payment card format that was used in the final contingent valuation experiment.

6.6.1 WTP results for the pilot study

In response to the payment principal question, 81 per cent of participants

indicated that they would be willing-to-pay something for the proposed beach protection

programs.

Contingent valuation experiments using open ended or payment card elicitation

methods usually produce positively skewed distributions of WTP values since many

respondents indicate zero WTP for the good (Mitchell and Carson, 1989). Inspection of

the responses to the value elicitation question in the pilot experiment confirmed that the

variable (WTP$) was non-normally distributed being censored by zero with a positive

skew (Skew = 4.79, σX̄ = 0.106). Four outliers (three values of $1,000 and one value of

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$750) were distorting the means and the distribution of this variable. These values

seemed unlikely to represent true WTP among the sample of students used for the pilot

experiment and were judged to be either protest responses or the result of

misunderstanding. Removal of the four outliers resulted in a median WTP value of $25

per year (x̄ = $56.19, σ = $83.01) for all participants and a median of $50 per year (x̄ =

$68.60, σ = $86.97) for all participants who gave a non-zero WTP value. Use of a log of

WTP$+1 transformation, as recommended by Tabachnick and Fidell (2001), resulted in

an acceptable distribution (Skew = - 0.492, σX̄ = 0.106) for the variable.

6.6.2 Evaluation and refinement of contingent market scenario and WTP

elicitation questions

Two significant changes were made to this section of the survey based on the

pilot experiment.

Firstly, the WTP values found in the pilot experiment using an open-ended

question format were used to provide an expected range of WTP values in the design of

a payment card for the final experiment. An exponential scale, similar to that used by

Rowe et al. (1996), was adopted for the payment card. The format of the payment card

can be seen on page 10 of the final survey instrument presented in Appendix F.

The second significant change was made to the valuation reference period. In the

pilot experiment participants were asked to state their WTP each year for the proposed

program. This annual reference period seemed problematic for two main reasons.

Firstly, the payment vehicle in the final experiment was property rates and, although

these are collected quarterly in Australia, the rate is set annually so that many

homeowners conceptualise them as an annual tax. Use of an annual reference valuation

period might have encouraged respondents to base their stated WTP on some proportion

of the annual rate rather than expressing a true maximum WTP for the good being

valued - the phenomenon described as anchoring by Tversky and Kahneman (1982). A

significant anchoring effect would reduce variation in WTP and might have masked any

effects of the information treatments. Secondly, it was felt that most respondents would

be more used to making household purchase decisions within the context of a weekly or

monthly household budget than an annual budget. Partly to minimise the incidence of

anchoring and partly to encourage respondents to consider the value elicitation question

in the context of their household budget a monthly valuation reference period was

adopted for the final contingent valuation experiment.

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Finally, a number of small changes were also made to the text of the contingent

market scenario to ensure that it was appropriate for the sample of homeowners used in

the final experiment rather than the sample of undergraduate students used in the pilot

experiment.

6.7 Pilot experiment results 3: The information treatments

The aim of the pilot experiment was to test the visual and text information

treatments and identify refinements that needed to be made to them prior to their use in

the final experiment. Provision of more detailed text information or images depicting

more severe erosion in unprotected beaches was expected to result in higher levels of

concern about erosion (V3); more positive attitudes toward beach protection (V4) and

paying for beach protection programs (V8); increased expectations of the utility of

outcomes (V5); and higher WTP (ln[WTP+1]).

6.7.1 The effects of information treatment on attitudes and WTP

Analysis of variance was used to identify significant information effects on each

of the eight attitude and behaviour variables and on WTP. The results of this analysis

are shown in Table 6-15. The final column of the table indicates the a priori expected

direction of information effects on the variable.

159

159

Table 6-15 Effects of Information Treatment on Behaviours, Attitudes and WTP (ANOVA)

Treatment (means)

Variable: 1 2 3 4 5 6 7 F Value

Expected direction of

effect

V1: General environmental attitudes 5.63 5.64 5.54 5.58 5.59 5.71 5.71 0.384 nil

V2c: Habit – Consumer dimension 2.69 2.73 2.63 2.63 2.53 2.57 2.65 0.973 nil

V2p: Habit – Political dimension 1.55 1.54 1.51 1.52 1.47 1.47 1.60 0.676 nil

V3: Attitude toward beach erosion 5.54 7 5.58 5.44 7 5.43 6,7 5.58 5.76 4 5.89 1,3,4 3.835** positive

V4: Attitude toward beach protection 5.85 6,7 5.96 7 5.89 6,7 5.89 6,7 6.06 6.25 1,3,4 6.361,2,3,4 4.580** positive

V5: Expected utility of outcomes 4.99 4.97 5.02 4.83 4.83 5.16 5.09 0.853 positive

V6: Subjective norms 14.81 14.93 17.33 16.22 15.08 16.86 17.42 1.253 nil

V7: Perceived behavioural control 2.89 2.88 2.94 3.03 2.99 3.09 3.18 0.396 nil

V8: Attitude toward paying for beach protection 4.42 4.45 4.34 4.38 4.28 4.47 4.40 0.383 positive

WTP: ln(WTP$+1) 2.86 2.67 2.93 3.00 3.41 2.83 3.07 1.369 positive

Min N 70 75 75 75 77 74 72

* p < 0.05; ** p < 0.01; Subscript denotes significant differences between individual treatments.

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160

Post-hoc comparisons of the means using Tukey’s HSD revealed significant

differences in two of the five variables in which information was expected to have an

effect. Significant information effects were identified in attitudes toward erosion (V3)

and attitudes toward beach protection (V4). However, significant effects were only

identified between the extremes of the information treatments, i.e. between treatments 1

(no text information, mild photos), 3 (brief text, mild photo’s) and 4 (detailed text, no

photo’s) compared with 6 (detailed text, moderate photo’s) and 7 (detailed text, severe

photo’s). These effects are summarised in Figure 6-3.

Figure 6-3 Significant information effects between treatments in the pilot experiment

Significant difference between treatments indicated by arrows

The significant information effect between treatments 4 (detailed text, no

photo’s) and 7 (detailed text, severe photo’s) indicates a positive effect of providing

visual information. However, the effect was only significant when comparing treatments

containing no photographs with treatments containing photographs depicting severe

erosion. There were no significant effects of more subtle changes in provision of visual

information to participants.

6.7.2 Evaluation and refinement of the information treatments

Significant information effects were found in the pilot experiment between the

extremes of information treatment. However, subtle changes in information provision,

for example the difference between providing participants with photo’s depicting mild

and moderate levels of erosion, did not result in significantly different responses to the

attitude measures or to WTP.

7 6 5 4 3. Detailed

3 2. Brief

2 1 1. None

Text

D. Severe

C. Moderate

B. Mild

A. None

Photographs

7 6 5 4 3. Detailed

3 2. Brief

2 1 1. None

Text

D. Severe

C. Moderate

B. Mild

A. None

Photographs

Attitude towards beach erosion (V3) Attitude towards beach protection (V4)

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The development of the information treatments used in the pilot experiment was

described in Section 6.2. Both the text treatments and photographic treatments had been

reviewed for content validity by the expert panel and the final selection of photographs

had been made based on a focus group rating exercise. A review of the treatments

following the pilot experiment convinced the researcher that the content validity was

sound in so much that the text descriptions were accurate and the photographs

represented three levels of beach erosion and did not contain overly emotive visual

images. Major changes to the information treatments could only be achieved by

damaging the content validity of the information.

Since the aim of this part of the experiment was to investigate sensitivity to

information, and not to artificially manipulate responses, the content of the individual

information treatments was not changed in the final contingent valuation instrument.

However, it was decided to test only two of the photographic treatments in the final

experiment. The data presented in Table 6-15 shows that there was no significant

difference in response to any of the attitude measures between treatments 1 and 2 or

between 5 and 6. The only difference between these treatment pairs was in the severity

of the erosion depicted in the photographs that respondents received and the results

suggest that respondents in the pilot study had not differentiated between photographs

of mild and moderate levels of erosion. Thus, in the final contingent valuation

experiment only the mild and severe photographic information treatments were tested to

maximise the contrast between the treatments and minimise the costs of data collection.

6.8 Summary

This chapter described the design, administration and results of the pilot

experiment that was conducted to test the attitude scales and information treatments that

were developed for this study. It started by describing the specific aims of the pilot

experiment and the development of the survey instrument.

The research design called for development of two text and three photographic

information treatments and scales to measure attitudes toward beach protection and

related attitude objects and behaviours. The process and the rationale underlying

development of these components of the survey instrument were described in detail.

Literature describing previous research, focus groups and expert groups were all used in

development of attitude measurement items and development of the information

treatments.

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The attitude items were analysed using factor analysis and scales were formed

with acceptable internal consistency to represent each of the variables in the model.

However, the analysis at this stage indicated that the scales could be improved by

refinements to some of the items and the nature and rationale for changes made to the

pilot instrument in preparation for the main contingent valuation experiment was

discussed.

The draft attitude scales were tested for theoretical validity by examining the

effects of information relevance and previous knowledge on the attitude measures. The

a priori expectation was that higher levels of beach use and previous knowledge of

beach erosion would be associated with more positive attitudes toward relevant targets

and this was supported by the data from the pilot experiment. These results supported

the theoretical validity of the draft attitude measurement scales that had been formed.

Analysis of the seven information treatments revealed that the treatments only

had significant effects on the target specific attitudes related to beach erosion and

protection. The significant information treatment effects did not extend to WTP values

or the immediate antecedent, attitude toward paying for beach protection. The

information effects were in the a priori expected direction, i.e. treatments containing

more detailed text information and photographs depicting more severe erosion were

associated with greater concern about erosion and more positive attitudes toward beach

protection. However, significant differences in attitudes were only observed between the

extremes of information treatment and subtle differences in information provision did

not have significant effects. There was some evidence to support an independent effect

caused by photographs but only when comparing treatments with no photographs and

treatments containing photographs depicting severe erosion. There was no evidence to

support an independent text treatment effect. Based on this analysis, refinements were

made to the information treatments to be tested in the main contingent valuation

experiment.

This chapter has described the development, testing and refinement of the pilot

instrument. The next chapter describes the main contingent valuation experiment.

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CHAPTER 7

THE CONTINGENT VALUATION EXPERIMENT

This chapter describes the administration and sample statistics of the contingent

valuation experiment. It starts with a brief review of the aims of the research and of the

strategies adopted to investigate the central research questions. It describes the

experimental design used to test the effects of seven information treatments and the

logistics of the survey administration. Details of the survey response rate and a socio-

economic profile of respondents are provided as a context for the analysis of the results

of the contingent valuation experiment that follows in Chapter 8. The reliability of the

attitude measurement scales is evaluated and these measures are then used to explore

the issue of protest responses.

7.1 Aims and experimental design

This thesis aimed to investigate two related issues. The first aim was to

investigate the effects of information provided in the contingent valuation scenario on

attitudes and stated WTP for a proposed good. The second aim was to investigate the

relationship between attitudes toward relevant targets and stated WTP, as an indicator of

behavioural intention, in a contingent valuation experiment. The central research

questions and specific hypotheses related to each of these areas of enquiry were

described in Chapter 1. The research set out to address these questions by; firstly,

developing attitude measures that enabled testing of three alternative attitude-behaviour

models, and; secondly, developing examples of strong and weak text and photographic

information treatments and testing the effects of these on attitudes and WTP in the

context of a contingent valuation experiment. Chapter 6 described how the attitude

measurement scales and the information treatments were developed, tested in a pilot

experiment and then refined in preparation for the contingent valuation experiment.

For the contingent valuation experiment a 3×3 experimental design was adopted,

as illustrated in Table 7-1, with three levels of photographic information and three levels

of text information. The two photographic treatments and two text treatments used in

the survey instrument are presented in Appendices D and E respectively.

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Table 7-1 Experimental design for the main contingent valuation experiment

Photographs

None Mild Severe

None Treatment 1

Brief Treatment 2 Treatment 4 Treatment 5 Text

Detailed Treatment 3 Treatment 6 Treatment 7

For logistical reasons it was not possible to test all nine cells in the experimental

design. Instead seven versions of the survey instrument were administered to subjects

that enabled the researcher to test for a ‘text information effect’ through treatments 1, 2,

and 3 and a ‘visual information effect’ through treatments 2, 4 and 5 and 3, 6 and 7.

Treatment 1 represented the control in which the contingent market scenario

provided no text information about the proposed beach protection programs and no

photographs. In treatment 3 respondents were provided with a detailed text description

of the proposed program that included explicit descriptions of the expected benefits of

the program, but no photographs. In treatment 7 respondents were provided with a

detailed text description of the proposed program and photographs depicting severely

eroded beaches before the program (the t0 condition) and well-maintained beaches

afterwards (the t1 condition).

7.2 Instrument structure and administration

The survey instrument comprised six sections as illustrated in Figure 7-1.

Section 1 contained questions designed to investigate the relevance of the beach

protection issues to respondents and their previous knowledge of those issues. Section 2

contained the items comprising the measurement scale for general environmental

attitudes (V1 in the attitude-behaviour model presented in Figure 1-1) and the questions

designed to investigate previous environmental behaviours (V2 in the model). Section 3

presented the text and photographic information treatments. Section 4 contained the

items designed to measure attitudes relating to beach erosion (V3), beach protection

(V4), expected utility of outcomes (V5), social norms (V6), perceived behavioural

control (V7), and attitude toward paying for the good (V8). Section 5 then presented the

information about the payment vehicle, reminders of budget constraints and the WTP

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elicitation questions. Finally, Section 6 contained questions designed to collect relevant

socio-demographic measures. An example treatment of the final survey instrument is

provided in Appendix F. All seven treatments are presented in the digital appendices on

the CD attached to this thesis

Figure 7-1 Structure of the final survey instrument

7.2.1 The sample frame and survey logistics

A simple random sample of individuals defined as ‘owner occupier residents of

the Gold Coast City local government area’ was drawn from the commercially available

InfoBase database supplied by List Marketing Australia Pty Ltd. This database is

developed primarily from the electoral role and supplemented by data from telephone

directories and other market research exercises. The sample was then randomly divided

into seven sub-samples of equal size and each group received one of the information

treatments.

The survey was distributed by mail using the Total Design Method (Dillman, 1999).

The initial mailing contained a personalised covering letter, a copy of the survey

instrument, a reply-paid envelope for returning the completed survey and an entry form

for the incentive prize draw. Individuals in the sample database were assigned a unique

identity code and this was printed on the survey form sent to them. Division of the

sample into seven databases and use of the identifier assisted in tracking of returns and

ensured that in the follow-up phase of the survey the correct information treatment was

Section 6

Socio-economic questions

Questions about relevant memberships

Section 5

Information about the payment vehicle

Reminders of budget constraints and substitute goods

WTP elicitation question

Section 4

Attitude measurement items for V3, V4, V5, V6, V7 and V8

Section 3 Information

Treatments

Text information treatment

Photographic information treatment

Section 2

Questions about past environmental behaviour (V2)

Questions about general environmental attitudes (V1)

Section 1

Questions about beach importance

Questions about beach use

Questions about previous knowledge of beach erosion

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sent to members of the sample. On completion of the data collection phase of the

research the identity codes were removed from the database to ensure anonymity of

responses.

The initial mailing on November 6, 2002, was followed seven days later by a postcard

reminder that reinforced the importance of the research. A final mailing was sent

approximately 21 days after the initial mailing to all householders that had not replied

and comprised another covering letter, a second copy of the survey instrument together

with a reply paid envelope and another entry for the incentive prize draw. Although

Dillman (1999) recommended a fourth contact for mail surveys, using registered post,

financial constraints prevented this. Copies of all covering letters and postcards used in

this phase of the research are provided in Appendix G.

7.3 Sample statistics and the socio-economic profile of respondents

A total of 1,750 surveys (250 × 7 treatments) were mailed to ‘owner occupier

residents’ in the Gold Coast City local government area. A summary of the survey

response rates is presented in Table 7-2. After accounting for those surveys returned as

'undeliverable' the usable response rate was 64.8 per cent. There were no significant

differences in the response rates to the seven different information treatments.

Table 7-2 Response rates for the main contingent valuation experiment Treatment Sent Returned

undelivered Returned &

usable Usable response rate

1 250 12 151 63.5 % 2 250 18 152 65.5 % 3 250 19 154 66.7 % 4 250 21 148 64.6 % 5 250 23 139 61.2 % 6 250 18 157 67.7 % 7 250 16 150 64.1 %

Total 1750 127 1051 64.8 %

Data were collected relating to participant's gender, age, education and

household incomes. When contingent valuation studies are used to estimate the social

welfare of a proposed project, socio-economic data is collected to determine if the

sample is representative of the population being studied (Mitchell and Carson, 1989).

Estimation of social benefit was not an objective of the current study and the socio-

economic data were collected primarily to test for homogeneity of sample

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characteristics between the information treatments and particularly among variables that

were expected to affect stated WTP such as household income.

A summary of the socio-economic profile of the survey respondents is presented

in Table 7-3. Many of the variable categories used in the survey instrument have been

collapsed to save space. There were more females (55.2 %) than males (44.6 %) in the

sample. The mean age of the sample was 59 years and 63 per cent of respondents were

over 56 years. The reported household income level was low, with 66.6 per cent of

respondents reporting less than $40,000 per annum. This is consistent with the age

profile of the respondents and the fact that over half of them (52.5 per cent) indicated

that they were retired from full time work.

Table 7-3 A socio-economic profile of respondents Variable Category N %

Gender Male 469 44.6

Female 580 55.2

Age 18 to 55 years 379 36.1

56 years and over 662 63

Country of origin Australia 804 76.6

Overseas 246 23.4

Households with children Yes 129 12.3

No 918 87.7

Household Income Less than $40,000 p.a. 700 66.6

More than $40,000 p.a. 265 25.2

Missing 86 8.2

Years resident in the region Five years or less 103 9.8

More than five years 934 89.9

Highest level of education completed School or vocational 680 64.7

College diploma or university degree

354 33.7

A comparison was made between the sample characteristics and the

characteristics of the population of homeowner / occupiers in the region extracted from

the 2001 Census (ABS, 2001). The results of this are summarised in Table 7-4. There

was no significant difference in gender balance between the sample and the population

(χ2(1) = 3.761, p > 0.05) but household incomes in the sample were significantly lower

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(χ2(2) = 191.6, p < 0.05) than among the regional population generally and respondents

were significantly older (χ2(1) = 215.5, p < 0.05). These differences mean that it would

not be possible to make inferences about the broader community’s values for the

proposed beach protection program from this data without using a suitable weighting

system to control for the sample bias.

Table 7-4 Comparison of sample and population socio-economic variables Household Income Category Survey Frequency Expected frequency from 2001

Census data Under $40,000 p.a. 700 478 $40,000 and over p.a. 265 454 Missing 86 118 χ2

(2) = 191.6, p< 0.05

Age Category Survey Frequency Expected frequency from 2001

Census data 18 to 55 years 379 612 56 years and over 662 429 χ2

(1) = 215.5, p< 0.05 Gender Survey Frequency Expected frequency from 2001

Census data Male 469 500 Female 580 548 χ2

(1) = 3.761, p > 0.05

Since the aim of the study was not to estimate community welfare for the

proposed project it was not critical for the sample to be representative of the population

from which it was drawn. Instead it was more important that there were no significant

differences between respondents in the different information treatments. Analysis of

variance and post-hoc tests showed that there were no significant differences in mean

age (F (6, 1040) = 0.686, p > 0.05) or household income (F (6, 964) = 0.340, p > 0.05) among

the seven information treatments. However, there was a significant difference in the

gender balance between treatments 1 and 5 only (F (6, 1042) = 2.19, p < 0.05) with

respondents to treatment 1 being more likely to be female. The effects of this response

bias were considered in relation to differences between these two information effects

and this is addressed in the results of the tests for information effects in Chapter 8.

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7.4 Beach use and previous knowledge

Reported beach use among respondents was positively skewed (Skew = 2.27)

with the means distorted by a relatively small number of high users, thus the median

provides a more appropriate indicator of central tendency in this variable. Median beach

visitation for respondents over the whole year was four visits per month. Visitation was

higher in summer than in winter. Only 12.4 per cent of respondents indicated that they

did not visit the beach at all.

Table 7-5 Beach visitation per month

Median Mean St.Dev

Summer 5 9.17 11.19

Winter 3 6.05 9.36

All year 4 7.61 9.87

Comparison of mean beach visitation showed that respondents in the 18-55 age

group visited the beach significantly more than those in the 56 plus age group (F (1, 1022)

= 9.21, p < 0.05). Respondents who lived less than ten kilometres from an ocean beach

visited more frequently than those who lived further away (F (1, 1032) = 55.82, p < 0.05).

Respondents who were members of a relevant interest group, such as surf club members

or employees in the tourism industry, visited the beach more frequently than those who

were not (F (1, 1032) = 68.31, p < 0.05). However, other variables that were expected to

influence beach use, such as the presence of children in the household and number of

years the respondent had been resident on the Gold Coast, did not significantly affect

beach visitation. The level of awareness of issues relating to beach erosion and

protection was high. Over one third of respondents indicated that they had frequently

read about, seen or thought about beach erosion (Table 7-6).

Table 7-6 Previous knowledge of beach erosion and protection % of respondents

Item statement Never Very rarely Sometimes Frequently

I have read about beach erosion or protection strategies in newspapers or magazines

1.5 10.6 51.8 36.2

I have seen beach erosion or protection measures with my own eyes

2.6 9.2 45.1 43.1

Beach erosion and protection is something I have thought about

2.0 12.6 45.7 39.6

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7.5 Scale analysis and formation

This section describes the exploration and analysis of the scales designed to

measure the eight independent variables in the attitude-behaviour model presented in

Figure 1-1. Prior to analysis and scale formation all items that had been negatively

worded in the survey instrument were reversed in the results database so that high

scores indicated more positive attitudes toward the target object or behaviour.

