Ecological Economics 68 (2009) 1858–1863

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Ecological Economics

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ANALYSIS

Respondent uncertainty in a contingent market for carbon offsets

Sonia Akter a,⁎, Roy Brouwer b, Luke Brander b, Pieter van Beukering b

a Crawford School of Economics and Government, The Australian National University, Canberra, ACT 2601, Australiab Institute for Environmental Studies (IVM), Vrije Universiteit, Amsterdam, The Netherlands

⁎ Corresponding author.E-mail address: sonia.akter@anu.edu.au (S. Akter).

0921-8009/$ – see front matter © 2008 Elsevier B.V. Adoi:10.1016/j.ecolecon.2008.12.013

a b s t r a c t

a r t i c l e i n f o

Article history:

The main objective of this Received 7 May 2008Received in revised form 13 December 2008Accepted 15 December 2008

Keywords:Respondent uncertaintyContingent valuationPolychotomous choiceClimate changeCarbon offset

paper is to provide additional empirical evidence of what explains respondentuncertainty in contingent valuation (CV) and how this in turn affects stated willingness to pay (WTP). Airtravelers asked to pay a carbon travel tax to offset carbon emissions from flying were asked how likely it isthat they will actually pay if the tax is voluntary. When changing the market compliance imperative from amandatory carbon tax to a voluntary contribution, a third of all air travelers consider it unlikely they willactually pay their stated WTP amount. An ordered probit estimation approach is applied to identify thesources of respondent uncertainty. Besides the bid price, respondent sense of responsibility and belief in theeffectiveness of the voluntary carbon market are among the main reasons for the experienced uncertainty.

© 2008 Elsevier B.V. All rights reserved.

1. Introduction

The microeconomic theory of household behavior is based on theassumption that individuals know their preferences and are able torank their utility and, hence state a true value in terms of willingnessto pay (WTP) for any change in the quality of a good with certainty.However, the psychology literature on the prediction of taste andpreferences demonstrates that people encounter difficulties whenevaluating the future utility of a particular state of the world(Kahneman and Snell, 1992). Considering the growing empiricalevidence in the psychology literature violating and even contradictingstandard assumptions in expected utility theory, Hanemann et al.(1996) proposed a welfare model that incorporates an element ofuncertainty in behavioral intentions and individual response tohypothetical or experimental market situations as in contingentvaluation (CV). Hanemann et al. (1996) and other authors argue thatthe individual may not necessarily know her true value (t) of a goodwith certainty. Instead, this value falls in an interval [t−δ, t+δ], whereδ refers to the uncertain utility or preference component (δN0). Asrespondentsmaynot precisely know their trueWTP, this uncertainty isexpected to manifest itself in the error term of the estimated valuefunction: the higher the uncertainty