7.5.1 General attitude towards the environment (V1)

The six-item scale used in this study was adapted from Steel’s (1996)

abbreviated version of the NEP scale (Dunlap and van Liere, 1978). In a review of

applications of the scale over a 20 year period Dunlap et al. (2000) argued that the NEP

scale was conceived as a uni-dimensional measure of an individual's worldview and

Steel (1996) and Tarrant and Cordell (2002) have used abbreviated uni-dimensional

versions of the scale.

Analysis of the responses to the six items in this experiment showed that they

formed a uni-dimensional scale with acceptable internal reliability (standardised

Cronbach's alpha = 0.67) which could not be improved by deletion of any of the items.

This was consistent with the pilot experiment, which also produced a Cronbach alpha

score of 0.67. Steel (1996, p.32) reported a reliability coefficient (Cronbach's alpha) of

0.82 for a similar six-item scale following a random survey of 1,094 members of the

general public. However, Dunlap et al. (2000, p.434) only reported alpha of 0.83 for the

revised 15-item New Ecological Paradigm scale. More recently Tarrant and Cordell

(2002, p.696) have reported standard alpha of 0.70 for a ten-item version of the NEP

scale and the results of the current research are consistent with these latter studies.

A simple summative scale was formed for the general attitudes to the

environment construct (V1 in Figure 1-1) by summing the six items and dividing by six.

7.5.2 Measures of previous behaviour (V2)

A summary of the responses to the items designed to measure environmental

behaviour is presented in Table 7-7. The mean scores on the items measuring the

consumer dimension were significantly higher than those measuring the political

dimension (t (989) = 83.9, p < 0.05). Over 90 per cent of respondents indicated that they

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frequently recycled paper, plastic or glass but less than three per cent had frequently

subscribed to environmental publications, attended environmental meetings or made

contact with a public official about environmental issues.

Table 7-7 Previous environmental behaviour

% of respondents How frequently do you do each of the following?

Never

Very rarely

Some-times Frequently Mean

Consumer behaviour sub-scale (V2c):

Recycle paper, plastics or glass 0.5 0.9 6.9 91.1 3.9

Take into account the amount of packaging on goods you buy

5.3 17.1 45.0 30.8 3.0

Switch products because of environmental reasons

9.4 24.0 48.4 18.3 2.8

Read books or magazines about the environment

10.5 32.7 43.6 13.3 2.6

Political behaviour sub-scale (V2p):

Write to or telephone a public official about an environmental issue

53.7 30.6 14.1 1.6 1.6

Subscribe to environmental publications 73.5 18.0 6.8 1.8 1.4

Attend meetings on environmental issues 71.1 20.6 7.3 1.0 1.4

Donate money to an environmental group 52.2 26.3 18.7 2.8 1.7

Vote for a public official because of their pro-environmental stance

30.6 21.3 37.0 11.0 2.3

Separate scales were formed for the consumer and political dimensions by summing the

responses to the items and dividing by the number of items.

7.5.3 Measures of specific target related attitudes (V3, V4, V5, V7 and V8)

In the survey instrument 22 items were used to measure attitudes toward five

specific targets; attitudes toward beach erosion (V3 in Figure 1-1); attitudes towards

beach protection (V4); expected utility of outcomes of the proposed beach protection

project (V5); perceived ability to pay for beach protection programs (V7); and, attitude

toward paying for beach protection programs (V8). A principal components analysis

with Varimax rotation was conducted on the 22 items to see if they loaded onto the

constructs as intended. Bartlett’s test of sphericity was large and significant [χ2(231) =

10,731, p < 0.001] and the Kaiser-Meyer-Olkin measure of sampling adequacy was well

over the acceptable threshold of 0.6 (msa = 0.879) indicating that factor analysis was

appropriate (Coakes and Steed, 2001). The analysis resulted in six components that

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explained 67.3 per cent of the total variance. The item loadings, communalities,

Eigenvalues, and percentage of variance explained by each component are presented in

Table 7-8.

The three items designed to measure perceived behavioural control (V7) all

loaded strongly on to component 1. Scale reliability analysis showed that the three items

formed a scale with good internal consistency (Cronbach's alpha = 0.87) with no

potential to improve the scale by item deletion.

The four items designed to measure expected utility of outcomes (V5) loaded

strongly onto component 3. Scale reliability analysis showed that the four items formed

a scale with good internal consistency (Cronbach's alpha = 0.84) with no potential to

improve the scale by item deletion.

Three of the four items designed to measure attitude toward paying for beach

protection (V8) loaded strongly onto component 5, with the fourth item loading less

strongly onto this component. Scale reliability analysis showed that omitting the item

'atpay4' strengthened this scale. The three remaining items formed a scale with good

internal reliability (Cronbach's alpha = 0.84).

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Table 7-8 Item Loadings, Communalities (h2), Eigenvalues and Percentage of Variance for Principal Components Analysis with Varimax Rotation

Component Label Description

1 2 3 4 5 6 h2 Attitude toward erosion (V3): erosn1 Beach erosion on the Gold Coast is a major problem for me as an individual .183 .169 -.225 .757 .128 .015 .702 erosn2 Beach erosion is a major problem for the Gold Coast community generally .063 .266 -.084 .687 -.117 .269 .640 erosn3 Beach erosion on the Gold Coast does not concern me or worry me in any way .074 .174 -.271 .698 -.172 .011 .626 erosn4 Beach erosion is something we should only worry about when it happens -.099 .103 -.047 .510 -.472 .065 .510 erosn5 Beach erosion reduces the recreation value of the beach .026 .192 -.090 .129 -.066 .892 .862 erosn6 Beach erosion reduces the visual appeal of the beach .024 .241 -.076 .075 -.039 .888 .860 erosn7 Beach erosion is a natural process and humans should not interfere with it by trying to

impose artificial solutions .001 .599 -.134 .079 -.387 .030 .534

Attitude toward protection (V4): prot1 Beach protection measures improve recreation values of the beach .070 .728 -.119 .191 -.016 .247 .646 prot2 Beach protection measures improve environmental / ecological values of the beach .071 .776 -.176 .182 .024 .094 .681 prot3 Beach protection measures improve the appearance of beaches .075 .744 -.099 .166 .032 .265 .668 prot4 I don’t believe that beach protection measures work .067 .627 -.219 .090 -.253 .004 .517 Expected utility of outcomes (V5): util1 I do not believe that I will get any direct recreation benefit from beach protection

measures on the Gold Coast. -.166 -.231 .684 -.245 .163 -.032 .636

util2 I do not believe that I will get any economic benefit from beach protection measures on the Gold Coast.

-.225 -.148 .790 -.129 .046 .014 .716

util3 I do not believe that any of my friends or family will get any recreation benefit from beach protection measures on the Gold Coast.

-.085 -.181 .710 -.138 .247 -.124 .639

util4 I do not believe that any of my friends or family will get any economic benefit from beach protection measures on the Gold Coast.

-.146 -.111 .814 -.103 .089 -.083 .721

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Component Label Description

1 2 3 4 5 6 h2 Perceived behavioural control (V7): pbc1 I have enough disposable income to pay an extra regional tax or levy to help finance

beach protection if it was needed. .867 .093 -.159 .070 -.059 .021 .795

pbc2 I have so many other financial commitments at the moment it would be impossible for me to pay an additional regional tax or levy to help finance beach protection.

.825 .050 -.116 .061 -.202 -.019 .741

pbc3 I could afford to pay an additional regional tax or levy to help finance beach protection. .831 .058 -.176 .088 -.165 .047 .762 Attitude toward paying for beach protection (V8): Atpay1 It would be unfair to expect local residents to pay more to protect Gold Coast beaches -.408 -.151 .184 -.091 .664 -.055 .676 Atpay2 I would be opposed to any proposal that involved me paying extra to ensure protection of

Gold Coast beaches -.496 -.146 .222 -.102 .630 -.014 .724

Atpay3 It is my right to have protected beaches and not something I should have to pay extra for -.484 .029 .204 .029 .622 -.035 .666 Atpay4 It is not worth paying money to protect beaches -.098 -.304 .392 -.170 .419 -.131 .477 Eigenvalue 7.124 2.783 1.536 1.168 1.150 1.037 Variance (%) 32.38 12.65 6.98 5.31 5.23 4.72

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The distinction between the 11 items designed to measure the closely related

constructs of attitudes to beach erosion (V3 - the problem) and attitudes to beach

protection (V4 - the proposed solution) was less clear with a number of items that did

not load as intended.

Two items 'erosn5' (Beach erosion reduces the recreation value of the beach)

and 'erosn6' (Beach erosion reduces the visual appeal of the beach) were strongly

correlated with each other but not with the other items designed to measure attitudes

toward erosion. The same result had been observed for these two items in the pilot

experiment and these results and content analysis of the items suggest that they may in

fact have been measuring something related to beach values rather than the intended

concern about beach erosion. For this reason the items were excluded from the attitudes

toward beach erosion (V3) scale.

The correlation matrix showed no significant relationship between the item

‘erosn7’ (Beach erosion is a natural process and humans should not interfere with it by

trying to impose artificial solutions) and the other items intended to measure attitudes

towards beach erosion. However, this item did correlate strongly with the items

intended to measure attitudes towards beach protection. This item was added to the

survey instrument after the pilot experiment to strengthen the ‘attitudes toward erosion’

scale and had not been tested before use in the final experiment. In practice it appears

that respondents may have focused on the last two words of the item and provided an

attitude response to the proposed artificial solution, i.e. the proposed beach protection

program. Evidence from the correlation matrix, principal component factor loadings and

item content analysis suggest that this item may be a valid measure of attitude toward

beach protection (V4) and it was included in the scale analysis of the items designed to

measure this attitude dimension.

Scale reliability analysis indicated that two robust scales could be formed from

the measurement items to represent attitude toward beach erosion (V3) and attitude

towards beach protection (V4). The four items labelled 'erosn1' to 'erosn4' appeared to

capture the construct of concern about erosion best. Scale reliability analysis showed

that these four items formed a scale with satisfactory internal reliability (Cronbach's

alpha = 0.72) with no potential to improve the scale by item deletion. Scale reliability

analysis of the four items designed to measure attitude toward beach protection and item

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'erosn7' showed that the five items formed a scale with good internal reliability

(Cronbach's alpha = 0.81).

Simple summative scales were formed for each of the variables representing

attitudes toward beach erosion (V3 in Figure 1-1); attitudes towards beach protection

(V4); expected utility of outcomes (V5); perceived ability to pay for beach protection

programs (V7), and; attitude toward paying for beach protection programs (V8).

7.5.4 Subjective norms (V6)

Berg et al. (2000) and Ajzen et al. (1996) argued that subjective norms are a

function of the extent to which an individual feels significant people around them

expect them to behave in a particular way and the extent to which they are motivated to

comply with those expectations. Thus, this research adopted the Berg et al. (2000)

approach and a scale was formed by adding the injunctive and descriptive norms

(norm1 and norm2 respectively), dividing by two then multiplying by the motivation to

comply (norm3).

7.6 Attitudes and identification of protest responses

Protest responses can have significant effects on estimated mean WTP and

subsequent calculations of consumer surplus for a project (Milon, 1989). Although the

aim of the current research was not to produce an estimate of total consumer surplus for

the proposed beach protection program, the issues of protest bids and irrational

responses still require some discussion. In part this is true because irrational responses

and protest bids are expected in a contingent valuation study and the presence of too

few or too many of them might cast some doubt on the validity of the instrument and

the approach used (Diamond and Hausman, 1993). More importantly, the attitude-

behaviour approach used in the current research has a contribution to make to the

problem of identifying and classifying these types of responses.

Many studies have used probing questions immediately following the WTP

elicitation question to identify protest bids (for example Jorgensen et al., 1999;

Soderqvist, 1998; Spash, 2000). In contrast, this study collected measures of attitude to

the target objects and relevant target behaviours prior to the WTP elicitation question.

This section of the results demonstrates and compares a number of approaches to

protest identification using the individual attitude items, the constructed attitude scales,

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and the WTP elicitation questions used in this survey instrument. The definition

congruence or the extent to which different definitions result in identification of the

same cases is determined by examination of case ID’s. Finally, the effects of protest

definition and case deletion on estimated mean WTP is examined.

7.6.1 Protest definitions 1 and 2 using a single item approach

Most previous studies have used single item statements rather than multi-item

attitude scales to identify protest motives in respondents. Typical of these are belief

statements that ask respondents to agree or disagree that access to the resource in

question is a ‘right’ and not something they should have to pay extra for (Jorgensen et

al., 2001).

Four items in the survey instrument were designed to investigate respondent’s

attitudes towards the behaviour of paying for beach protection (Questions 12, 13, 14 and

15 in section 3) and these can be used individually or as a composite scale. Question 14

was adapted from a measure used by Jorgensen et al. (2001) to measure attitudes toward

paying for storm water controls and asked respondents to agree or disagree with the

statement; “It is my right to have protected beaches and not something I should have to

pay extra for”. Scores of 5 to 7 on the Likert scale indicated agreement with the protest

statement. Scores of less than 5 (including the neutral 4) were interpreted as

representing non-protest attitudes.

Table 7-9 presents a cross tabulation of responses to the single item protest

measure in Question 14 and the payment principle question. When asked if they would

be willing to pay anything at all for beach protection measures on the Gold Coast,

respondents to this survey were almost evenly split (‘No’ = 50.1 per cent; ‘Yes’ = 49.9

per cent). Cells 1 to 4 present the analysis for the total sample and cells 5 to 8 present

the analysis of only those respondents that indicated that they could afford to pay

through the composite variable V7 described earlier.

Cells 2 and 6 represent individuals who did not register a protest and indicated

that they would be willing to pay for the good; this can be interpreted as a consistent

positive WTP response. Cells 4 and 8 represent individuals who registered a protest and

indicated that they would not be willing to pay for the good; this can be interpreted as a

consistent protest zero WTP response. Cells 1 and 5 represent individuals who did not

register a protest but then indicated that they would not be willing to pay for the good. A

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comparison of cells 1 and 5 indicates that, for 182 respondents, the reason they were not

willing to pay was because they felt they were unable to. Thus, only ten participants

recorded inconsistent zero WTP responses in cell 5. Finally, cells 3 and 7 represent

individuals who registered a protest but then indicated that they would be willing to pay

for the good; this appears to be an inconsistent positive WTP response.

Table 7-9 Cross-tables of rights to have protected beaches vs WTP

Would you be willing to pay an additional cost to ensure that beach protection work was continued on the Gold Coast?

Total sample (N=1045) Filtered for perceived ability to pay (N=207)

Question 14: No Yes No Yes

Disagree (<5) (non-protest)

Cell 1 192

(18.4%)

Cell 2 408

(39.0%) Consistent

Cell 5 10

(4.8%) Inconsistent

Cell 6 166

(80.2%) Consistent

It is my right to have

protected beaches and

not something I should

have to pay extra for Agree (≥5) (protest)

Cell 4 328

(31.4%) Protest 1

Cell 3 117

(11.2%) Inconsistent

Cell 8 5

(2.4%) Protest 2

Cell 7 26

(12.6%) Inconsistent

If question 14 is used as the sole measure of protest, 328 respondents (31.4 per

cent of the total sample) would be defined as protest zeros in this study (cell 4).

However, if the perceived ability to pay variable is used to filter out those who indicated

that they were not able to pay (that is, respondents who scored less than 4 on the

composite variable V7) only five respondents (2.4 per cent of the remaining sample)

appear to have made a protest bid under this definition (cell 8).

7.6.2 Protest definitions 3 and 4 using composite measures

An alternative to a single item protest statement is to use a composite attitude

scale made up of several items for increased reliability. This approach is similar to that

explored by Jorgensen et al. (1999) and Jorgensen and Syme (2000). Four items in this

survey (Questions 12, 13, 14 and 15 in Section 3) formed a composite scale of

respondent’s attitudes toward the behaviour of paying for beach protection (V8 in the

attitude-behaviour model presented in Figure 1-1). Table 7-10 presents the results of

using the composite attitude scale to identify protest responses; firstly without the

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moderating affects of perceived ability to pay (cells 1 to 4), and then with the

moderating affect of perceived ability to pay (cells 5 to 8).

Table 7-10 Cross-table of attitude towards payment (composite scale V8) vs WTP

Would you be willing to pay an additional cost to ensure that beach protection work was continued on the Gold Coast?

Total sample (N=1045) Filtered for perceived ability to pay (N=207)

No Yes No Yes

No Protest (V8 >3)

Cell 1 171

(16.4%)

Cell 2 449

(43.0%) Consistent

Cell 5 8

(3.9%) Inconsistent

Cell 6 183

(88.4%) Consistent

Attitude towards

payment for beach

protection programs

(Composite attitude

scale V8) Protest (V8 ≤ 3)

Cell 4 349

(33.4%)Protest 3

Cell 3 76

(7.3%) Inconsistent

Cell 8 7

(3.4%) Protest 4

Cell 7 9

(4.3%) Inconsistent

Table 7-10 shows that use of the composite attitude scale resulted in an increase

in the proportion of consistent positive WTP responses shown in cells 2 and 6 compared

with the single item approach presented in Table 7-9. There were similar decreases in

the proportion of inconsistent positive WTP responses shown in cells 3 and 7, to the

extent that only 4.3 per cent of those who indicated that they could afford to pay then

provided what appears to be an inconsistent response. Thus, the effect of using the more

stable composite attitude measures is an increase in the proportion of consistent

responses (cells 2 and 6) and a decrease in the proportion of inconsistent responses

(cells 3 and 7). The multi-item scale approach results in only minor changes in the

proportion of consistent protest responses as shown in cells 4 and 8 of Table 7-10

compared with Table 7-9. This suggests that those who were genuinely registering a

protest zero WTP response were consistent in their responses to the four items that

comprised the attitude to paying for beach protection scale (V8).

7.6.3 Protest definition 5: A decision tracking approach

If individuals follow a central processing path (Petty and Cacioppo, 1984) in

identifying their WTP for a resource improvement, respondents faced with a contingent

valuation exercise must work through a complex decision process. A structured

approach to measuring attitudes toward relevant target objects and behaviours can assist

researchers to understand this decision process and to identify both protest zeros and

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irrational responses. Figure 7-2 attempts to represent the decision process a respondent

might take in determining their WTP for a generic resource improvement offered

through a contingent valuation experiment.

The first stage of the decision process relates to the respondents attitude towards

the targets; firstly the resource itself (V3 in the model tested here) and, secondly, the

action or solution being valued (V4 in the model). If a respondent holds no value for the

resource, either direct or indirect, or they believe that the proposed action will not result

in improved welfare for themselves or others, the logical response would be a zero

WTP. Even though they may value the resource and the proposed solution, if they

perceive that they are unable to pay any additional amount (V7 in the model) for the

improved welfare because of budget constraints the logical outcome is also a zero WTP

response. Protest zero responses would be expected from respondents who, for whatever

reason, did not accept the premise of the contingent valuation scenario or trust the

political process.

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Figure 7-2 A WTP Decision Tree in an Attitude-Behaviour model context

Valuesresource

[V3]

Believes solutionwill be effective

[V4]

Is able to pay[V7]

Accepts vehicleand political

process

No

No

No

No

Yes

Yes

Yes

Yes

Valid zero WTPor

Refusal (interview)Nil return (mail)

Valid zero WTPor


Valid zero WTPor


Protest zero WTPor


Positive WTP

Decision Process Outcome

182

At any stage of this decision process individuals may choose simply not to

complete the interview or self-completion survey and this has important implications for

how non-response is dealt with in assessment of community welfare. If individuals

refuse to participate in the contingent valuation experiment because of time constraints

or distrust of researchers generally, and before they have any information and

commence the decision making process, it may be reasonable to replace non-responses

with average WTP values, one of the treatment options proposed by Halstead et al.

(1992). However, if the refusal occurs after the decision process has commenced and

because the individual feels that the targets described are not relevant or of interest to

them the likely effect is to replace an expected zero WTP outcome with a non-response.

In this case, replacing non-responses with average values will bias estimates of

community welfare upward.

In the current study, the data collected for the attitude-behaviour model can also

be used to track the respondent’s decision making process and this is illustrated in

Figure 7-3. Of the 1051 respondents, 843 indicated that the resource of well-preserved

Gold Coast beaches was important to them (V3). Of the 217 who indicated that the

resource was not important to them, 209 provided zero WTP values and eight provided

what appeared to be inconsistent positive WTP values. Among those who valued the

resource, 719 indicated positive attitudes towards the proposed beach protection

program (V4). Again, a small number of respondents indicated negative attitudes

toward beach protection but then provided an inconsistent positive WTP value. A large

number of respondents indicated that they were not able to pay an additional

environmental levy because of a perceived budget constraint (V7), but over half (58.8

per cent) of them then reported an inconsistent positive WTP value.

Only 17 respondents reported positive attitudes towards the targets (V3 and V4)

and an ability to pay (V7) but then provided a zero WTP. These individuals appear to

have registered a protest against either the survey vehicle or the political entities and

processes responsible for allocating funds to the project. Inspection of some of the

unsolicited comments made on the survey forms by these respondents suggested that at

least some of the responses were motivated by distrust of the political process and

concerns about local government financial management. For example, one respondent

wrote, “Once the initial tax was paid, history shows the tax would not be removed but

reallocated to something that poor planning has caused” (Case#1092 – identified by

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protest definition 5) and another commented that the local council “… should manage

their finances better” (Case#3102 - identified by protest definition 5).

Figure 7-3 The WTP decision tree in the current study

Completes mail survey Unknownproperties

Values the resource[V3]

Believes solution will beeffective

[V4]

Perceived ability to pay[V7]

Accepts vehicle and politicalprocess[Implied]

Yes (n=1051)Yes (n=843)

Yes (n=719)Yes (n=243)

No (n=217)

No

Valid zeroWTP

(n=209)

Inconsistentpositive WTP 1

(n=8)

No (n=115) Valid zeroWTP

(n=107)


(n=8)

No (n=476) Valid zeroWTP

(n=196)


(n=280)

Consistentpositive WTP

(n=228)

Yes (n=228)

No (n=17) Protest zero(n=17)

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7.7 WTP values under alternative definitions of protest

The analysis in Section 7.6 demonstrated how measures of attitude toward target

objects and related behaviours can be used to identify five alternative definitions of

protest response in these data. These are summarised in Table 7-11.

Table 7-11 A summary of four different approaches to identifying protest zeros Definition Description Frequency % of N N

Protest 1 Believes well maintained beaches are a ‘right’ not something they should have to pay extra for

328 31.4 1045

Protest 2 Believes well maintained beaches are a ‘right’ not something they should have to pay extra for and indicates ability to pay (V7 >4)

4 0.4 1045

Protest 3 Has negative attitude toward payment for beach protection programs (V8 ≤ 3)

349 33.4 1045

Protest 4 Has negative attitude toward payment for beach protection programs (V8 ≤ 3) and indicates ability to pay (V7 >4)

7 0.6 1045

Protest 5 Values the resource (V3 ≥5), believes proposed treatment will be effective (V4 ≥5), and indicates ability to pay (V7 >4)

17 1.6 1051

Examination of each of the cases identified using the alternative definitions

revealed that there was a high degree of overlap between protest definitions 2, 4 and 5.

The Venn diagram in Figure 7-4 shows that the four cases identified using protest

definition 2 are a sub-set of the cases identified using definition 4. Of the 17 cases

identified using definition 5 three are also identified by definition 2 (Case #’s 4137,

1238 and 7031), one was also identified under definition 7 (case # 6227), and there were

13 unique cases. Definition 5 represents a quite different approach to the others

identified here. While definitions 1 to 4 are derived from the items designed to measure

protest toward the behaviour of paying for beach protection, definition 5 considers the

extent to which respondents value the proposed good and are able to pay for it and

assumes that reported zero WTP values not explained by these factors can be explained

by some form of protest motives. Between the three definitions 20 unique cases were

identified as potential protest responses.

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Figure 7-4 Venn diagram of the cases identified by alternative definitions of protest

Although the objective of this research was not to estimate community welfare

changes for the proposed beach protection works, analysis of the stated WTP values

illustrates how market context and the related definition of protest responses can affect

estimates of aggregate consumer surplus. Table 7-12 shows that if a private goods

market context were adopted (Jorgensen et al., 1999; Lindsey, 1994), and respondents

who indicated that they could not afford to pay were censored, then deletion of the 349

cases identified using the multi-item measure of protest (definition 3) resulted in a

significant difference in mean WTP (t (669) = 7.414, p < 0.05). On the other hand if a

political market model is assumed, and inability to pay is treated as a legitimate zero

response, deletion of all 20 cases identified by the alternative definitions 2, 4 and 5 does

not result in a significant difference in mean WTP (t (998) = 0.412, p > 0.05). Given the

non-normal distribution of the dependent variable, these mean differences were also

tested using the Mann-Whitney U test (non-parametric analogy of the t-test) and the

results confirmed those produced by the parametric t-test.

In this study, definition and deletion of cases consistent with a private goods

model would result in estimates of aggregate community welfare that were almost 70

per cent higher than those produced using definitions consistent with a political market

model (Jorgensen et al., 1999; Lindsey, 1994).

Definition 4 (n=7)

Definition 2 (n=4)

Definition 5 (n=17)

#4137 #1238 #7031

#4191

#7113 #3101

Plus 13 unique cases

#6227

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Table 7-12 The effects of protest definition and case deletion on WTP values Treatment N Mean WTP

($ per month) Std. Dev Median WTP

($ per month)

Total sample (baseline) 1022 2.49 3.93 1.00

Private goods market model:

Protest 1 only deleted 691 3.61 * 4.32 2.00

Protest 3 only deleted 670 3.73 * 4.34 2.00

Political market model:

Protest 2, 4 and 5 deleted 1031 2.54 3.95 1.00

* significant difference(p < 0.05) between treatment and total sample mean (baseline)

7.8 Exploring inconsistent responses using attitude measures

Contingent valuation researchers have traditionally explored protest responses

through follow-up questions put to those who indicated zero WTP, a technique

described by Halstead et al. (1992) and Lindsey (1994). However, this approach

assumes that those who provide a positive WTP value do not also hold attitudes that

might be interpreted as protests. Thus, Jorgensen et al. (1999, p.148) recommended that

responses to protest items be collected from all respondents and that researchers should

consider using Likert or semantic differential scales to measure respondents “intensity

of feeling”. The method adopted for the current study conformed to both of these

recommendations and Figure 7-3 illustrates how decision tracking, based on

participants’ responses to the multi-item attitude measures, can be used to identify

apparently irrational or inconsistent responses from participants who provided positive

WTP values.

Table 7-13 presents the mean and median WTP for respondents who provided

positive WTP values that were consistent with their reported attitudes and three

variations of inconsistent positive WTP values. In this experiment 530 respondents

(50.4 per cent of the total) reported positive WTP values for the proposed good.

However, 280 (52.8 per cent) of the respondents who provided positive WTP values

also indicated, through the 3-item scale designed to measure perceived ability to pay,

that they could not afford to pay anything for the good and this appears to be an

inconsistent or irrational response pattern. Respondents who recorded a positive WTP

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value that was consistent with their attitudes reported a significantly higher mean WTP

than those who provided inconsistent positive WTP responses (t (512) = -7.939, p < 0.05).

These results were also confirmed using a non-parametric Mann-Whitney U test.

Table 7-13 Comparing rational and irrational positive WTP values

Group / Description N Mean WTP ($ per month)

Std Dev

Median WTP ($ per month)

a. Consistent positive WTP

234 6.41 d 5.17 5.00

b. Inconsistent positive WTP 1 (Does not value resource but still reports positive WTP).

8 3.81 3.02 3.50

c. Inconsistent positive WTP 2 (Does not believe solution will be effective but still reports positive WTP).

8 2.75 1.67 2.00

d. Inconsistent positive WTP 3 (Says can’t pay but still reports positive WTP). 280 3.52 a 2.95 2.00

Total 530 Superscript denotes significant difference (p < 0.05) between groups

7.9 Summary

This chapter started by describing the experimental design and administration of

the contingent valuation experiment that was conducted to address the central questions

of this thesis. It then provided an analysis of the sample statistics and of the attitude

measurement scales that were embedded in the survey. The analysis provided in this

chapter is intended to justify the suitability of the data prior to addressing the central

research questions of this thesis in Chapter 8.

A mail survey comprising seven different information treatments was distributed

to 1,750 randomly selected homeowners in the study region. The useable response rate

for the survey was 64.8 per cent and this compares favourably with large-scale postal

surveys of the general population (Mitchell and Carson, 1989). Analysis of the sample

statistics confirmed that the sample was suitable for the experimental purposes of this

research. Principal components analysis and scale analysis were used to investigate the

attitude measurement items used in the survey instrument and the results confirmed a

scale structure that was very close to the one intended following testing and refinement

through the pilot study. Based on this analysis, composite variables were constructed for

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each of the eight independent variables in the attitude-behaviour model presented in

Figure 1-1.

The issue of identification and treatment of protest responses has attracted

substantial attention from contingent valuation researchers (Garrod and Willis, 1999;

Mitchell and Carson, 1989) as the chosen approach can significantly influence the

estimates of WTP and aggregate community welfare for a non-market resource. The

approach to protest identification using attitude scales that was explored in this

experiment offers an alternative to the single item measures of protest traditionally

adopted in contingent valuation studies and discussed at length by Halstead et al.

(1992), Lindsey (1994), and Jorgensen et al. (1999). An advantage of this approach is

that it collects data that enables the researcher to identify protest attitudes among those

who report positive WTP values as well as those that report negative WTP values.

The individual attitude measurement items and the composite attitude variables

collected in this study were used to explore alternative definitions of protest to the

contingent valuation question. The analysis showed that recognition of the appropriate

market model (private goods or political market) and selection of appropriate censoring

decision rules, as described by Lindsey (1994) and Jorgensen et al. (1999), are

important if the aim of the contingent valuation experiment is to develop estimates of

aggregate community welfare. In this study, identification and treatment of protest

responses consistent with a private goods model resulted in classification of over 30 per

cent of the total responses as protests while adoption of a political market model

resulted in approximately 2 per cent of the total responses being classified as protests.

Deletion of protest responses identified under a private goods market model resulted in

a mean WTP value approximately 70 per cent higher than mean WTP under a political

market model.

Although it is not one of the central questions of this thesis, the approach of

using attitude measures before the elicitation question appears to have considerable

potential for investigating both protest and irrational responses in contingent valuation

experiments. Future studies using attitude measures and decision tracking methods

might help to clarify the extent to which respondents use questions relating to their

ability to pay to lodge a form of protest about the contingent valuation scenario. The

revelation that a significant number of respondents who reported positive WTP values

also held what might be interpreted as protest attitudes leads to an extension of

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Jorgensen et al’s (1999) assertion that it is difficult to justify censoring one form of

protest response and not another. If a respondent indicates that they can not pay but then

reports a positive WTP value are they indulging in a form of ‘yea-saying’ or are they

providing a hypothetical answer to a hypothetical question? Whatever the underlying

cause, it would be difficult to justify censoring respondents who lodged protests

accompanied by a zero WTP value but not those who lodged protests accompanied by a

positive WTP value.

The next chapter will address the central research questions and hypotheses of

this thesis.

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CHAPTER 8

RESULTS AND DISCUSSION OF THE CONTINGENT VALUATION

EXPERIMENT

This chapter presents the results of the experiment to investigate the effects of

information on attitudes and WTP in the context of a contingent valuation survey and

addresses the central research questions and hypotheses described in Chapter 1.

The analysis is conducted in three stages and, for the readers’ convenience, the

research questions and associated hypothesis that each stage addresses are restated at the

beginning of the corresponding sections of this chapter. First, the effects of both visual

and text information treatments on attitudes and WTP are investigated using analysis of

variance. Second, the effects of attitudes on WTP are investigated using logit and tobit

models. Finally, the complex interrelationships between attitude variables are

investigated and three alternative attitude behaviour models are evaluated using

Structural Equation Modelling (SEM). The basic principles of the statistical techniques

used in this analysis are explained in Appendix H.

8.1 Information effects on attitudes and WTP

This stage of the analysis addresses the first of the major research questions and

eight related hypotheses described in Chapter 1. These were:

Question 1: What effect does information provided in the contingent valuation scenario

in the form of visual images and text descriptions have on attitudes toward and

willingness-to-pay for a proposed environmental good?


followed by images of well nourished beaches will indicate greater concern toward

beach erosion (the problem) than subjects provided with images depicting mild levels of

erosion followed by images of well nourished beaches and subjects provided with no

images at all (a control group).



towards beach protection (the proposed solution) than subjects provided with images

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depicting mild levels of erosion followed by images of well nourished beaches and

subjects provided with no images at all (a control group).



towards paying for beach protection (the target behaviour) than subjects provided with

images depicting mild levels of erosion followed by images of well nourished beaches

and subjects provided with no images at all (a control group).


followed by images of well nourished beaches will indicate higher WTP values than

subjects provided with images depicting mild levels of erosion followed by images of

well nourished beaches and subjects provided with no images at all (a control group).


benefits of the proposed beach protection program will indicate greater concern toward

beach erosion (the problem) than subjects exposed to descriptions that lack explicit

benefit information and subjects provided with no text description at all (a control

group).



toward beach protection (the proposed solution) than subjects exposed to descriptions

that lack explicit benefit information and subjects provided with no text description at

all (a control group).



toward paying for the beach protection program (the target behaviour) than subjects

exposed to descriptions that lack explicit benefit information and subjects provided with

no text description at all (a control group).


benefits of the proposed beach protection program will indicate higher WTP values for

the beach protection program (behavioural intention) than subjects exposed to

descriptions that lack explicit benefit information and subjects provided with no text

description at all (a control group).

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8.1.1 Exploration and transformation of variables

Exploration of the eight attitude and behaviour composite variables revealed

distributions with acceptable levels of skewness and kurtosis, given the large sample

size (all within the ±1 range). As expected, the continuous WTP variable (WTP$) was

non-normally distributed being censored by zero with a substantial positive skew (Skew

=10.2). A log transformation was applied [ln(WTP$+1)] and the resulting distribution

fell within acceptable parameters (Skew = 0.730) for parametric analysis (Tabachnick

and Fidell, 2001).

8.1.2 Scale validation: The effects of beach use and previous knowledge on

attitudes and WTP

The frequency with which an individual uses a resource and the level of

previous knowledge that they have of it were expected, a priori, to influence both

attitudes toward the resource and WTP for it (Ajzen et al., 1996; Hoehn and Randall,

2002; Judge et al., 1995). Thus, analysis of these relationships was used as a test of the

theoretical validity of the approach before going on to examine the effects of

information on attitudes and WTP.

There was no significant difference in beach visitation [F(6, 1027) = 0.427, p >

0.05] or previous knowledge [F(6, 1017) = 0.670, p > 0.05] between the seven information

treatments and this provides reassurance that any differences in attitudes and behaviours

between the information treatments was not caused by sample bias in respect to these

variables.

Based on responses to the beach visitation questions, the sample was divided

into three groups of approximately equal size labelled ‘low’ (0 to 29 visits per year),

‘medium’ (30 to 79 visits per year) and ‘high’ (80 + visits per year) users. In a similar

way, three groups were identified based on responses to the previous knowledge

questions although non-normal distribution of this variable meant that the three groups

were not of equal size. Tables 8-1 and 8-2 present the analysis of variance for beach use

and previous knowledge respectively. Levene’s test for homogeneity of variances

showed that this assumption had not been violated (p > 0.05) for any of the variables.

Analysis of variance indicated that the relationship between beach use and

previous knowledge and attitudes and WTP were as predicted. Higher levels of beach

use and previous knowledge were both associated with higher levels of general

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environmental concern (V1); higher levels of reported past environmental behaviour on

the consumer (V2c) and the political (V2p) dimensions; higher levels of concern about

beach erosion (V3); more positive attitudes towards beach protection measures (V4);

higher expected utility of outcomes (V5); stronger normative influences supporting

payment for beach protection measures (V6); higher levels of perceived behavioural

control (V7); more positive attitudes to paying for beach protection measures (V8); and,

higher WTP values. All relationships were significant (p < 0.05). These results provided

support for the construct validity of the instrument used in this research.

194

Table 8-1 Effects of beach use on behaviours, attitudes and WTP

User category (means) F value


V1: General environmental attitudes 5.40 c 5.39 c 5.62 a, b 6.20 **

V2c: Habit – Consumer dimension 3.00 c 3.07 3.13a 5.42 **

V2p: Habit – Political dimension 1.51 b, c 1.67 a, c 1.82 a, b 26.59 **

V3: Attitude toward beach erosion 5.28 b, c 5.64 a, c 5.86 a, b 33.93 **

V4: Attitude toward beach protection 5.42 b, c 5.62 a 5.66 a 6.80 **

V5: Expected utility of outcomes 3.97 b, c 4.66 a, c 4.96 a, b 44.80 **

V6: Subjective norms 26.24 b, c 29.38 a 30.37 a 4.55 **

V7: Perceived behavioural control 2.49 b, c 2.88 a 3.01 a 11.06 **

V8: Attitude toward paying for beach protection 3.39 c 3.60 c 3.93 a, b 10.33 **

WTP: ln(WTP$+1) 0.53 b, c 0.83 a 0.97 a 22.50 **

Min N 353 311 329 * p < 0.05; ** p < 0.01 Subscript denotes significant differences (p < 0.05) between user categories.

Table 8-2 Effects of previous knowledge on behaviours, attitudes and WTP

Previous level of knowledge (means) F value


V1: General environmental attitudes 5.35 c 5.55 5.62 a 8.51 **

V2c: Habit – Consumer dimension 2.91 b, c 3.08 a, c 3.26 a, b 50.41**

V2p: Habit – Political dimension 1.48 b, c 1.69 a, c 1.90 a, b 64.66 **

V3: Attitude toward beach erosion 5.28 b, c 5.68 a, c 5.96 a, b 59.12 **

V4: Attitude toward beach protection 5.46 c 5.61 5.67 a 5.71 **

V5: Expected utility of outcomes 4.28 c 4.57 4.81 a 13.99 **

V6: Subjective norms 25.67 b, c 30.24 a 31.76 a 11.56 **

V7: Perceived behavioural control 2.63 c 2.92 2.94 a 5.11*

V8: Attitude toward paying for beach protection 3.45 b, c 3.81 a 3.84 a 7.37 **

WTP: ln(WTP$+1) 0.68 c 0.78 0.89 a 5.43 **

Min N 469 158 354 * p < 0.05; ** p < 0.01 Subscript denotes significant differences (p < 0.05) between knowledge categories.

8.1.3 Information treatment effects on attitudes and WTP

Results of the analysis of variance, presented in Table 8-3, show that

information treatments used in this study had a significant effect [F(6,1043)=3.521, p <

0.05] only on attitudes to beach protection (V4) in this experiment. Post hoc tests using

Tukey’s HSD found significant effects only between the extremes of information

195

provision, i.e. between treatments 1 and 2 compared with treatments 5, 6 and 7. These

results are summarised visually in Figure 8-1

Figure 8-1 Significant information effects in the contingent valuation experiment

Significant difference between treatments indicated by arrows

There was a significant difference in the mean response to the scale measuring

attitude toward beach protection between treatment 1, which contained no text

description and no photographs of the proposed change, and treatments 5 (brief text

description and photographs of severe erosion), 6 (detailed text description and

photographs of mild erosion) and 7 (detailed text description and photographs of severe

erosion). Similarly, there was a significant difference between treatment 2 (brief text

description and no photographs) and treatment 7 (detailed text description and

photographs of severe erosion). Treatments 2 and 5 both contained the same level of

detail in the text description of the proposed change but, while treatment 5 contained

photographs depicting severe erosion events and subsequent beach repair, treatment 2

contained no photographs. The interpretation of these results is discussed in Section

8.1.5.

Analysis of the sample statistics in Chapter 7 revealed that the proportion of

female respondents in treatment 1 was significantly larger than in treatment 5 (F (6, 1042)

= 2.19, p < 0.05). However, comparison of the mean responses to the scale measuring

attitude toward beach protection (V4) revealed that the mean for females (x̄ = 5.63) was

actually significantly higher (t (1046) = 2.602, p < 0.05) than the mean for men (x̄ = 5.48).

The effect of the gender inequality was to reduce the information effect between the two

treatments not to enhance it, thus, we can be confident that the difference in means

between information treatment 1 and 5 was not caused by gender inequality between the

two treatments.

Attitude towards beach protection (V4)

7 6 3 Detailed

5 4 2 Brief

1 None

Text

Severe Mild None

Photographs

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Table 8-3 Effects of Information Treatment on Behaviours, Attitudes and WTP

Treatment (means)

Variable: 1 2 3 4 5 6 7 F value

V1: General environmental attitudes .94 .94 .99 .97 .93 .98 .95 0.715

V2c: Habit – Consumer dimension .60 .62 .65 .63 .62 .63 .62 0.842

V2p: Habit – Political dimension .41 .67 .49 .47 .49 .45 .42 1.228

V3: Attitude toward beach erosion 1.07 1.11 1.12 1.13 1.11 1.11 1.12 0.243

V4: Attitude toward beach protection .95 5, 7 .96 5, 7 1.04 1.03 1.11 1, 2 1.07 1.111, 2 3.521*

V5: Expected utility of outcomes .81 .81 .80 .86 .88 .80 .85 0.716

V6: Subjective norms 4.96 4.97 5.10 5.07 5.27 5.02 4.91 0.590

V7: Perceived behavioural control .81 .89 .84 .83 .98 .84 .86 1.253

V8: Attitude toward paying for beach protection 3.64 3.54 3.51 3.54 3.84 3.66 3.69 0.726

WTP: ln(WTP$+1) .82 .80 .73 .77 .92 .77 .82 0.497

Min N 141 148 148 139 134 149 145

* p < 0.05; Subscript denotes significant differences (p < 0.05) between individual treatments.

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There were no significant information effects on general environmental values

(V1) or on reported consumer (V2c) or political (V2p) dimensions of environmental

behaviour. This nil result is reassuring for two reasons. First, the measurement items

relating to these variables were placed before the information treatments in the survey

and any significant effect on these values would suggest that respondents had been

reading ahead and completing sections of the survey out of sequence. Second, it is

consistent with findings of other research (Newhouse, 1990; Vining and Ebreo, 1992)

that higher order environmental beliefs or values of the type measured by the NEP

instrument are not effective predictors of attitudes and behaviour relating to specific

environmental issues.

The information treatments used in this experiment had no significant effect on

respondent’s attitude toward beach erosion (V3), expected utility of outcomes (V5),

reported normative influences (V6) or perceived behavioural control (V7).

8.1.4 Information treatment effects when controlling for previous knowledge and

beach use

Previous knowledge and relevance of information have both been shown to have

a mediating role on information effects (Berrens et al., 2004; Hoehn and Randall, 2002).

In the context of this experiment the level of beach use can be interpreted as an indicator

of the relevance to respondents of the issues canvassed in the survey. In an attempt to

control for these factors, separate analysis was conducted on respondents reporting high

and low levels of previous knowledge and high and low levels of beach use as defined

in Section 8.1.2. Splitting the data file in this way revealed similar results to the total

sample.

Among those who reported high levels of previous knowledge there were no

significant information effects on any of the variables and this is consistent with

concepts of attitude stability and the mediating role of previous knowledge (Eagly and

Kulesa, 1997). Among those who reported low levels of previous knowledge the only

significant difference [F(6,473) = 3.153, p < 0.05] was again found in means for attitudes

toward beach protection (V4) where post hoc tests show significant differences (p <

0.05) between treatments 1 and 6, treatments 2 and 6, and treatments 4 and 6.

Among those who reported high levels of beach use there were a number of

significant information treatment effects not observed in the analysis of the total sample

and this may be indicative of high relevance and high levels of involvement among this

segment. Analysis of variance showed significant treatment effects on attitude to beach

protection (V4) [F(6,336) = 2.399, p < 0.05], expected utility of outcomes (V5) [F(6,334) =

2.625, p < 0.05] and in WTP [F(6,324) = 2.428, p < 0.05]. For V4 post hoc tests showed

significant differences (p < 0.05) between treatments 2 and 7, and treatments 4 and 7.

For V5 post hoc tests showed significant differences (p < 0.05) between treatments 2

and 7 and treatment 3 and 7. For WTP post hoc tests showed a significant difference (p

< 0.05) between treatments 1 and 3 only. Among those who reported low levels of

beach use there were no significant information treatment effects on any of the variables

and this may indicate low relevance and low involvement among this segment. The

interpretation of these results is discussed in Section 8.1.5.

8.1.5 Evaluation of hypotheses 1-8 and discussion

The first four hypotheses described the expected effects of photographic

information in this experiment. The analysis of variance presented in Table 8-3 showed

that there were no significant information effects created by exposing respondents to

photographs of varying levels of beach erosion on attitudes towards beach erosion (V3),

attitudes toward paying for beach protection (V8) or WTP for the proposed protection

program in this experiment. Thus, hypotheses 1, 3 and 4 are rejected.

There were significant information effects on attitude toward beach protection

(V4) and the significant difference between treatments 2 and 5 represents a visual

information effect only. Respondents to these two treatments were both provided with

the same brief text description of the proposed project but treatment 2 included no

photographs while treatment 5 included photographs of severe erosion followed by

photographs of well repaired beaches as illustrated in Figure 8-1. Thus, hypothesis 2 is

accepted. However, this result should be treated with some caution since there was no

significant difference between responses to the treatments which included photographs

of mild levels of erosion (treatment 4) and severe levels of erosion (treatment 5). There

was also no significant visual information effect when respondents were provided with a

detailed text description of the proposed program, as shown by treatments 3, 6 and 7.

In relation to hypotheses 5 to 8, which described the expected text information

effects, the analysis did not reveal any significant differences between groups receiving

different text treatments. Even when comparing treatments 1, 2 and 3, which received

only text information about the proposed project and no photographs, there was no

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significant difference in attitude toward any of the target objects or behaviours. Thus,

hypotheses 5 to 8 were all rejected.

The results of this section of the analysis suggest that attitudes toward beach

protection and associated targets were quite insensitive to information treatments in this

sample. Significant effects were only detected between the extremes of information

provision, i.e. no photographs with no text or brief text descriptions (treatments 1 and 2)

compared with photographs of severe erosion events accompanied by brief or detailed

text descriptions (treatments 5 and 7). Since this sample indicated high levels of

previous knowledge about these targets it is likely that attitudes relating to them were

well formed and stable in this sample so the results are consistent with Eagly and

Kulesa’s (1997, p.130) observations that ‘…extensive knowledge about a particular

issue…protects people from changing their attitudes on that issue, in part for the simple

reason that the new information must compete with the beliefs people already hold’.

Further empirical support for the moderating effects of previous knowledge on

information effect within the context of a contingent valuation study was found by

Carson, Wilks and Imber (1994). Their study of WTP to protect the Kakadu

Conservation Zone from mining operations found that information provided in the

scenario had a significant effect on WTP among non-local residents but not on WTP

among locals (defined as residents of the Northern Territories). Carson et al. (1994)

rationalised that local residents had already been exposed to a substantial amount of

information about the project and had formed their own views which were unlikely to

be changed by the information received in the contingent valuation scenario. Thus, the

results and interpretation of the current study are consistent with those of Carson et al.

(1994).

Information treatment did not have a significant effect on attitude toward beach

erosion (V3). Since the text information treatments specifically described the proposed

beach protection measures and not beach erosion as a general concept this result is

consistent with concepts of attitude specificity and process theories of attitude change

(Eagly and Chaiken, 1993; Petty and Wegener, 1998). Had there been significant visual

information effects on the attitude to beach erosion variable it could have been argued

that the photographs depicting eroded beaches before beach protection works had

conveyed unintended information about beach erosion in general, but this was not the

case.

Despite the fact that the information provided in the contingent valuation

scenario related to the benefits of the proposed program, the information treatments

used in this experiment had no significant effect on respondents expected utility of

outcomes (V5). When controlling for frequency of beach use, significant information

effects were observed between treatments 2 and 7, and 3 and 7 among respondents

defined as ‘high’ users (80+ visits per year). Neither of these effects can be attributed

entirely to a text effect but the difference between treatments 3 and 7 can be interpreted

as a visual effect induced by the addition of photographs to the detailed text scenario.

This suggests that respondents in this group were influenced more by photographs than

detailed text descriptions and may have been following a peripheral, rather than a

central, information processing route (Petty and Cacioppo, 1984).

Since information treatments had some significant effects on attitudes to beach

protection (V4) they might be expected to have an affect on attitude toward paying for

beach protection (V8) and on WTP. However, there were no significant effects on either

variable and this suggests that expected utility of outcomes (V5), normative influences

(V6) and perceived behavioural control (V7) exercise a strong mediating role as

indicated in the attitude-behaviour models discussed in Chapter 4. This mediating

relationship will be examined in the third, and final, phase of the analysis of this

experiment.

The finding that resident’s WTP for beach protection programs was insensitive

to information treatment is consistent with a number of studies that have investigated

information effects in contingent valuation. Boyle (1989) and Brown et al. (1995) tested

three levels of text information similar to the treatments used in this study and found no

significant differences in WTP among treatments. Hoevenagle and van der Linden

(1993) and Protiere et al. (2004) both found significant text information effects but only

between control treatments offering no or limited information and treatments offering

full information. Using visual communication devices, Navrud (1997) found that

residents WTP for preservation of a local natural environment was insensitive to

information treatments comprising combinations of video and photographs.

8.2 The effects of socio-economic variables and attitudes on WTP

This stage of the analysis addresses the second major research question and the

four related hypotheses. These were:

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Question 2: Are attitudes toward the environment generally, relevant targets (beach erosion and protection) and the related behaviour (paying for beach protection) effective predictors of stated willingness to pay in a contingent valuation experiment?

H9: Strong pro-environment attitudes will be associated with high levels of willingness-

to-pay for beach protection programs.

H10: High levels of concern related to beach erosion will be associated with high levels

of willingness-to-pay for beach protection programs.

H11: More positive attitudes toward beach protection programs will be associated with

high levels of willingness-to-pay for beach protection programs.

H12: More positive attitudes towards the behaviour of paying for beach protection

programs will be associated with high levels of willingness-to-pay for beach protection

programs.

These hypotheses were tested using logistic and tobit regression models.

8.2.1 Socio-economic variables as predictors of WTP

Previous research has demonstrated that various social and economic

characteristics influence respondent’s WTP for non-market resources (Bateman and

Langford, 1997; Hanemann, 1999) and the presence of these effects can be interpreted

as an indicator of construct validity of the contingent valuation method. Social and

economic data collected in this survey were used to test the theoretical construct validity

of the approach used. A summary of the variables used in the socio-economic model is

provided in Table 8-4.

Initial investigation of the data was conducted using SPSS and ordinary least

squares regression on the continuous dependent variable. The six independent variables

and the log-transformed dependent variable (ln[WTP$+1]) were all found to have

acceptable distributions for regression analysis.

Table 8-4 Variables in the socio-economic regression model

Variable Description Type Expected sign

Dependent Variables:

WTP Willingness to Pay Anything (No=0, Yes=1) Discrete

ln(WTP$+1) Maximum Willingness to Pay in Dollars (Log of WTP+1) Continuous

Independent Variables:

YRSGC Years resident on the Gold Coast Continuous -

HHINCCAT Household Income (0 = less than $40,000 p.a., 1 = more than $40,000 p.a.)

Discrete +

USECAT Beach user category (1= 0 to 29 visits per year, 2 = 30 to 79 visits per year, 3 = 80 + visits per year)

Discrete +

PKNCAT Previous knowledge about beach erosion and protection (1= low, 2 = medium, 3 = high)

Discrete +

EDCATE2 Maximum level of education completed (0 = School or vocational, 1 = diploma or degree)

Discrete +

Analysis of the residuals of regression found five cases with Mahalanobis’

scores above the critical value (χ2 critical / 6df = 22.46). Inspection of the cases

indicated that they were all older respondents (over 75 years of age) who had lived all or

most of their lives on the Gold Coast but had indicated low WTP values for beach

protection. However, the low WTP values were consistent with their low incomes and

perceived ability to pay. The large sample size makes the critical value of Cook’s

distance4 overly sensitive with 48 cases having Cook’s values above the critical value

(0.004). However, when a gap criterion was applied, two cases had outlying Cook’s

values. Inspection of the cases indicated that, while they had both expressed relatively

high WTP for the proposed good ($20 and $25 per month), the stated values were

consistent with their strong positive attitudes toward the proposed project. In the

interests of representing the entire population and in the absence of any strong rationale

for deletion, the seven cases identified above were retained in the final model.

Two alternative regression models were estimated. Firstly, the socio-economic

variables were regressed against the dichotomous payment principle question using the

logistic form of the regression model. Secondly, the socio-economic variables were

regressed against the continuous, but censored, maximum WTP values obtained using

the payment card elicitation method using the tobit form of the regression model.

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Logistic and tobit regression analysis was conducted using SHAZAM 9.0 (White,

2001). Table 8-5 presents the results for the two regression equations.

The relationships and signs on the coefficients were largely as expected.

Household income, frequency of beach use, previous level of knowledge about erosion

and beach protection, and education level were all positively and significantly (p < 0.05)

related to the dichotomous payment principle question and to the continuous maximum

WTP dependent variable. That is, as the value of the independent variable increased the

likelihood of a ‘yes’ response to the payment principle question increased and the

reported maximum WTP value increased.

Table 8-5 The socio-economic regression model

Logistic Tobit Variable Coefficient (S.E) Asymptotic

T-ratio Coefficient (S.E) Asymptotic

T-ratio HHINCCAT 0.7715 (0.1632) 4.7282** 0.5053 (0.0838) 6.0310** USECAT 0.3113 (0.0898) 3.5547 ** 0.2169 (0.0469) 4.6247** PKNCAT 0.2673 (0.0875) 3.3307 ** 0.1139 (0.0425) 2.6812** EDCATE2 0.3064 (0.1512) 2.0266 * 0.2007 (0.0789) 2.5411* YRSGC -0.0165 (0.0055) -2.9956 ** - 0.0077 (0.0030) - 2.5975** Constant -0.9946 (0.2329) - 4.2701 ** - 0.5225 (0.1276) - 4.0959** Log-likelihood - 587.65 - 1138.36 Correct predictions

62 %

Cragg-Uhler R2 0.109

Sigma (σ) 1.46

MSE 0.74 Pseudo R2 0.1055 n 909 887

* p < 0.05; ** p < 0.01

It has been suggested that residents who have recently moved into a region have

demonstrated a willingness to pay for access to the amenities of the region (Spain,

1993). Research by Johnston, Swallow, Tyrrell and Bauer (2003) found quantitative

support for a significant negative relationship between length of residency and WTP for

rural amenities. Following this, the a priori assumption was that newer residents on the

Gold Coast would be more likely to provide a ‘yes’ response to the payment principle

4 Critical value of Cook’s distance = 4 / (n-k-1)

question and higher WTP values than residents who had lived in the region for a longer

period and the data supported this relationship. The number of years respondents had

lived on the Gold Coast was significantly (p < 0.05) and negatively related to both of

the dependent variables in the models. Newer residents valued the proposed changes

more highly than more established residents and there appeared to be some evidence of

increased cynicism among long-term residents about the effectiveness of beach

protection measures that have been undertaken over the last 30 years in the region. A

number of unsolicited comments made on the survey form by respondents support this

proposition. For example, one respondent wrote “… it is obvious groynes used on the

coast have been a 90% failure. Nature is the best healer for erosion” (Case#4101).

Although the R2 values for the models5 indicate that they explain only around 11

per cent of the variance in the dependent variables this is consistent with other

contingent valuation surveys of the general population. For example, using logistic

regression analysis of WTP for environmental improvements among the general

population, Bateman and Langford (1997, p.578) reported an R2 of 0.134 and

Whitehead and Blomquist (1991, p. 2528) reported R2 of between 0.12 and 0.14.

Alternative models to those summarised here were tested but no other socio-

economic variables were significantly related to either of the dependent variables. R2

values were not improved by removal of the 13 protest responses identified in Chapter

7. Overall, the socio-economic variables in the models described here explained the

variation in WTP in a manner that was sufficiently consistent with economic theory to

support the construct validity of the instrument and the sampling approach.

8.2.2 Attitudes as predictors of WTP

The following analysis describes the direct relationship between the latent

attitude and behaviour variables and the payment principle response and maximum

WTP dependent variables. Three models were tested and compared. Model 1 contained

the variables represented in Ajzen’s (1985) theory of planned behaviour (TPB), model 2

contained variables designed to operationalise Eagly and Chaiken’s (1993) composite

model, and model 3 contained the additional variable from the proposed ‘augmented’

model introduced in Chapter 1 (Figure 1-1). The structure and formation of each of the

5 For the tobit model SHAZAM reports the ‘squared correlation between observed and expected values’ as a pseudo R2 value

205

composite attitude and behaviour variables was described in detail in Chapter 7. A

summary of the variables used in the three models is provided in Table 8-6.

Table 8-6 Variables in the behavioural regression models

Variable Description Type

Model 1 TPB

(Ajzen, 1985)

Model 2

Model 3 Proposed

augmented model

Dependent Variables: WTP Willingness to Pay Anything (No=0,

Yes=1) Discrete

ln(WTP$+1) Maximum Willingness to Pay in Dollars (Log of WTP+1)

Continuous

Independent Variables: V1 General Attitudes Toward the

Environment Continuous

V2c Habit – Consumer dimension Continuous

V2p Habit – Political dimension Continuous

V3 Attitude to Beach Erosion Continuous

V4 Attitude to Beach Protection Continuous

V5 Expected Utility of Outcomes Continuous

V6 Normative influences Continuous

V7 Perceived Behavioural Control Continuous

V8 Attitude Toward Payment Continuous

Regression diagnostics were conducted using SPSS. The nine independent

variables and the log-transformed dependent variable (ln[WTP$+1]) were all found to

have acceptable distributions for regression analysis.

Analysis of the residuals of regression found four cases with Mahalanobis’

scores above the critical value (χ2 critical / 8df = 26.13). Inspection of these cases

revealed that, while these respondents each indicated strong attitudes on a number of

scales (usually in favour of beach protection programs but against paying for them), the

responses were consistent. Sixty cases had Cook’s distance values above the critical

value (0.004) and a gap criterion revealed three cases with outlying values. Inspection

of the cases indicated that, while the respondents had indicated strong negative attitudes

toward paying for beach protection, the responses were consistent and there was no

compelling argument for removing them from the analysis. In the interests of

representing the entire population and in the absence of any strong rationale for

deletion, the seven cases identified above were retained in the final model.

The results of the logistic regression of the IV’s against the dichotomous

‘payment principle’ response is shown in Table 8-7. In Model 1 normative influences

(V6), perceived behavioural control (V7) and attitude towards payment for beach

protection (V8) were all positively and significantly (p < 0.01) correlated with the

likelihood of the respondent giving a ‘yes’ response to the payment principle question.

In Model 2 these three variables were again significant as was expected utility of

outcomes (V5), attitude toward beach protection (V4) and attitude toward beach erosion

(V3). The consumer and political dimensions of environmental behaviour (V2c and

V2p) were not significant predictors (p > 0.05) of the dependent variable. Analysis of

Model 3 revealed that the general environmental values variable (V1) was not a

significant predictor of the payment principle response.

Table 8-7 The behavioural regression models compared (Logit, DV=WTP) Model 1 Model 2 Model 3

Variable Regression Coefficient

Asymptotic T-ratio

Regression Coefficient

Asymptotic T-ratio

Regression Coefficient

Asymptotic T-ratio

V1 0.1782 1.5915

V2c -0.3794 -1.7155 -0.4255 -1.8958

V2p 0.3053 1.4966 0.2474 1.1979

V3 0.3721 2.8078 ** 0.3445 2.5758 *

V4 0.4066 3.1684 ** 0.4087 3.1861 *

V5 0.3479 4.1682 ** 0.3469 4.1448 **

V6 0.0253 4.5057 ** 0.0221 3.4743 ** 0.0235 3.6770 **

V7 0.6430 8.4690 ** 0.6735 7.9651 ** 0.6641 7.8328 **

V8 0.7562 10.896 ** 0.6164 8.1280 ** 0.6070 7.8899 **

Constant -5.0961 -16.373 ** -9.8739 -10.048 ** -10.440 -9.7894 **

L-Likelihood -425.84 -358.92 -355.27

Correct predictions 81.0 % 84.1% 84.1 %

Cragg-Uhler R2 0.5743 0.6368 0.6388

N 1035 974 968 * p < 0.05; ** p < 0.01

Variation in the attitude and behaviour variables explained a substantially larger

proportion of the variation in the dichotomous payment principle variable than did the

socio-economic variables described in Table 8-5. Model 1 accounted for 57.4 per cent

of the variation in the dependent variable and correctly predicted the response 81 per

cent of the time. Model 2 accounted for 63.7 per cent of the variation in the dependent

variable and correctly predicted the response 84.1 per cent of the time. Thus, inclusion

of the additional five explanatory variables in Model 2 resulted in a model with slightly

207

improved predictive ability. However, addition of the final variable representing general

environmental values (V1) in Model 3 did not contribute substantially to the predictive

ability of the model.

A tobit regression equation was used in analysis of the censored WTP variable

(ln[WTP$+1]) and the results are presented in Table 8-8. In Model 1 the variables

subjective norms (V6), perceived behavioural control (V7) and attitude towards

payment for beach protection (V8) were all positively and significantly (p < 0.01)

correlated with WTP. In Model 2 the consumer (V2c) and political dimensions (V2p) of

environmental behaviour, attitude toward beach protection (V4), utility of outcomes

(V5), subjective norms (V6), perceived behavioural control (V7) and attitude towards

payment for beach protection (V8) were all significant (p < 0.05) predictors of WTP.

When the variable representing general environmental attitude (V1) was added in

Model 3 it was not a significant predictor of WTP (p > 0.05) and resulted in the variable

representing attitude toward beach erosion (V3) also becoming non-significant (p >

0.05).

The attitude and behaviour variables explained substantially more of the

variation in WTP than the socio-economic variables described in Table 8-6. The

variables in Model 1 explained approximately 47.7 per cent of the variation in the

dependent variable while Models 2 and 3 explained approximately 49.8 per cent of the

variation in WTP. Addition of the variable representing general environmental values in

Model 3 did not make a substantial improvement to the predictive ability of the model.

The SHAZAM 9.0 (White, 2001) output for the each of the three logit and tobit

models described above are available in the digital appendices on the CD at the back of

this thesis.

208

Table 8-8 The behavioural regression models compared (Tobit, DV = log of WTP+1)

Model 1 Model 2 Model 3 Asymptotic Asymptotic Asymptotic

Variable Normalised Coefficient S.E t-ratio Normalised

Coefficient S.E t-ratio Normalised Coefficient S.E t-ratio

V1 0.0791 0.0448 1.7641

V2c -0.2233 0.0902 -2.4764 * -0.2395 0.0908 -2.6365 *

V2p 0.2070 0.0815 2.5381 * 0.1878 0.0825 2.2766 *

V3 0.1113 0.0546 2.0391 * 0.1009 0.0551 1.8319

V4 0.1441 0.0551 2.6141 * 0.1398 0.0551 2.5396 *

V5 0.1701 0.0352 4.8563 ** 0.1722 0.0353 4.8847 **

V6 0.0083 0.0022 3.7553 ** 0.0063 0.0023 2.6856 * 0.0066 0.0023 2.8421 *

V7 0.2947 0.0311 9.4774 ** 0.2878 0.0321 8.9487 ** 0.2865 0.0323 8.8635 **

V8 0.3701 0.2958 12.5110 ** 0.2937 0.0319 9.1956 ** 0.2854 0.0322 8.8646 **

Constant -2.2132 .1100 -20.108 ** -3.7173 0.3645 -10.199 ** -3.9685 0.3956 -10.0310 **

Sigma (σ) 1.1463 1.0495 1.0454

Log-Likelihood function -992.2 -896.9 -891.7

MSE 0.4333 0.4206 0.4208

Pseudo R2 0.4766 0.4980 0.4987

n 1007 948 943 * p < 0.05; ** p < 0.01

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Hypotheses 9 through 12 described the a priori expected direct relationships

between attitudes toward related target objects and behaviours and WTP for beach

protection programs. In each case a higher level of concern or support expressed in

relation to an attitude target object or behaviour was expected to correlate positively

with reported WTP.

The logit models (Table 8-7) showed that all the attitude-behaviour variables

except general environmental attitude (V1) and the consumer and political dimension of

previous behaviour (V2c and V2p) were significant predictors of participants’ response

to the payment principle question. The tobit models (Table 8-8) showed that all

variables except general attitude toward the environment (V1) were significant

predictors of the continuous WTP variable. Based on the analysis of the three alternative

models, hypothesis 9, which proposed a relationship between broad environmental

values (V1) and WTP, was rejected. Hypotheses 10, 11 and 12, which proposed

relationships between WTP and attitudes toward beach erosion (V3), beach protection

(V4) and paying for beach protection (V8) respectively, were accepted.

The results of this analysis are consistent with Fishbein and Ajzen’s (1975)

concept of specificity which suggests that attitudes and behaviours that are more closely

related to the final behaviour in terms of action, target, context and time are better

predictors of behavioural intention and final behaviour. Thus, in this study, attitudes and

behaviours related to distal targets such as the environment in general and recycling

behaviour were not significant predictors of WTP while those that related to more

proximal targets were consistently strong predictors of WTP.

The results of this analysis are consistent with previous studies that have

specifically examined the relationship between individual attitudes and WTP as an

indicator of behavioural intention. Judge et al. (1995) found no significant relationship

between general environmental attitudes and WTP for beach re-nourishment programs.

However, Jorgensen and Syme (2000) found that attitude toward the specific target

object of paying for stormwater controls was a stronger predictor of WTP than either the

price of the proposed intervention or the annual household income of the respondents.

Luzar and Cosse (1998) found that subjective norms and attitude toward the proximal

behaviour of paying for water quality improvements were both significant predictors of

210

reported WTP. Kerr and Cullen (1995) also found that a specific attitude toward

protection of a forest park was a significant predictor of WTP for protecting it.

The total predictive power of the models used in this study were also consistent

with the results of the small number of previous studies that have adopted Ajzen’s

(1985) theory of planned behaviour, or adaptations of it, as a basis for investigating the

attitude-WTP relationship. In this study the theory of planned behaviour explained

approximately 47 per cent of the variation in WTP and correctly predicted 81 per cent

of responses to the dichotomous payment principle question. Pouta and Rekola (2001)

adopted a slightly augmented theory of planned behaviour framework, in which they

measured attitudes toward the environmental problem and toward the proposed solution

as separate dimensions, and found that the model explained approximately 57 per cent

of the variation in WTP and correctly predicted 87 per cent of responses to a

dichotomous WTP question. More recently Ajzen, Brown and Carvajal (2004) used a

theory of planned behaviour framework to explain 50 per cent of the variance in

response to a dichotomous WTP question. It is worth noting that studies using attitude

behaviour models, such as those described above and the current study, have

consistently accounted for 50 per cent or more of the variation in WTP while traditional

socio-economic measures frequently account for less than 15 per cent of the variation

(Bateman and Langford, 1997; Whitehead and Blomquist, 1991).

This analysis has shown that direct linear regression models using attitude

measures are able to explain substantial proportions of the variation in the dependent

WTP variables. The next, and final, stage of this analysis used structural equation

modelling to investigate the complex interrelationships between the variables in three

alternative attitude-behaviour models.

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8.3 Evaluating the attitude-behaviour models

This section extends the analysis described in Section 8.2 by building a more

comprehensive picture of the inter-attitudinal relationships that indirectly affect stated

behavioural intention. In doing so it addresses the third major research question and the

final three hypotheses of this thesis. These were as follows:

Question 3: Can behavioural intention in the form of stated willingness to pay for a proposed good be adequately explained by expectancy-value forms of attitude-behaviour models?


acceptable fit to a model based on Ajzen’s (1985) theory of planned behaviour.


acceptable fit to a model based on Eagly and Chaiken’s (1993) composite attitude-

behaviour model.


acceptable fit to the proposed augmented model presented in Figure 1-1.

Structural equation modelling was used to test the utility of the three alternative

hypothesised attitude-behaviour models. Structural equation models comprise two parts;

a measurement model that is concerned with the relationships between the measured

variables and the latent variables and the structural model that describes the

relationships between the latent variables. Kelloway (1998) warned that poor model fit

could be the result of a poor fitting measurement model, a poor fitting structural model

or both. Since the measurement model is nested within the full structural equation

model the full model cannot provide a better fit to the data than the measurement model.

Thus, Hair, Anderson, Tatham and Black (1995) recommended a two stage modelling

strategy in which the researcher first assesses the measurement model and then expands

that to incorporate the structural model.

This analysis starts with a confirmatory factor analysis of the items used to

measure the latent variables in the models and analysis of the fit of the measurement

model. Having established the structure and fit of the measurement model the analysis

goes on to describe development and testing of the full structural model following

Bollen and Long’s (1993) five stages of structural equation modelling: model

specification, identification, estimation, testing fit and re-specification.

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8.3.1 Confirmatory factor analysis of the measurement model

The measurement items used in this research were not part of a standardised

instrument, though they had been designed to investigate the latent constructs embodied

in the attitude-behaviour model described in Chapter 1 (Figure 1-1). The scale analysis

and exploratory factor analysis described in Chapter 7 showed that the items could be

used to form reliable indicators of the strength of the latent constructs, however, a

number of the measures had to be refined in order to operationalise the measurement

model. The items used to measure consumer and political dimensions of past

environmental behaviour were not designed as a psychometric-type scale and these

items were aggregated to provide one summary or ‘observed’ measure for each

dimension. In a similar way, the four measures of expected direct and indirect economic

and recreation benefits were aggregated to form two measures; one measure of expected

recreation benefit and one measure of expected economic benefit. Finally, the scale

described in Chapter 7 to measure subjective norms was a function of perceived social

pressures multiplied by the motivation to comply. In the measurement model only the

two measures of perceived social pressure were retained. In all other respects the draft

hypothesised measurement model followed the structure revealed by the exploratory

factor analysis described in Chapter 7.

In exploratory factor analysis, measurement variables are free to load on to any

factor but in confirmatory factor analysis the researcher specifies how the measured

variables relate to the latent constructs then tests the extent to which the hypothesised

model fits the data. Modification indices may indicate that alternative specifications of

the hypothesised model provide a better fit to the data or a more parsimonious model.

Inspection of the goodness-of-fit measures for the draft hypothesised model

indicated a poor fit. The Chi-squared value indicated a significant difference between

the data and the hypothesised model (χ2(265) = 966, p < 0.05), although this was to be

expected given the sample size, and the adjusted or normed Chi-squared value (χ2 /df)

of 3.6 was also outside the desirable range (between 1.0 and 3.0). Other indices

indicated a marginal fit between the data and the hypothesised model (RMSEA=0.053;

GFI=0.93; Standardised RMR= 0.046).

Inspection of the modification indices indicated that the fit and parsimony of the

model could be improved substantially by removal of four measurement items that had

loaded satisfactorily on to two factors using exploratory factor analysis described in

213

Chapter 7. Specifically, two of the measurement items intended to measure general

attitude toward the environment (Nep4 and Nep6) and two of the items that had been

used to form the scale representing attitude toward beach protection (prot4 and erosn7)

failed to meet the more discriminating criteria of confirmatory factor analysis. These

items were removed from the measurement model.

Table 8-9 presents the standardised structural equation coefficients for the

confirmatory factor analysis of the measurement model. All coefficients were

significant (p< 0.05) and the R-squared values indicated that, in most cases, substantial

amounts of the variance in the measurement item were explained by variation in the

latent construct to which it was related. However, it should be noted that four of the

measurement items in the model had R-squared values below 0.25 indicating that more

than 75 per cent of the item’s variance was not explained by the factor it was supposed

to measure. Despite these limitations the goodness-of-fit indices for the re-specified

measurement model showed a good fit to the data. The Chi-squared value was still

significant (χ2 (202) = 518, p< 0.05) but the normed Chi-squared value of 2.51 fell within

the desired range (between 1.0 and 3.0) and other indices also indicated an improved

and satisfactory level of fit (RMSEA=0.041; GFI=0.95; std. RMR = 0.035).

214

Table 8-9 Standardised path coefficients and R2 values for the confirmatory factor model

Label Description β R2

General attitude toward the environment (V1):

Nep1 The balance of nature is very delicate and easily upset by human activities. 0.81 0.66

Nep2 Modifying the environment for human use hardly ever causes serious problems. 0.34 0.12

Nep3 The earth is like a spaceship with only limited room and resources. 0.39 0.15

Nep5 Plants and animals have as much right as humans to exist. 0.49 0.24 Habit (V2):

V2c Habit – Consumer dimension (composite variable) 0.71 0.50

V2p Habit – Political dimension (composite variable) 0.79 0.62 Attitude toward erosion (V3):

erosn1 Beach erosion on the Gold Coast is a major problem for me as an individual 0.57 0.45 erosn2 Beach erosion is a major problem for the Gold Coast community generally 0.59 0.48 erosn3 Beach erosion on the Gold Coast does not concern me or worry me in any way 0.71 0.50 erosn4 Beach erosion is something we should only worry about when it happens 0.44 0.19 Attitude toward protection (V4):

prot1 Beach protection measures improve recreation values of the beach 0.78 0.60 prot2 Beach protection measures improve environmental / ecological values of the beach 0.74 0.55 prot3 Beach protection measures improve the appearance of beaches 0.78 0.61

215

215

Expected utility of outcomes (V5):

Util_rec Expected utility – recreation dimension (composite variable) 0.85 0.74 Util_eco Expected utility – economic dimension (composite variable) 0.77 0.59 Subjective norms (V6):

Norms1 Most people who are important to me would expect me to be willing to pay towards the costs of beach protection.

0.81 0.66

Norms2 Most people who are important to me would be willing to pay towards the costs of beach protection themselves.

0.79 0.63

Perceived behavioural control (V7):

pbc1 I have enough disposable income to pay an extra regional tax or levy to help finance beach protection if it was needed. 0.85 0.72 pbc2 I have so many other financial commitments at the moment it would be impossible for me to pay an additional regional tax

or levy to help finance beach protection. 0.80 0.65

pbc3 I could afford to pay an additional regional tax or levy to help finance beach protection. 0.85 0.74 Attitude toward paying for beach protection (V8):

Atpay1 It would be unfair to expect local residents to pay more to protect Gold Coast beaches 0.82 0.67 Atpay2 I would be opposed to any proposal that involved me paying extra to ensure protection of Gold Coast beaches 0.91 0.82 Atpay3 It is my right to have protected beaches and not something I should have to pay extra for 0.70 0.49

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8.3.2 Specification of the structural equation models

The measures of attitude and behavioural intention collected in this study were

compared with three alternative hypothesised models drawn from the attitude-behaviour

literature. The first of these models was Ajzen’s (1985) theory of planned behaviour.

This model proposes four latent variables; subjective norms, perceived behavioural

control, attitude toward the target behaviour and behavioural intention. This model,

together with the LISREL notation for model identification, is presented in Figure 8-2.

The second hypothesised model was an attempt to operationalise Eagly and

Chaiken’s (1993) composite model. In addition to the variables described in the theory

of planned behaviour (Ajzen, 1985) it proposed the addition of variables to represent

expected utility of outcomes, attitude toward the target (as distinct from attitudes

towards behaviours related to the target) and habit or past behaviour. Two aspects of

attitudes toward the target were measured and modelled; those related to beach erosion

(the problem) and those related to beach protection (the proposed solution). This model,

together with the LISREL notation, is presented in Figure 8-3.

The third hypothesised model extended model 2 by adding a variable to

represent higher order environmental beliefs and the effect of these on other antecedents

of behavioural intention. This model, together with the LISREL notation, is presented in

Figure 8-4.

The assumptions of multivariate normality and linearity were evaluated through

SPSS. The database had already been examined for multivariate outliers prior to

conducting the regression analysis and the results of this were described in Section 8.2.

No further outliers were identified in the database. Only the dependent WTP variable

was significantly non-normally distributed (Skew = 10.2) and this was corrected with a

log transformation (Skew = 0.73). There were 111 cases of missing data, which were

deleted through listwise deletion, leaving an effective sample size of 940.

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Figure 8-2 Hypothesised Model 1 showing LISREL notation

ξ1Subjective norms

ξ2Perceived

Behavioural Control

η1Attitude toward payingfor beach protection

η2Behavioural

Intention

Y4WTP$λY

42

X1Norm1

X2Norm1

λx11

λx

21

X3PBC1

X4PBC2

X5PBC3

λx32

λx42

λx 52

Y1att_pay1

Y2att_pay2

Y3att_pay3

λ y11

λy21

λy 31

ε1 ε2 ε3

γ12

γ11γ21

γ22

β21

ζ1

ε4

δ1

δ2

δ3

δ4

δ5

ζ1

218


ξ1Habit

η1Attitude towardbeach erosion

η2Attitude toward beach

protection

ξ2Expected utility of outcomes

ξ3Subjective norms

ξ4Perceived

Behavioural Control


η4Behavioural

Intention

X1V2C

X2V2C

δ1 δ2

λ x11 λ

x 21

Y11WTP$λY

11,4

Y1erosion1

Y2erosion2

Y3erosion3

Y4erosion4

λY 11

λY 21

λ Y41

λ Y31

ε1 ε2 ε3 ε4

ε5

Y5protect1

Y6protect2

Y7protect3

λY 52

λY

62

λ Y72

ε6 ε7X3

Util_rec

X4Util_econ

λ x32

λx 42

X5Norm1

X6Norm1

λ x53

λx

63

X7PBC1

X8PBC2

X9PBC3

λx74

λx8,4

λx 9,4

Y8att_pay1

Y9att_pay2

Y10att_pay3

λY

83

λY 93

λY 10

,3

ε8 ε9 ε10

γ21

γ12

γ22

γ32

γ34

γ33

γ42

γ43

γ44

β31

β32

β43

γ41

γ31

ζ2

ζ3

ζ1

ζ4

ε11

δ3

δ4

δ5

δ6

δ7

δ8

δ9

γ11

β21

219


ξ1General


η1Habit



protection

ξ2Expected utility of outcomes

ξ3Subjective norms

ξ4Perceived

Behavioural Control


η5Behavioural

Intention

Y1V2C

Y2V2C

ε1 ε2

λ Y11 λ

Y 21

X1

NEP1

X2NEP2

X3NEP3

X4

NEP4

δ1

δ2

δ3

δ4

λ x11

λx 41

λx31

λx21

Y13WTP$λY

13,5

Y3

erosion1Y4

erosion2Y5

erosion3Y6

erosion4

λY 32 λY 42

λ Y62

λ Y52

ε3 ε4 ε5 ε6

ε7

Y7

protect1Y8

protect2Y9

protect3

λY 73

λY

83

λ Y93

ε8 ε9X5

Util_rec

X6Util_econ

λ x52

λx 62

X7Norm1

X8Norm1

λx73

λx

83

X9

PBC1

X10PBC2

X11PBC3

λx94

λx10,4

λx 11,4

Y10att_pay1

Y11

att_pay2Y12

att_pay3

λY

10,4

λY 11

,4

λY 12

,4

ε10 ε11 ε12

γ11

γ21

γ31

γ22

β31

γ32

γ42

γ44

γ43

γ52

γ53

γ54

β42

β43

β54

β51

β41

ζ3

ζ1

ζ4

ζ2

ζ5

ε13

δ5

δ6

δ7

δ8

δ9

δ10

δ11

β21

β32

220

8.3.3 Model identification and estimation

For a system of structural equations to be properly identified the number of

unique elements in the model covariance matrix must exceed the number of parameters

to be estimated in the model6. Because the three hypothesised models used in this

analysis were recursive models (i.e. causal paths were hypothesised to flow in only one

direction) and had a relatively large number of measured and latent variables each of the

models was over-identified. This is desirable since over-identification allows the

software to find the solution that provides the best fit to the data (Kelloway, 1998). Only

one measured indicator of behavioural intention (the reported WTP value) was used in

each of the models so the variance of this indicator was fixed to zero to prevent model

identification problems and to enable calculation of the other model coefficients.

Following the procedures used by Joreskog and Sorbom (2002) maximum likelihood

estimation was employed to estimate each of the models using LISREL 8.52.

8.3.4 Testing goodness of fit and model re-specification

Each of the three hypothesised models was tested for goodness-of-fit and, where

appropriate, re-specified.

For model 1 the independence model that tests the hypothesis that all variables

in the model are uncorrelated was easily rejected (χ2(36, N=940) = 9,357, p < 0.05). All

paths in the hypothesised structural model were significant (p < 0.05) and, since this

model was a simple one in which all recursive paths were already identified, it was not

possible to improve the fit of the model. The final structural model with the

standardised structural equation coefficients is presented in Figure 8-5. Fit indices

indicated that the data fit the model well. Although the chi-square value was significant

(χ2(22, N=940) = 63, p < 0.05) this was to be expected, given the large sample size, and

alternative measures indicated good fit (RMSEA = 0.045; GFI = 0.99; SRMR = 0.027).

WTP increased as attitude toward paying for the proposed program became more

positive (std. coefficient = 0.30). Attitude toward paying became more positive as

subjective norms (std. coefficient = 0.34) and perceived behavioural control (std.

coefficient = 0.39) increased. While they were both significant, perceived behavioural

control (std. coefficient = 0.34) was a stronger predictor of final reported WTP than

subjective norms (std. coefficient = 0.18).

221

221

The independence model that tests the hypothesis that all variables in the model

are uncorrelated was rejected for model 2 (χ2(190, N=940) = 19,751, p< 0.05). Three paths

in the hypothesised model were found to have non-significant coefficients (p > 0.05)

and these were deleted. The final structural model with the standardised structural

equation coefficients is presented in Figure 8-6. Non-significant paths that were

proposed in the hypothesised model are shown as dotted lines. Fit indices indicated a

good fit between the data and this model. Although the chi-square value was significant

(χ2(152, N=940) = 392, p < 0.05) alternative measures indicated good fit (RMSEA = 0.041;

GFI = 0.96; SRMR = 0.034). Within the context of this model, previous environmental

behaviour (Habit) did not have a significant effect on attitudes toward paying for beach

protection or on stated WTP. The relationship between ‘Habit’ and attitude toward

beach protection was negative (standardised coefficient = −0.15) implying that those

who indicated higher levels of previous environmentally related behaviour were less

likely to support the proposed beach protection program. Attitude toward beach erosion

was a significant predictor of attitude toward paying for the proposed protection

program (std. coefficient = 0.10) but attitude toward beach protection was not.

The independence model that tests the hypothesis that all variables in the model

are uncorrelated was rejected for model 3 (χ2(276, N=940) = 21,593, p< 0.05). The addition

of a variable representing broad environmental beliefs to model 2 resulted in the

addition of two significant paths and one non-significant path to the model. The final

structural model is presented in Figure 8-7. Fit indices indicated a good fit between the

data and this model. Although the chi-square value was significant (χ2(232, N=940) = 572,

p< 0.05) alternative measures indicated good fit (RMSEA = 0.040; GFI = 0.95; SRMR

= 0.042). As respondents expressed greater concern for the environment generally they

also indicated higher levels of past environmentally related behaviour (std. coefficient =

0.57) and greater concern related to the target of beach erosion (std. coefficient = 0.31).

However, there was no significant effect of general environmental values on the more

specific target of attitude toward beach protection.

The LISREL output for each of the three Structural Equation Models is available

in the digital appendices on the CD at the back of this thesis.

6 For a k x k covariance matrix (where k is the number of variables in the model) there are k × (k-1)/2 unique elements in the covariance matrix.

222

Figure 8-5 Model 1 - Structural model showing standardised structural equation coefficients

ξ1Subjective norms

ξ2Perceived

Behavioural Control


η2Stated WTP

0.39

0.34 0.18

0.34

0.30

χ2 = 63, df = 22;

p value - 0.0000

RMSEA = 0.045

223


ξ1Habit



protection

ξ2Expected utility of

outcomes

ξ3Subjective norms

ξ4Perceived

Behavioural Control


η4Stated WTP

-0.15

0.54

0.18

0.21

0.35

0.23

0.14

0.41

0.25

0.35

0.57

χ2 = 392, df = 152

p value = 0.0000

RMSEA = 0.041

0.10

0.14

224


ξ1General


η1Habit



protection

ξ2Expected utility of

outcomes

ξ3Subjective norms

ξ4Perceived

Behavioural Control

η4

Attitude toward payingfor beach protection

η5Stated WTP

0.57

0.31

0.51

-0.15

0.16

0.21

0.35

0.230.14

0.34

0.25

0.22

0.58

χ2 = 572, df = 232

p value = 0.0000

RMSEA = 0.040

0.10

0.14

225


The final research question and three associated hypotheses addressed the ability

of expectancy-value attitude-behaviour theories to explain stated WTP in a contingent

valuation experiment. Each of the three hypotheses proposed an acceptable fit between

the attitude and stated WTP data collected in this study and three attitude-behaviour

models of increasing complexity. Goodness-of-fit measures for the alternative models

are summarised in Table 8-10. The goodness-of-fit measures indicated that the

experimental data provided an acceptable fit to models based on the theory of planned

behaviour (Ajzen, 1985), a more complex model similar to that proposed by Eagly and

Chaiken (1993), and an augmented version of that model. Thus, hypothesis 13, 14 and

15 were accepted.

Care needs to be exercised when comparing the efficacy of the alternative

models using structural equation modelling. Although the results indicated that each of

the models provided an acceptable fit to the data it was not possible to identify which of

the models provided the best fit. For direct comparisons to be made between goodness-

of-fit measures in structural equation models the models being compared must be

defined as ‘nested’ models. That is, they must contain the same measurement and latent

variables and differ only in the extent to which parameters between latent variables are

constrained (Kelloway, 1998). Each of the alternative models tested in this experiment

contained different variables and, therefore, different variance-covariance matrices

against which to compare the empirical data. Thus, the various fit indices are not

directly comparable. Measures of model parsimony are particularly misleading when

comparing different structural models and for this reason only the normed Chi-squared

statistic, for which it is possible to define an acceptable range of values, has been

presented in Table 8-10.

The data in this experiment indicated that expected utility of outcomes,

subjective norms and perceived behavioural control were the strongest predictors of

WTP. The strong mediating role of perceived ability to pay for the proposed good on

WTP directly, and indirectly via attitude toward paying, is consistent with the

hypothesised role of perceived behavioural control in the theory of planned behaviour

(Ajzen, 1985) on which the models tested here were based. The results of this study are

consistent with recent research by Ajzen et al. (2004) who found a good fit between the

226

theory of planned behaviour and attitude measures collected in a contingent valuation

study of student’s willingness to pay into a scholarship fund. This study and the Ajzen

et al. (2004) study both found perceived behavioural control to have the strongest

overall influence on reported WTP.

Table 8-10 Goodness-of-Fit measures for the alternative models

Goodness-of-Fit Measure Decision criteria for measures

Model 1 Model 2 Model 3

Absolute fit measures:

Likelihood ratio Chi-square (χ2) 63 390 573

degrees of freedom 22 152 232

p

p < 0.05 indicates poor fit but unreliable in large samples 0.000 0.000 0.000

Goodness-of-fit index (GFI) GFI > 0.95 = good fit 0.99 0.96 0.95

Standardised RMR (SRMR) SRMR < 0.05 = good fit 0.027 0.034 0.042

Root mean square error of approximation (RMSEA)

RMSEA < 0.05 = good fit 0.045 0.041 0.040

Incremental fit measures:

Adjusted goodness-of-fit index (AGFI)

AGFI > 0.95 = good fit 0.97 0.94 0.94

Normed fit index (NFI) NFI > 0.95 = good fit 0.99 0.98 0.97

Parsimonious fit measures:

Normed Chi-square (χ2/ df) Values between 1.0 and 3.0 acceptable

2.86 2.56 2.47

The second model, based on Eagly and Chaiken’s composite model (1993),

introduced variables representing attitude toward targets and previous behaviours, or

habits, to the theory of planned behaviour model (Ajzen, 1985). Attitude toward the

target of beach erosion (the problem) was only a weak predictor of attitude toward

payment, which is antecedent to the behavioural intention expressed in stated WTP.

However, attitude toward beach protection (the proposed solution) was not a significant

predictor of attitude toward payment. This result is consistent with theories of attitude

specificity (Fazio, 1989; Vining and Ebreo, 1992) and provides support for the

argument presented in Chapter 6 that these attitudes should be treated as separate

227

dimensions in investigations of attitudes and behavioural intention related to

environmental issues.

The data in this experiment indicated that higher levels of previous

environmentally related behaviour were associated with greater concern about beach

erosion but less support for the proposed beach protection program. The latter finding is

consistent with the expression of an ecocentric ideology and rejection of human

attempts to constrain natural processes like beach erosion (Pearce and Turner, 1990).

Further support for this interpretation can be found in the unsolicited comments made

on the survey forms by some respondents. One respondent wrote “Quit wasting money

trying to alter nature – beaches survived thousands of years before us – leave them

alone” (case#4011) while another wrote “Let nature take it’s course” (case#2122).

Finally, although Eagly and Chaiken’s composite model (1993) proposed that habit

should be a significant predictor of both behavioural intention and the antecedent

attitude toward the behaviour that was not supported by the data in this experiment.

However, in this experiment previous behaviour was measured at the general level and

behavioural intention and its immediate antecedent were measured in relation to the

specific issue of payment for beach protection. Thus, while this result does not the

support the relationship hypothesised in the Eagly and Chaiken model (1993), it is

consistent with theories of attitude specificity (Fazio, 1989; Vining and Ebreo, 1992).

In the third model a variable representing general environmental values was

added to model 2. Once again the relationships between this variable and others in the

model were consistent with theories of attitude specificity (Fazio, 1989; Vining and

Ebreo, 1992). While general environmental values were strong predictors of self

reported general environmental behaviour and of attitude toward the broad issue of

beach erosion they were not significant predictors of attitude toward the specific beach

protection program proposed in the contingent valuation scenario.

Within the limitations of structural equation modelling it was only possible to

determine that each of the alternative models tested here provided an acceptable fit to

the data collected in this experiment. The results of the regression analysis described in

Section 8.2 indicated that model 3 accounted for approximately 2.3 per cent more of the

variation in WTP than model 1 (Table 8-8). However, substantially more research effort

and expense is involved in collecting data related to the additional variables in model 3.

228

8.4 Summary

This chapter addressed the three central research questions and the associated

hypotheses of this thesis. The thesis set out to investigate the relationship between

attitudes and WTP in the context of a contingent valuation study and the effects of

information provided in a contingent market scenario on these.

The first stage of the analysis showed that alternative text and visual information

treatments had few effects on attitudes toward relevant targets and no effect on WTP for

the proposed good in this experiment. The only significant information effects were

seen in attitudes toward beach protection and these were only significant when

comparing extremes of information provision, i.e. when comparing scenarios containing

no photographs and no or brief text descriptions with scenarios that contained images of

severe beach erosion events. The analysis provided some evidence to support the

hypothesis of a photographic information effect that was independent of text

descriptions, but none to support a text effect independent of the photographic

treatments, implying that respondents had been more influenced by photographs than

text descriptions. Previous knowledge of beach erosion and protection issues among

participants was high and these results are consistent with Eagly and Kulesa’s (1997)

observations that previous knowledge has a moderating affect on attitude change when

people are presented with additional information.

The second stage of the analysis revealed that most of the variables identified in

attitude-behaviour models based on Ajzen’s (1985) theory of planned behaviour and

Eagly and Chaiken’s (1993) composite model were significant predictors of WTP in this

experiment. Past environmental behaviour, attitudes toward beach erosion and

protection, expected utility of outcomes, subjective norms, and attitude toward paying

for beach protection were all significant predictors of WTP. Only general environmental

attitudes were found to be unrelated to WTP and this is consistent with principles of

attitude specificity (Vining and Ebreo, 1992). The variables identified in an attitude-

behaviour model based on Eagly and Chaiken’s (1993) composite model were able to

explain approximately 49 per cent of the variation in WTP for a proposed beach

protection project in this experiment.

The final stage of this analysis set out to investigate the complex inter-attitudinal

relationships that indirectly affect WTP in a contingent valuation experiment. Data

collected in the experiment were compared with three attitude-behaviour models to see

229

if they provided adequate explanations of the relationships between attitudes and stated

behavioural intention in the form of stated WTP. The data collected in this experiment

showed a good fit to models based on the theory of planned behaviour (Ajzen, 1985)

and Eagly and Chaiken’s (1993) composite model.

The next chapter, the final chapter in this thesis, will discuss the implications of

the results of this research and present the concluding remarks.

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CHAPTER 9

CONCLUSIONS AND IMPLICATIONS

This chapter provides a synthesis of the study’s main findings and focuses on the

implications of the results for theory and practice. It starts by summarising the

conclusions relating to each of the three questions that the research aimed to address. It

describes the implications of these results, and of some of the incidental findings of this

research, for economic theory and for analysts and other stakeholders who conduct, or

use the results of, contingent valuation studies. Finally, it discusses some of the

limitations of this research and identifies opportunities for future research.

9.1 Conclusions about the research questions and hypotheses

This thesis aimed to address three major research questions and to test 15 related

hypotheses. The results of these tests were reported and discussed in Chapter 8.

Conclusions relating to each of the three research questions will be discussed in this

section.

9.1.1 Information effects on attitudes and WTP

The first research question considered the effect of information conveyed via

photographic images and text descriptions on attitudes toward and WTP for the public

good of a beach protection program. To some extent this question was stimulated by

observations by Loomis and du Vair (1993) and Schuman (1996) that respondents

might be highly sensitive to photographic images supplied in a contingent valuation

scenario and the NOAA panel’s recommendation that photographs should be rigorously

pre-tested before use (Arrow et al., 1993).

The results provided in Section 8.1.3 showed that while the information

treatments had a significant effect on respondent’s attitude toward beach protection they

had no effect on stated behavioural intention in the form of WTP. This suggests a strong

moderating effect on WTP of other variables and this was confirmed by the structural

equation modelling described in Section 8.3. Attitudes toward other related target

objects and behaviours, such as beach erosion and paying for beach protection, were

also generally insensitive to the information treatments.

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The experimental design used in the study enabled the researcher to test for

independent text and photographic information effects on attitude variables. There was a

significant effect on attitude toward beach protection that could be attributed solely to

the provision of photographic information, but this was only when comparing a control

treatment containing no photographs with one that provided photographs depicting

severe beach erosion. There were no significant effects that could be attributed solely to

providing alternative text descriptions of the good, even when photographic information

was absent all together. This suggests that participants in this experiment were more

influenced by photographs than by detailed text descriptions and may have been

following a peripheral rather than a central information processing route (Petty and

Cacioppo, 1984).

Overall, the participants in this study reported a high level of previous

knowledge about beach erosion and protection and, under these conditions, the observed

insensitivity to information is consistent with theories of attitude stability and the

moderating influence of previous knowledge described by Eagly and Kulesa (1997).

Further support for this explanation was provided by repeating the analysis while

controlling for previous level of knowledge and beach use in Section 8.1.4. Among

those who reported high levels of previous knowledge there were no significant

information effects from any of the treatments but among those who reported low levels

of previous knowledge there were significant information effects on attitudes toward

beach protection. Among those who reported high levels of beach use, there were a

number of information effects not observed in the analysis of the total sample including

significant effects on expected utility of outcomes and on WTP. These results are

consistent with expectancy-value attitude-behaviour models (Ajzen, 1985). In contrast,

among those who reported low levels of beach use there were no significant information

treatment effects on any of the variables and this suggests low relevance and low

involvement among this segment (Petty and Wegener, 1998).

9.1.2 Attitudes as predictors of WTP

The second research question asked whether attitudes toward relevant target

objects and behaviours were effective predictors of WTP in a contingent valuation

experiment. The research instrument used in the current study was designed to measure

variables that would allow experimental data to be fitted to three alternative expectancy-

value models; one based on Ajzen’s (1985) theory of planned behaviour; one based on

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Eagly and Chaiken’s (1993) proposed composite model, and; a third proposed

augmented model presented in Figure 1-1. As such, the data also allowed three

alternative regression models to be tested.

In the three variations of the model tested, all of the attitude and behavioural

variables, except general attitudes toward the environment, were significant predictors

of WTP. Consistent with expectancy-value models (Azjen, 1985), the variables that

were most proximal to the stated behavioural intention, such as attitude toward the

behaviour of paying for beach protection and perceived behavioural control, were the

strongest predictors of WTP.

Attitude and behavioural variables contained in the three models were able to

explain between 47.7 per cent and 49.8 per cent of the variation in the continuous WTP

variable and between 57.4 per cent and 63.8 per cent of the variation in the dichotomous

payment-principle variable. This is consistent with studies by Ajzen et al. (2004) and

Pouta and Rekola (2001) that have tested similar models and shows a substantial

improvement on the predictive ability of models using socio-economic variables

(Bateman and Langford, 1997; Whitehead and Blomquist, 1991).

9.1.3 Inter-attitudinal relationships on WTP

The third question that this research set out to address considered the effects of

inter-attitudinal relationships on WTP and asked whether data collected in a contingent

valuation experiment could be adequately explained by a formal expectancy-value

attitude-behaviour model.

Goodness of fit indices estimated through Structural Equation Modelling

indicated a good fit between the data collected in this experiment and models based on

the theory of planned behaviour (Ajzen, 1985), a conceptual model proposed by Eagly

and Chaiken (1993), and a third proposed augmented model presented in Figure 1-1.

The data in this experiment indicated that expected utility of outcomes, subjective

norms and perceived behavioural control were the strongest predictors of WTP. The

strong mediating role of perceived ability to pay for the proposed good on WTP

directly, and indirectly via attitude toward paying, is consistent with the hypothesised

role of perceived behavioural control in the theory of planned behaviour (Ajzen, 1985).

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9.2 Implications for research in contingent valuation

Figure 3-2 in this thesis presented a conceptual model of research in non-market

valuation as a framework for the literature review. Primarily this research set out to

investigate the processes by which respondents to contingent valuation questions form

construct values (the dimension labelled A in Figure 3-2). The research has also

contributed to interpretation of contingent valuation responses (labelled C in Figure 3-2)

and to debate about theoretical validity of the contingent valuation method (labelled E

in Figure 3-2). The contributions that this research has made to each of these three

dimensions will be discussed in turn.

9.2.1 Implications for research into formation of construct values

The research reported in this thesis represents one of the first attempts to test

information effects on both WTP and its antecedent attitudes using a formal attitude-

behaviour model. Reported WTP is a behavioural intention and an approach that

examines the effects of information provided in the contingent valuation scenario on the

attitude variables that precede the behavioural intention can reveal important

information about how individuals construct values for goods in a contingent valuation

experiment.

To the best of this researcher’s knowledge, this study was the first to test the

effects of photographic information treatments provided in the contingent valuation

scenario on attitudes toward and WTP for a public good. Previous research has shown

that WTP was insensitive to what Ajzen et al. (1996) described as ‘strong’ and ‘weak’

arguments provided by text descriptions (Boyle, 1989; Brown et al., 1995). This

research showed that, under conditions of high levels of previous knowledge, WTP was

also insensitive to varying levels of photographic information. Antecedent attitudes

were also largely insensitive to varying levels of photographic information. A

significant photographic information effect was only detected between extremes of

treatment on attitudes toward beach protection (the proposed solution).

This study was also the first to employ an experimental design that enabled the

researcher to compare text and photographic information effects and to examine the

combined effects of these communication devices on attitudes and WTP in a contingent

valuation experiment. The only significant information effects were observed on

attitudes toward the proposed solution but these effects were not carried through to the

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behavioural intention expressed in WTP. Analysis based on attitude-behaviour models

in Section 8.3 allows this observation to be explained by the mediating roles of

perceived behavioural control, expected utility of outcomes and subjective norms. This

shows that these variables have significant effects on value formation and expression in

a contingent valuation experiment.

9.2.2 Implications for interpretation of contingent valuation responses

The current research makes two contributions to the field of interpretation of

contingent valuation responses. First, this research developed and piloted an attitude-

behaviour model designed specifically to investigate the relationship between attitudes

toward relevant target objects and behaviours and the behavioural intention expressed in

stated WTP. Second, it demonstrated how formal attitude measures can be used to

identify protest and inconsistent responses.

The attitude-behaviour model that was proposed to provide a framework for this

study was presented in Figure 1-1 and was derived from Eagley and Chaiken’s (1993)

proposed composite model. However, in the proposed model, the single attitude

dimension described as ‘attitude toward the target’ was disaggregated into two separate

attitude dimensions; one related to the problem and one to the solution. In many

contingent valuation studies participants are asked to place a value on a proposed

solution to an environmental problem such as impaired river flows (Loomis, Kent,

Strange, Fausch and Covich, 2000) or coastal flooding (Penning-Rowsell et al., 1992).

This implies two attitude targets; the problem and the solution. Literature on attitude

specificity and compatibility (Eagly and Chaiken, 1993; Fazio, 1989) suggests that

attitudes toward these two targets may form discrete domains.

In the current study an individual who was concerned about erosion and

supportive of beach protection measures would represent the most likely combination of

attitudes. However, it is conceivable that an individual might express concern about

erosion but not be supportive of beach protection measures because they don’t believe

they work or because they believe that humans should not interfere with nature. The

four alternative combinations of attitudes to these two targets and their interpretation are

summarised in Table 9-1.

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Table 9-1 Potential attitude combinations toward beach erosion and protection Attitude target

Erosion (Level of concern)

Protection (Level of support)

Interpretation

High High Concerned about erosion and supportive of protection measures

High Low Concerned about erosion but doesn’t believe protection measures work

Low Low Doesn’t believe that erosion is a problem and doesn’t believe protection measures work

Low High Doesn’t believe that erosion is a problem but supportive of protection measures – inconsistent!

Although some refinement of the instruments used to measure attitudes toward

the problem and the solution in this study is still needed, the analysis in Sections 8.2 and

8.3 provided support for the independence of these two dimensions.

Although the current research did not set out to investigate the issue of protest

responses in contingent valuation studies, development of attitude measures based on

the model presented in Figure 1-1 allowed the researcher to explore alternative ways of

identifying protest and inconsistent responses in Chapter 7. Section 7.6 demonstrated

how attitude measurement items and composite variables can be used to identify protest

and inconsistent or irrational WTP responses. It showed that composite attitude

variables provide more stable and reliable measures of protest attitude than single items.

It demonstrated the importance of the market context and the perceived ability to pay

variable in identifying and treating protest responses. When a private goods market

model was adopted, and respondents who indicated that they were unable to pay were

censored, mean WTP was significantly higher than if a political market model was

assumed and those respondents were treated as genuine WTP responses. In addition, it

showed that approximately 12 per cent of the respondents in this study had reported

protest attitudes but still given a positive WTP value. This has important implications

for treatment of protest responses in a contingent valuation study since it is difficult to

justify censoring protest responses that are followed by a zero WTP value but not those

that are followed by a positive WTP value.

9.2.3 Implications for research into validity of contingent valuation methods

The theoretical validity of contingent valuation methods is assessed by

considering the degree to which WTP responses are consistent with theoretical

expectations. The theoretical validity of individual contingent valuation studies has been

236

assessed by the ability of theoretically relevant socio-economic variables to predict the

WTP response and this study conducted a similar test in Section 8.2.

Adoption of an attitude-behaviour framework provides three other indicators of

validity in this study. First, the strong predictive ability of relevant attitude variables

was consistent with attitude-behaviour theories (Ajzen, 1985; Eagly and Chaiken,

1993). Second, the observed interactions between information and previous knowledge

and information relevance were consistent with information processing theories (Petty

and Cacioppo, 1984; Petty and Wegener, 1998) and theories of attitude stability (Eagly

and Kuleasa, 1997). Third, the observation that proximal attitudes were strong

predictors of WTP while distal attitudes, such as those relating to the environment in

general, were not significant predictors was consistent with attitude specificity theories

(Fazio, 1989; Fishbein and Ajzen, 1975).

9.3 Implications for policy and practice

The results of this research have implications for stakeholders who apply

contingent valuation methods to valuation of public goods and those who use the results

in policy development.

9.3.1 Implications for researchers applying the contingent valuation method

This research has confirmed findings by other researchers (Boyle, 1989; Brown

et al., 1995) that WTP is insensitive to text information in the contingent valuation

scenario when previous knowledge of the good is high. Furthermore, it has shown that

WTP is also largely insensitive to photographic images when previous knowledge of the

good is high. Thus, some of the concerns expressed by Loomis and du Vair (1993),

Schuman (1996) and the NOAA panel (Arrow et al., 1993) about the potential of

photographs to introduce undesirable information effects may be exaggerated. This

implies that researchers investigating WTP for well defined goods for which previous

knowledge is expected to be high, do not need to incur the time and cost penalties

associated with extensive testing of communication devices containing photographic

images prior to conducting a study as recommended by the NOAA (Arrow et al., 1993).

This study has also demonstrated the value of combining attitude measures with

the contingent valuation experiment for confirming theoretical validity of the WTP data

and for identifying protest responses. Comparison of the three models tested in this

research in Sections 8.2 and 8.3 showed relatively simple models fit the data well and

237

there was minimal benefit from collecting additional data for more complex models. A

simple model based on the theory of planned behaviour (Ajzen, 1985) explained 47.7

per cent of the variation in WTP and required only 10 measurement items to be included

in the survey instrument. More complex models were able to explain up to 49.9 per cent

of the variation in WTP but these required substantially more data to be collected. For a

researcher who simply wishes to use attitude measures to provide support for the

validity of the contingent valuation process and WTP estimates, a simple model based

on theory of planned behaviour would provide sufficient evidence of consistency of

attitudes among respondents. Where the aim is to understand the attitudes and thought

processes underlying participant responses to a contingent valuation question, a more

comprehensive model would be able to contribute a deeper understanding of the inter-

attitudinal relationships that contribute to stated values.

Although regression analysis in Section 8.2 indicated that the two measures of

previous environmental behaviour (V2c and V2p) were significant predictors of WTP,

the path between the combined measure of previous behaviour and WTP was not

significant in structural equation models 2 and 3 explored in Section 8.3. Thus, a model

comprising variables 3 to 8 only would provide a compromise between models 1 and 2

that would provide most of the explanatory power of model two, enable analysis of

protest responses, and would require a total of only 22 attitude measurement items in

the instrument.

The exploration of protest responses in Chapter 7 raises some important

implications for researchers in how they identify and treat these responses. First, it

demonstrated the increased reliability of composite measures of attitude rather than

single item measures in identifying protest and inconsistent responses. Second it

demonstrated the value of decision tracking approaches based on composite attitude

measures to understanding participant responses. Finally, it demonstrated the

importance of perceived ability to pay and the choice of market model on treatment of

protest responses and resultant mean WTP.

9.3.2 Implications for policy makers

Contingent valuation studies are frequently important components of benefit-

cost analysis applied to public projects (Hanley and Spash, 1993) and government

stakeholders often wish to use the results of such studies in policy development and to

justify expenditure on public projects. The current research piloted a framework for

238

exploring resident attitudes toward proposed public projects that might be of interest to

policy makers. The results of the tests of information effects on attitudes and WTP

might also be of interest to those who seek to manage public opinion in relation to

controversial public projects.

Inclusion of formal measures of attitude, based on attitude-behaviour models of

the type used in this research, can generate rich data on public opinion related to a

public project. The recognition that attitudes relating to the project are not uni-

dimensional is important. The current study examined attitudes toward three related but

separate target objects and behaviours; beach erosion (the problem), beach protection

(the proposed solution), and paying for beach protection (the target behaviour). Almost

any combination of positive and negative attitudes toward these three targets is possible

and the data collected from residents can contribute to the policy making process and to

the strategies adopted to promote the project to the local population.

In Australia, major projects involving substantial investment of public funds are

often politically sensitive and local authorities seek to justify the expenditure to the

public through independent economic analysis and information campaigns (Raybould

and Mules, 1999). Public concerns that are identified through the use of attitude

measures like the ones used in this research can be systematically addressed in either ex

ante or ex post information campaigns relating to the project. However, the results of

the tests of information effects in this study indicate that, where public knowledge is

already high as a result of media coverage and extensive personal contact with the good,

attitudes are relatively insensitive to information and influencing public opinion would

require carefully planned strategies.

The results of this study indicated that a significant proportion of local residents

did not believe that beach protection strategies worked. This perception was largely

caused by observations that sand pumped onto Gold Coast beaches as part of past

nourishment programs appeared to be washed away easily by the next set of storms. In

fact, the sand remains in the system forming off-shore bars and is then slowly returned

to the beach during normal weather conditions so that the benefits of the project are

enduring (Tomlinson, 2001). This is a message that the local authority have worked

hard to communicate to local residents through media strategies.

239

9.4 Limitations

The research described in this thesis suffers from a number of limitations, some

intended and some unintended, relating to the characteristics of the proposed good, the

experimental design, and the sample. Each of these will be discussed briefly here.

9.4.1 Limitations relating to characteristics of the proposed good

The vehicle for this experiment was a proposed beach protection program and,

since 87.6 per cent of respondents indicated that they visited the beach at least once a

year, use values would be expected to represent a high proportion of the total values of

the proposed project. While high levels of beach use were expected, the high level of

previous knowledge that respondents claimed to have of beach erosion and protection

issues was unexpected. About 85 per cent of respondents claimed to have ‘sometimes’

or ‘frequently’ read about, seen directly or thought about beach erosion and protection.

These characteristics limit the extent to which results of the information treatment

effects found in this study can be extended to goods with which respondents have low

previous levels of knowledge and where non-use values are expected to represent a

large proportion of total values.

9.4.2 Limitations relating to the experimental design

This research adopted an experimental design to test the effects of seven

information treatments on attitudes and WTP. For logistical reasons limitations were

imposed on the range and types of information treatments tested in this research and on

the market context adopted.

Three limitations were placed on the information treatments used in the research.

First, the information treatments were limited to black and white photographs only to

control for the incidence of colour blindness in the community and for the effects that

different levels of colour saturation might have on respondents. Second, this study used

still images only and did not attempt to test the effects of moving images through video.

Third, all of the photographs tested in this research depicted relatively moderate levels

of erosion. The intention was to investigate respondent’s sensitivity to realistic images

of the marginal benefits of the proposed project and not to contrive shock responses by

presenting unrealistic images.

240

Finally, the contingent market was framed as a private goods market in which

respondents were asked to report their maximum WTP using a payment card. Within the

budget constraints imposed on this research it was not possible to extend the

experimental design to include alternative market contexts or payment mechanisms.

9.4.3 Limitations relating to the sample

While the sample collected in this research was suitable for the experimental

design, aspects of the demographic profile of respondents limit the extent to which the

WTP results in particular can be applied to the regional population.

The useable response rate of 64.8 per cent achieved by the household survey

conducted in this research was high and the sample size of 1051 was sufficiently large

to allow reliable analysis between the seven information treatments. The analysis in

Chapter 7 showed that there were no sample biases that influenced the tests of

information treatments. However, comparison of the demographic profile of the sample

indicated that the sample was not representative of the regional population of home

owners. Older residents who were retired from full time work were over represented.

The sample frame was also restricted to owner occupiers in the region of interest and

did not include local residents who rent property. This limits the extent to which

inferences can be made about attitudes and WTP for the proposed good in the total

regional population. If the aim of the research was to estimate regional consumer

surplus for the proposed good, the survey would have to be extended to cover residents

who were not owner occupiers and weightings applied to compensate for the

demographic bias in the sample.

The limitations identified in this section naturally identify some opportunities

for future research and these will be discussed in the next section.

9.5 Implications for further research

The limitations identified in the previous section relating to the characteristics of

the proposed good and the experimental design highlight a number of opportunities to

extend the research described here on information effects in contingent valuation. In

addition, the exploration of the relationships between attitudes and WTP identifies two

potentially valuable future research directions.

241

9.5.1 Research on information effects

First, research is needed to investigate the affects of visual images on attitudes

and WTP for goods for which respondents have low levels of prior knowledge to

complement the research described here. Controlling for relevance of the good in this

experiment showed that information treatment had no effect on attitudes among

respondents for whom relevance was low, suggesting low involvement. Thus, it would

be necessary to identify a population who have low previous knowledge of the good but

for whom the good is relevant. For the environmental good examined in this study,

tourist users of the beach who have not been exposed to local media coverage of beach

erosion and protection would be a suitable population.

Second, given the relative insensitivity of attitudes and WTP to images within

the context of this study, there may be some value in testing extreme images of

environmental damage in an attempt to identify an information threshold at which

attitudes and WTP are consistently affected.

Third, the limited range of black and white photographic treatments tested in this

research could be extended to include colour photographs and / or video presentations.

9.5.2 Research which combines measures of attitudes with contingent valuation

The use of measurement items to explore respondent’s attitudes and the relationship

between attitudes and behavioural intention raises questions about the affect that these

items have on the process of value formation. Pouta (2004) demonstrated that

respondents who answered questions about attitudes toward relevant targets before the

elicitation question reported higher WTP values than those who did not have to answer

the questions. Further research needs to be conducted to confirm Pouta’s (2004) results

under conditions of high and low previous knowledge and to investigate whether any

effect is a desirable and enduring one caused by assisting respondents to explore their

utility functions and report true values or an undesirable, and probably short term, effect

caused by activation of an affective response.

A particularly valuable application of attitude-behaviour models in contingent

valuation might be in investigating the relationship between attitude strength and stated

and actual WTP. Studies of criterion validity have found that stated WTP values for

public goods are consistently significantly higher than the actual financial commitments

made when the good is made available through a market mechanism (Brookshire and

242

Coursey, 1987; Brown et al., 1996; Byrnes et al., 1999; Kealy et al., 1990). Attitude-

behaviour models of the type used in this research could contribute to understanding of

this attitude-behaviour discrepancy. Within an attitude-behaviour model, that

incorporates the moderating affects of variables such as perceived behavioural control,

expected utility of outcomes and social norms, it may be possible to use attitude

strength as a means of calibrating stated WTP responses so that estimates of consumer

surplus more accurately reflect individual’s actual WTP.

243

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Appendix A

Summary of focus group questions and comments Description: Section 6.2 of this thesis described how five focus groups were used to generate attitude items related to target objects and behaviours relevant to beach protection. This appendix lists the four questions used to guide the discussion and summarises the responses from the groups.

Appendix A

Summary of focus group questions and comments

Question 1: How do you think local residents feel about beach erosion? • It only gets bad every few years. • When we were kids growing up we used to like playing on the slopes left by the

erosion. • I don’t think most people think about it. Only when we have a bad storm every couple

of years. • Unless you use the beach a lot it probably doesn’t affect you much. • There is nothing you can do about it. It is just going to happen. • It doesn’t look good for tourists. • I saw erosion in 1996 and that was really bad. Question 2: How do you think local residents feel about beach protection measures? • I think they would want to see more planting of dunes and things like that. • I don’t think there is much going on. • I don’t think most people know about it. • I saw the sand pumping at Narrow Neck and it looked a real mess. Pipes and

machinery all over the beach. But, the beach looks better after it. Question 3: In what ways do you think local people get value out of the beach? • A lot of people just walk on the beach. • A lot of local people use the beach as well as tourists. • I work in hotels. If the beach was washed away we wouldn’t get so many tourists and

I wouldn’t get much work. • It’s a good place for kids to play. At weekends you see a lot of families there. • I don’t use the beach much myself but a lot of my friends do and a lot of them work

in tourism as well. Question 4: How do you think local ratepayers feel about paying to repair beach erosion? • I suppose council just repairs it. • I don’t think people know they pay for it. • I think they get fed up with being asked to pay extra for everything. • It’s not fair that residents have to pay for it all. Tourists are the main users and they

should have to pay too. • I suppose it depends on how much it was going to cost them. If it wasn’t too much

people wouldn’t mind.

Appendix B

Photographs used in the pre-test experiment Description: Section 6.2.2 of this thesis described how five focus groups were used to assist in selection of the photographic images to be used in the survey instrument. Appendix B presents the Microsoft Powerpoint presentation used in this exercise. Participants in the exercise viewed each of the sixteen images once (for 10 seconds each) and on the second viewing they were asked to rate the severity of the beach erosion in each image on a ten point scale. Numbers in parentheses are the image ID’s and correspond with those shown in table 6-9

1

Appendix B

Perceptions of beach erosion

Record your assessment of

image 1

[1]


image 2

[6b]

2

Appendix B


image 3

[2]


image 4

[3]


image 5

[4]

3

Appendix B


image 6

[5]


image 7

[7b]


image 8

[3b]

4

Appendix B


image 9

[6]


image 10

[7]


image 11

[8]

5

Appendix B


image 12

[11b]


image 13

[9]


image 14

[10]

6

Appendix B


image 15

[11]


image 16

[12]

Thank you for your

assistance with this project

Appendix C

Pilot instrument (one example treatment)

Description: This appendix presents the pilot survey instrument for information treatment 7 (photographs depicting severe erosion and detailed text description) The pilot survey instrument was printed in A4 booklet form (i.e. A3 folded in half) with the photographs displayed on high gloss semi-photographic paper in the centre spread of the booklet.

Appendix C

1

7

A survey of beach use and attitudes

towards beach erosion on the Gold Coast

Complete this survey and the entry slip on the final page to

enter a draw for two $100 cash prizes.

Appendix C

2

Appendix C

3

Section 1 - About your use of Gold Coast beaches These questions ask you about your contact with the beach. Please place a tick in the relevant box to indicate your answer. 1. How important would you say the beach was to you? Not very important 1 2 3 4 5 6 7 Very Important

2. How important is proximity to the beach in your decision about where to live?

Not very important 1 2 3 4 5 6 7 Very Important

3. In the table below please indicate how often you visit each of the beaches listed on average each month in summer and winter.

Beaches Average visits per month in Summer

Average visits per month in Winter

Northern beaches: (Stradbroke Island, The Spit, Main Beach, Narrow Neck)

Central beaches: (Surfers Paradise, Broadbeach, Kurrawa, Mermaid, Nobby, Miami, Burleigh)

Southern beaches: (Tallebudgerra, Palm Beach, Currumbin, Tugun, Billinga, Kirra, Coolangatta)

4. These questions ask about your knowledge of beach erosion and protection. Please place a tick in the relevant box to indicate your answer. N

ever

Very rarely

Som

etimes

Frequently or a lot

I have read about beach erosion or protection strategies in newspapers or magazines. 1 2 3 4 I have seen beach erosion or protection measures with my own eyes. 1 2 3 4 Beach erosion and protection is something I have thought about. 1 2 3 4

Appendix C

4

Section 2 - Questions about environmental attitudes and activities Please place a tick in the relevant box to indicate your answer. How frequently do you do each of the following? N

ever

Very

rarely

Som

etimes

Frequently or a lot

Recycle paper, plastics, or glass. 1 2 3 4

Take into account the amount of packaging on goods you buy. 1 2 3 4 Switch products because of environmental reasons.

1 2 3 4 Read books or magazines about the environment.

1 2 3 4 Write to or telephone a public official about an environmental issue. 1 2 3 4 Subscribe to environmental publications.

1 2 3 4 Attend meetings on environmental issues.

1 2 3 4 Donate money to an environmental group.

1 2 3 4 Vote for a public official because of their pro-environmental stance. 1 2 3 4 Please indicate the extent to which you agree or disagree with each of the following statements by placing a tick in the relevant box. Strongly

disagree

Disagree

Slightly

disagree

Neutral

Slightly

agree

Agree

Strongly agree

The balance of nature is very delicate and easily upset by human activities. 1 2 3 4 5 6 7 The earth is like a spaceship with only limited room and resources. 1 2 3 4 5 6 7 Plants and animals do not exist primarily for human use. 1 2 3 4 5 6 7 Modifying the environment for human use hardly ever causes serious problems. 1 2 3 4 5 6 7 There are no limits to growth for nations like Australia. 1 2 3 4 5 6 7 Humankind was created to rule over the rest of nature. 1 2 3 4 5 6 7

Appendix C

5

Section 3 - Protecting our beaches Please read this section carefully. It describes some of the strategies for protecting Gold Coast beaches. Gold Coast beaches suffer from erosion resulting from storms, high tides and other natural processes. At times these erosion events have caused extensive damage. It is not possible to prevent these natural processes but we can minimise the short term and long term damage using a variety of beach protection strategies.

The Northern Gold Coast Beach Protection Strategy is one example of a program undertaken in recent years. This program involved beach nourishment through sand pumping, dune re-vegetation and protection, and construction of erosion control points to reduce loss of sand from the beach system. More than 1.1 million cubic meters of sand was dredged from the Broadwater and deposited on the beaches to widen the beaches in this area by between 30 and 50 meters and increase the volume of sand within the storm buffer. At Narrow Neck an artificial reef has been constructed using approximately 500 sand-filled synthetic bags, each weighing 300 tonnes. This program has produced a number of benefits. The wider beaches increase recreation space for beach users and are expected to reduce damage to beaches, dunes, parks, foreshores and private property when storms hit the Gold Coast. Re-vegetated dunes also contribute to storm protection and provide improved habitat for flora and fauna. The artificial reef acts as a barrier to sand migrating north out of the beach system and, in addition, it provides a recreational surfing site and has become a habitat for marine animals and plants. The photographs on the next two pages show some of the effects of this program on the beach.

Appendix C

6

Section 4 - Photographs of beach nourishment and protection

Examples of beach erosion on the Gold Coast in recent years.

Appendix C

7

Gold Coast beaches in 2001 after beach protection measures.

Appendix C

8

Section 5 - Your attitudes towards beach erosion and protection Strongly

disagree

Disagree

Slightly

disagree

Neutral

Slightly

agree

Agree

Strongly agree

Beach erosion on the Gold Coast is a major problem for me as an individual. 1 2 3 4 5 6 7 Beach erosion is a major problem for the Gold Coast community generally. 1 2 3 4 5 6 7 Beach erosion is something we should only worry about when it happens. 1 2 3 4 5 6 7 Beach erosion reduces the recreation value of the beach. 1 2 3 4 5 6 7 Beach erosion reduces the visual appeal of the beach. 1 2 3 4 5 6 7 Beach protection improves recreation values of the beach. 1 2 3 4 5 6 7 Beach protection improves environmental / ecological values of the beach. 1 2 3 4 5 6 7 Beach protection improves the appearance of beaches. 1 2 3 4 5 6 7 We should not interfere with natural beach processes. 1 2 3 4 5 6 7 I believe that beach protection does not work.

1 2 3 4 5 6 7 It would be unfair to expect local residents to pay more to protect Gold Coast beaches. 1 2 3 4 5 6 7 I would be opposed to any proposal that involved me paying extra to ensure protection of Gold Coast beaches. 1 2 3 4 5 6 7

It is my right to have protected beaches and not something I should have to pay extra for. 1 2 3 4 5 6 7 It is not worth paying money to protect beaches. 1 2 3 4 5 6 7

Appendix C

9

Section 5 - Your attitudes towards beach erosion and protection (cont.) Strongly

disagree

Disagree

Slightly

disagree

Neutral

Slightly

agree

Agree

Strongly agree

I do not believe that I will get any direct recreation benefit from beach protection measures on the Gold Coast. 1 2 3 4 5 6 7

I do not believe that I will get any economic benefit from beach protection measures on the Gold Coast. 1 2 3 4 5 6 7

I do not believe that any of my friends or family will get any recreation benefit from beach protection measures on the Gold Coast. 1 2 3 4 5 6 7

I do not believe that any of my friends or family will get any economic benefit from beach protection measures on the Gold Coast. 1 2 3 4 5 6 7

Most people who are important to me would expect me to be willing to pay towards the costs of beach protection. 1 2 3 4 5 6 7

Most people who are important to me would be willing to pay towards the costs of beach protection themselves. 1 2 3 4 5 6 7

Generally speaking, I try to do what those who are important to me want me to do. 1 2 3 4 5 6 7

For me to pay an additional living expense (either rent or rates) to help finance beach protection would be easy. 1 2 3 4 5 6 7

I believe that I could afford to pay an additional living expense (either rent or rates) to help finance beach protection. 1 2 3 4 5 6 7

Appendix C

10

Section 6 - Paying for beach protection

The Northern Gold Coast Beach Protection Strategy shows what can be achieved, but extending these strategies to all Gold Coast beaches would cost a lot of money. One way of collecting the money for increased beach protection is for the local council to impose an additional fee on all ratepayers in the region. This money could be paid into a special beach protection fund, similar to the bush preservation funds or environmental protection funds set up by some local authorities in Australia. Although this extra fee would be directly charged to property owners it is likely that the cost would be passed on to tenants in the form of increased rents. So, a scheme like this would result in increased living costs for all Gold Coast residents. Because the additional rates levy would be charged to owners of commercial property as well as residential property it would also result in increased costs for tourists. So tourists would pay their fair share towards beach protection too. If you could be sure that the extra money would be spent on the beach protection measures described above, how much would you be willing to pay in increased living costs per month? Please think about this question carefully. You should remember that any money that you have to pay into a beach protection fund reduces the amount you have to spend on other things. You should also remember that although Gold Coast beaches may become eroded without protection there will be other beaches in Australia that are not eroded.

All things considered, would you be willing to pay an additional living expense (rates or rent) to ensure that beach protection work was continued on the Gold Coast?

YES 1 NO 2

What is the maximum amount of money that you would be willing to pay each year in additional rates or rent to continue the beach protection work on the Gold Coast? In the space below please enter the maximum amount of money that you would be willing to pay each year to continue the beach protection work on the Gold Coast.

$ each year

Appendix C

11

Section 7 – Questions about you 1. What is your gender? Male 1 Female 2

2. How old are you? ______________

3. What is your nationality?

Australian 1

International 2 Please specify country of origin._________________

4. How many years have you lived on the Gold Coast? ___________

5. Post code or name of suburb in which you live: ______________

6. Are you: Yes No

a) A member of any environmental group e.g. Greenpeace, Surfrider Foundation etc? 1 2

b) A member of a Surf Lifesaving Club? 1 2

c) Currently employed in the tourism or hospitality industry? 1 2

This section will be detached from the survey for the draw.

My name is (first name only needed) ___________________ and I’d like to win $100 cash.

If I win please contact me by:

Telephone: _____________________________________

Email: _________________________________________

Prizes will be drawn on Monday May 13th2002.

Mike Raybould Room G01 3.41, Tel. 55528822, email: [email protected]

Appendix D

Photographic treatments used in the final survey instrument

Description: This appendix presents the photographs of Gold Coast beaches used in the final survey instrument to depict mild erosion, severe erosion and well maintained beaches following a beach protection project.

Appendix D

1

Photographs of before beach nourishment and protection scheme: Mild erosion

Appendix D

2

Photographs of before beach nourishment and protection scheme: Severe erosion

Appendix D

3

Photographs after beach nourishment and protection activities

Appendix E

Text treatments used in the final survey instrument

Description: This appendix presents the brief text description and the detailed text description, including explicit benefits, of the pilot Northern Gold Coast Beach Protection scheme that was used in the final survey instrument to communicate benefits of the proposed project.

Appendix E

Brief text description Detailed text description

Please read this section carefully. It describes some of the strategies for protecting Gold Coast beaches. Gold Coast beaches suffer from erosion resulting from storms, high tides and other natural processes. At times these erosion events have caused extensive damage.



This program involved beach nourishment through sand pumping, dune re-vegetation and protection, and construction of erosion control points to reduce loss of sand from the beach system. This resulted in wider beaches in the treated areas.

Please read this section carefully. It describes some of the strategies for protecting Gold Coast beaches. Gold Coast beaches suffer from erosion resulting from storms, high tides and other natural processes. At times these erosion events have caused extensive damage.




More than 1.1 million cubic meters of sand was dredged from the Broadwater and deposited on the beaches to widen the beaches in this area by between 30 and 50 meters and increase the volume of sand within the storm buffer.

At Narrow Neck an artificial reef has been constructed using approximately 500 sand-filled synthetic bags, each weighing 300 tonnes.


Appendix F

Final survey instrument (One example treatment)

Description: This appendix presents the final survey instrument for information treatment 7 (photographs depicting severe erosion and detailed text description) The final survey instrument was printed in A4 booklet form (i.e. A3 folded in half) with the photographs displayed on high gloss semi-photographic paper in the centre spread of the booklet.

7 Appendix F

A survey of Gold Coast residents’

beach use and attitudes toward

beach erosion

Please complete this survey and return in the reply-paid envelope supplied. For more information about this survey contact Mike Raybould on Tel: 07 5552 8822 or E Mail: [email protected]

Appendix F

Appendix F

Section 1 - About your use of Gold Coast beaches These questions ask you about your contact with the beach. Please place a tick

in the relevant box to indicate your answer. 1. How important would you say the beach was to you? Not very important 1 2 3 4 5 6 7 Very Important

2. How important is proximity to the beach in your decision about where to live?

Not very important 1 2 3 4 5 6 7 Very Important

3. In the table below please indicate how often you visit each of the beach areas listed on average each month in summer and winter.

Beaches Average visits per month in Summer

Average visits per month in Winter

Northern beaches: (Stradbroke Island, The Spit, Main Beach, Narrow Neck)

Central beaches: (Surfers Paradise, Broadbeach, Kurrawa, Mermaid, Nobby, Miami, Burleigh)

Southern beaches: (Tallebudgerra, Palm Beach, Currumbin, Tugun, Billinga, Kirra, Coolangatta)

4. These questions ask about your knowledge of beach erosion and protection. Please place a tick in the relevant box to indicate your answer. N

ever

Very rarely

Som

etimes

Frequently or a lot

I have read about beach erosion or protection strategies in newspapers or magazines. 1 2 3 4 I have seen beach erosion or protection measures with my own eyes. 1 2 3 4 Beach erosion and protection is something I have thought about. 1 2 3 4

Appendix F

Section 2 - Questions about your environmental attitudes and activities Please place a tick in the relevant box to indicate your answer. How frequently do you do each of the following? N

ever

Very

rarely

Sometim

es

Frequently or a lot

Recycle paper, plastics, or glass. 1 2 3 4

Take into account the amount of packaging on goods you buy. 1 2 3 4 Switch products because of environmental reasons.

1 2 3 4 Read books or magazines about the environment.

1 2 3 4 Write to or telephone a public official about an environmental issue. 1 2 3 4 Subscribe to environmental publications.

1 2 3 4 Attend meetings on environmental issues.

1 2 3 4 Donate money to an environmental group.

1 2 3 4 Vote for a public official because of their pro-environmental stance. 1 2 3 4 Please indicate the extent to which you agree or disagree with each of the following statements by placing a tick in the relevant box. Strongly

disagree

Disagree

Slightly

disagree

Neutral

Slightly

agree

Agree

Strongly agree

The balance of nature is very delicate and easily upset by human activities. 1 2 3 4 5 6 7 Modifying the environment for human use hardly ever causes serious problems. 1 2 3 4 5 6 7 The earth is like a spaceship with only limited room and resources. 1 2 3 4 5 6 7 There are no limits to growth for nations like Australia. 1 2 3 4 5 6 7 Plants and animals have as much right as humans to exist. 1 2 3 4 5 6 7 Humankind was created to rule over the rest of nature. 1 2 3 4 5 6 7

Appendix F

Protecting our beaches Please read this section carefully. It describes some of the strategies for protecting Gold Coast beaches. Gold Coast beaches suffer from erosion resulting from storms, high tides and other natural processes. At times these erosion events have caused extensive damage.




More than 1.1 million cubic meters of sand was dredged from the Broadwater and deposited on the beaches to widen the beaches in this area by between 30 and 50 meters and increase the volume of sand within the storm buffer.

At Narrow Neck an artificial reef has been constructed using approximately 500 sand-filled synthetic bags, each weighing 300 tonnes.


The photographs on the next two pages show some of the effects of beach protection programs on Gold Coast beaches.

Appendix F

Photographs of beach nourishment and protection

Examples of beach erosion on the Gold Coast in recent years.

Appendix F

Gold Coast beaches after beach protection measures.

Appendix F

Section 3 - Your attitudes towards beach erosion and protection Strongly

disagree

Disagree

Slightly

disagree

Neutral

Slightly

agree

Agree

Strongly agree

Beach erosion on the Gold Coast is a major problem for me as an individual. 1 2 3 4 5 6 7

Beach erosion is a major problem for the Gold Coast community generally. 1 2 3 4 5 6 7

Beach erosion on the Gold Coast does not concern me or worry me in any way. 1 2 3 4 5 6 7

Beach erosion is something we should only worry about when it happens. 1 2 3 4 5 6 7

Beach erosion reduces the recreation value of the beach. 1 2 3 4 5 6 7

Beach erosion reduces the visual appeal of the beach. 1 2 3 4 5 6 7

Beach erosion is a natural process and humans should not interfere with it by trying to impose artificial solutions.

1 2 3 4 5 6 7

Beach protection measures improve recreation values of the beach. 1 2 3 4 5 6 7

Beach protection measures improve environmental / ecological values of the beach. 1 2 3 4 5 6 7

Beach protection measures improve the appearance of beaches. 1 2 3 4 5 6 7

I don’t believe that beach protection measures work. 1 2 3 4 5 6 7

It would be unfair to expect local residents to pay more to protect Gold Coast beaches. 1 2 3 4 5 6 7

I would be opposed to any proposal that involved me paying extra to ensure protection of Gold Coast beaches.

1 2 3 4 5 6 7

It is my right to have protected beaches and not something I should have to pay extra for. 1 2 3 4 5 6 7

Appendix F

Section 3 - Your attitudes towards beach erosion and protection (cont.) Strongly

disagree

Disagree

Slightly

disagree

Neutral

Slightly

agree

Agree

Strongly agree

It is not worth paying money to protect beaches. 1 2 3 4 5 6 7

I do not believe that I will get any direct recreation benefit from beach protection measures on the Gold Coast.

1 2 3 4 5 6 7

I do not believe that I will get any economic benefit from beach protection measures on the Gold Coast.

1 2 3 4 5 6 7

I have enough disposable income to pay an extra regional tax or levy to help finance beach protection if it was needed.

1 2 3 4 5 6 7

I do not believe that any of my friends or family will get any recreation benefit from beach protection measures on the Gold Coast.

1 2 3 4 5 6 7

I do not believe that any of my friends or family will get any economic benefit from beach protection measures on the Gold Coast.

1 2 3 4 5 6 7

I have so many other financial commitments at the moment it would be impossible for me to pay an additional regional tax or levy to help finance beach protection.

1 2 3 4 5 6 7

Most people who are important to me would expect me to be willing to pay towards the costs of beach protection.

1 2 3 4 5 6 7

Most people who are important to me would be willing to pay towards the costs of beach protection themselves.

1 2 3 4 5 6 7

Generally speaking, I try to do what those who are important to me want me to do. 1 2 3 4 5 6 7

I could afford to pay an additional regional tax or levy to help finance beach protection. 1 2 3 4 5 6 7

Appendix F

Section 4 - Paying for beach protection

The Northern Gold Coast Beach Protection Strategy shows what can be achieved, but extending these strategies to all Gold Coast beaches would cost a lot of money. One way of collecting the money for increased beach protection is for the local council to impose an additional fee on all ratepayers in the region. This money could be paid into a special beach protection fund, similar to the bush preservation funds or environmental protection funds set up by some local authorities in Australia. Although the additional rates levy would be directly charged to residential and commercial property owners it is likely that the cost would be passed on to tenants in the form of increased rents. So, a scheme like this would result in increased living costs for all Gold Coast residents and tourists would also pay their fair share towards beach protection through increased costs for accommodation and other tourist services. If you could be sure that the extra money would be spent on the beach protection measures described above, how much would you be willing to pay in increased rates per month? Please think about this question carefully. You should remember that any money that you have to pay into a beach protection fund reduces the amount you have to spend on other things. You should also remember that although Gold Coast beaches may become eroded without protection there will be other beaches in Australia that are not eroded.

• All things considered, would you be willing to pay an additional cost to ensure that

beach protection work was continued on the Gold Coast?

YES I would be willing to pay something 1

NO I would not be willing to pay anything at all 2

• What is the maximum amount of money that you would be willing to pay each month in additional rates to continue the beach protection work on the Gold Coast?

In the table below put a circle around the maximum additional amount that you are sure you would be willing to pay each month or write any alternative amount in the box underneath.

Circle the value that represents the most you would be willing to pay each month

$0 $2 $5 $10 $20 $45 $95 $200

$0.50 $3 $6 $12 $25 $55 $120 More than $200

$1 $4 $8 $16 $35 $75 $155 Don’t know

Or write any alternative amount in the box below

$ each month

Appendix F

1. What is your gender? Male 1 Female 2

2. How old are you? ___________________

3. Post code or name of suburb in which

you live: ____________________

4. How many years have you lived on the

Gold Coast? ____________________

5. In which country were you born?

Australia 1

Overseas 2 Please specify

country of birth.____________________

6. What is your average annual total household income from all sources?

Less than $20 000 1

$20 000 - $39 999 2

$40 000 - $59 999 3

$60 000 - $79 999 4

$80 000 - $99 999 5

$100 000 – $119,999 6

$120 000 – $139,999 7

Over $140,000 8

7. Are there children under 15 years of age in your household?

Yes 1 No 2

8. Which of the following best describes your current employment status? Full time employed 1

Part time employed 2

Unemployed, seeking work 3

Retired 4

Home duties 5

Student 6

Other (please state) ………………. 7

9. What is the highest level of education you have completed? Primary School 1

High School (Grade 10/ Junior) 2

High School (Grade 12/ Senior) 3

Vocational Training, e.g. apprenticeship 4

College Diploma, e.g. TAFE 5

University undergraduate degree 6

University postgraduate degree 7

Other (please state) …..……….…… 8

10. Do you currently belong to any of the following groups? Tick if

applicable

Any environmental group e.g. Greenpeace, Surfrider Foundation etc. 10.1

A Surf Lifesaving Club 10.2

Currently employed in the tourism or hospitality industry. 10.3

Thank you for completing this survey. Please return it in the reply-paid envelope provided and don’t forget to enter the cash-prize draw

Section 5 – Questions about you The questions on this page will enable us to compare your responses with the general

population

Appendix G

Covering letters and postcards used in the data collection

Description: This appendix presents all the letters and postcards used to communicate with the sample in survey of Gold Coast households. Letter 1 accompanied the first copy of the survey instrument. The postcard was sent 7 days after the survey instrument to all addresses from which completed surveys had not been returned at that stage. Letter 2 was sent to all addresses in the sample frame from which responses had not been received 21 days after the initial mailing. A replacement survey instrument accompanied this letter.

Appendix G: Letter 1

Mike Raybould Direct telephone: (07) 5552 8822

Email: [email protected] (Date) (Name and address) The Gold Coast is well known for its beaches but we know very little about how local residents use and value the beach. This survey asks you about your use of the beach and your attitudes toward beach related issues like beach erosion and protection. I have only asked a small number of Gold Coast residents to complete this survey so your response is important. I hope that you will be able to help me by completing it and returning it in the reply-paid envelope supplied. Individual survey responses are anonymous and will be treated confidentially. The study is not sponsored by, or conducted on behalf of, any local authority body although a report containing a summary of all responses may be made available to relevant local authorities and community groups. As an incentive for completing the survey I invite you to enter the prize draw for two $100 cash prizes by completing the yellow entry slip enclosed with this survey. My contact details are supplied at the top of this letter. If you have any questions regarding the survey or the research please feel free to contact me. Thank you for your assistance. Mike Raybould Griffith University – Gold Coast

Privacy request

If you wish to be removed from this mailing list and receive no further mail, please let us know by ticking the box below and either fax this page to 07 5552 8507 or return it in the reply-paid envelope provided.

I do not wish to receive any further mail. Please remove me from your mailing list

Appendix G: Postcard reminder

Front

Back

Appendix G: Letter 2

Mike Raybould Direct telephone: (07) 5552 8822

Email: [email protected] (Date) (Name and address) About three weeks ago I sent a questionnaire to you that asked about your use of Gold Coast beaches and your attitudes toward beach related issues. To the best of our knowledge it has not yet been returned. Just in case the original has been lost in the post or mislaid I have enclosed another copy. The level of response to the survey overall has been very good but, because only a small number of randomly selected Gold Coast residents were sent the survey, it is important that as many people as possible have their say. The study is not sponsored by or conducted on behalf of any local authority body. I am an independent researcher and this survey is part of my PhD research. However, a summary of the results will be made available to interested groups. I hope that you will find time to complete the survey soon and return it in the reply-paid envelope supplied. There is still time to enter the prize draw by completing the yellow entry slip and enclosing it with your completed survey. If you have any questions regarding the survey or the research my contact details are supplied at the top of this letter. Please feel free to contact me. Thank you for your assistance. Mike Raybould Griffith University – Gold Coast

Privacy request

If you wish to be removed from this mailing list and receive no further mail, please let us know by ticking the box below and either fax this page to 07 5552 8507 or return it in the reply-paid envelope provided.

I do not wish to receive any further mail. Please remove me from your mailing list

Appendix H

Statistical Appendix: Summary of Logit and Tobit regression and Structural Equation Modelling

Description: This appendix presents a technical summary of the main statistical techniques used in this thesis.

Appendix H

1

Statistical Appendix: Logit and Tobit regression and Structural Equation Modelling

In this thesis logit and tobit regression analysis and structural equation

modelling were used to test hypotheses about relationships between the variables in the

proposed models. The choice of the alternative forms of the regression model and the

use of structural equation modelling require justification and a brief explanation of the

techniques.

The logit and tobit models

The second major question that this research aimed to address related to the

direct effects that attitudes toward a range of relevant target objects had on WTP for a

beach protection program. Regression analysis was used to test the significance of the

relationships between eight explanatory attitude and behaviour variables and two

alternative dependent variables. The first of the dependent variables was a dichotomous

response (‘Yes’ = 1, ‘No’= 0) to a payment principle question in which the respondent

was asked if they would be willing to pay anything at all for the proposed program thus

linear regression was not appropriate and logit regression was used to analyse this

variable. The second dependent variable was the respondent’s maximum WTP value

solicited through a payment card elicitation format in the final contingent valuation

experiment. This variable was non-normally distributed, being censored by zero, and

thus a tobit form of the regression model was used to analyse this data. The logit and

tobit models were both estimated using SHAZAM 9.0 (White, 2001).

Logistic regression uses binomial probability theory to predict outcomes where

the dependent variable is dichotomous. The procedure for calculating the logit

coefficient compares the probability of an event occurring (in this case the probability

of a respondent answering ‘Yes’ to the payment principle question) with the probability

of it not occurring (a ‘No’ response to the payment principle question). This is

expressed in the log-of-the-odds or logit function as follows:

Appendix H

2

iii

i XP

Pεβα ++=⎥

⎦

⎤⎢⎣

⎡−1

ln (6.1)

where α is the constant in the regression equation, β is the coefficient of the predictor

variables, X is a vector of predictor variables, and ε is the residual error term

(Tabachnick and Fidell, 2001, p.518). According to Ramanathan (1995, p.644), the

estimated probability that the ith individual (i=1,…,n) would respond positively to the

payment principle question is calculated by first exponentiating both sides of the

equation and solving for P to give:

)(exp11

εβα ++−+=

iXiP (6.2)

Logit coefficients are estimated using the iterative maximum likelihood method

in which the objective is to find the best linear combination of predictors that maximize

the likelihood of predicting the dichotomous outcome (Tabachnick and Fidell, 2001).

Logit regression produces similar output to standard multiple regression except

that the coefficients are interpreted by exponentiating them to produce an odds ratio for

each independent variable. The odds ratio indicates the change in the odds of the

observation appearing in a specific group associated with a one unit change in the

independent variable, when all other variables are held constant.

Since the conceptual framework adopted in this contingent valuation experiment

did not allow negative ‘compensatory’ values, the maximum WTP variable was

constrained at the bottom end of the distribution and there were many reported zero

WTP values. This distribution is expected in most contingent valuation studies and, as

Halstead, Lindsay and Brown (1991) demonstrated, the use of ordinary least squares

regression analysis on censored contingent valuation data results in biased and

inconsistent estimators. The tobit model is a censored regression model proposed by

Tobin (1958) for analysis of censored dependent variables.

In a contingent valuation experiment there are two types of observations. For

those who indicate a positive WTP value we are able to observe their actual scores on

the dependent variable but for those whose valuation is censored by zero the preference

Appendix H

3

is not fully observed, i.e. they might have had a negative value for the good meaning

they would actually require compensation to restore their personal utility. In effect,

according to Greene (2003, p.764) we are able to observe the following outcomes:

yi = yi* if yi

*> 0

yi = 0 if yi*≤ 0 (6.3)

where yi*

is the latent or unconstrained value and yi is the observed or stated WTP value

for subject i. In a contingent valuation experiment we are frequently interested in the

relationship between the latent WTP variable and a range of socio-economic, or in the

current study, attitudinal variables. Thus, we want to estimate the parameters of the

equation:

yi*

= β x′i +σεi (6.4)

for each of the i = 1, 2,…, N individuals, where , x′i is a vector of predictor variables, β

is a vector of tobit regression coefficients, and εi is a residual error term that is assumed

to be normally distributed with zero mean and constant variance σ2 (Smith and Brame,

2003, p. 381). For cases in which WTP is reported to be zero we know only the values

of the predictor (x) variables. For cases that reported a positive WTP we know both the

values of the predictor variables (x) and the dependent (y) variable.

The likelihood function of the tobit consists of the probability of observing

censored and uncensored WTP values and the density of the distribution of yi given that

it is positive (Smith and Brame, 2003). The probability of observing a WTP value that

has been censored at zero (i.e. that yi* is censored at zero or yi = 0) is given by:

Pr(yi = 0) = 1-Φ(βx′i /σ ) (6.5)

and the probability of observing an uncensored value (i.e. that yi* is above the censoring

threshold or yi > 0) is given by:

Pr(yi > 0) = Φ(βx′i /σ ) (6.6)

where Φ(⋅) is the standard normal cumulative normal distribution function.

The distribution of yi is observed among cases that report a positive WTP value

and it is estimated by:

Appendix H

4

{ } ( )( )⎟

⎟⎠

⎞⎜⎜⎝

⎛′Φ′

+′=>σβσβφ

σβ//

0i

iiii x

xxyyE (6.7)

where φ(⋅) is the standard normal probability density function and Φ(⋅) is the standard

normal cumulative normal distribution function (Verbeek, 2000, p.199).

Estimation of the tobit model is through maximum likelihood and Greene

(2003, p. 767) shows that the log-likelihood function for the tobit regression model is:

⋅⎥⎦

⎤⎢⎣

⎡⎟⎠⎞

⎜⎝⎛ ′

Φ−+⎥⎦

⎤⎢⎣

⎡ ′−++−= ∑∑

=> 02

22

01log

)(log)2log(

21

ii y

iii

y

xxyLogL

σβ

σβ

σπ (6.8)

The first part of the log-likelihood function corresponds to the classical regression for

the non-censored observations and the second part corresponds to the cases that stated

zero WTP.

According to Verbeek (2000) further treatment and interpretation of the tobit

coefficients depends upon the researchers interests but the coefficients need to be

interpreted with care. Tobit coefficients provide a measure of the expected effects on

the latent dependent variable yi* of a unit change in a given independent Xi variable.

This is because the coefficients are a function of the distribution of the observed non-

zero values weighted by the probability of observing a non-censored value and the

probability of observing a censored value. To overcome this problem McDonald and

Moffitt (1980) suggested a decomposition of the tobit coefficient into the two

components that enables investigation of the elasticity effects of changes in the

independent variables on the observed dependent values and the probability of

observing a non-zero WTP value.

The aim of this study was to investigate the significance of the direct

relationship between each of the attitude variables and WTP, thus the researcher was

interested in the sign and significance of the tobit coefficients, to see if they were

consistent with theoretical expectations, and not in their magnitude or elasticity effects.

Appendix H

5

Structural equation modelling

The third major research question that this thesis aimed to address related to the

complex interactions between the independent attitude variables and the dependent

WTP variable in the context of an attitude-behaviour model. Structural equation

modelling was identified as the most appropriate technique for analysing the indirect

relationships between variables posited by the attitude-behaviour models and for testing

the explanatory powers of the models. The structural equation modelling was

conducted using LISREL 8.52 (Joreskog and Sorbom, 2002).

Structural equation modelling is a multivariate statistical technique that can be

used to confirm, by hypothesis testing, the structural relationships between variables in

a model intended to represent some theoretical phenomenon (Byrne, 1998). Thus, it is a

confirmatory rather than exploratory technique in which the researcher starts with a

theoretical model and attempts to fit data to the a priori defined model. If the fit is

adequate the data can be said to support to the conceptual model.

A full structural equation model comprises two components: a measurement

model that depicts the relationships between the latent variables and their observed

measures (i.e. the factor analytic model) and the structural model that depicts the

relationships between the latent variables (Byrne, 1998).

According to Kelloway (1998) the main advantage of structural equation

modelling is that it allows for specification and testing of complicated multi-stage

models. Byrne (1998) identifies three specific advantages of structural equation

modelling over conventional multivariate techniques like multiple regression. First,

SEM is a confirmatory rather than exploratory technique which allows alternative

models to be compared statistically. Second, both observed and latent variables can be

used in SEM. Third, SEM allows the researcher to estimate the amount of measurement

error in the observed variables and correct for it.

According to Bollen and Long (1993) structural equation modelling comprises

five stages; model specification, identification, estimation, testing fit and

respecification. The first stage involves construction of a path diagram representing the

hypothesised causal relationships in the model. The diagram is then translated into a

Appendix H

6

series of simultaneous (regression) equations. Unlike ordinary least squares regression

which attempts to minimise the squared differences between predicted and observed

values for individual cases, SEM compares the variance / covariance matrices of the

data set with the matrix of predicted variances and covariances based on the conceptual

model.

No single measure has been found to adequately describe the adequacy of the fit

between a predicted model and empirical data. Instead a number of measures of

goodness-of-fit are commonly used to evaluate structural equation models in terms of

overall fit, comparative fit to a base model, and model parsimony (Ullman, 2001).

Models that fit the data well produce consistent results on many of the indices that are

calculated by LISREL and similar applications. Comprehensive descriptions of how

each of these measures and indices are calculated are beyond the scope of this thesis but

can be found in Hair et al. (1995) and Ullman (2001).

The simplest measure of overall fit is the likelihood-ratio discrepancy function

that compares the predicted variance / covariance matrices with the empirical and is

evaluated against a χ2 distribution. In contrast to most other statistical tests, the aim is

to find a non-significant difference (i.e. p > 0.05) which indicates an adequate fit

between the empirical and the conceptual models. However, Ullman (2001) cautioned

that the χ2 measure is sensitive to sample size and is only reliable for sample sizes

between 100 and 200. For large sample sizes Ullman warned, “…significant differences

will be found for any specified model” (2001, p.684). The effective sample size in the

current research was 940, thus evaluation of the absolute fit of the models utilised

measures such as the root mean squared residual (RMR) and the goodness-of fit index

(GFI) which attempt to adjust the likelihood-ratio discrepancy function for sample size.

Models with good fit have low RMR but the scale of the variable affects the size of the

residual, making them difficult to interpret, thus the standardised root mean squared

residual (SRMR) is calculated, and values of 0.08 or less are said to indicate good fit

(Ullman, 2001, p.702). The GFI has a range from 0 to 1 with values in excess of 0.9

indicating a good fit (Hair et al., 1995, p.684).

Appendix H

7

Comparative fit measures compare the proposed model with a baseline model,

usually the null model of completely independent variables. Common variations of

these indices are the adjusted goodness-of-fit index (AGFI) and the normed fit index

(NFI), for which values in excess of 0.9 indicate a good fit, and the root mean square

error of approximation (RMSEA), for which values below 0.05 indicate good fit and

values between 0.05 and 0.08 are considered acceptable (Hair et al., 1995, p.685).

Parsimonious fit indices indicate the efficiency with which the model predicts

the data. Commonly cited indices include the parsimonious goodness-of-fit index

(PGFI) and the parsimonious normed fit index (PNFI), for which high values indicate

greater levels of parsimony, and the Akaike information criterion (AIC), for which low

values indicate greater levels of parsimony. Measures of parsimony can also be used to

compare models but only where the models can be defined as ‘nested’, that is they

contain the same measurement and latent variables and differ only in the constraints

placed on paths between variables. The three alternative models tested in this study

were not nested models thus measures of parsimony were of limited value in the

analysis.

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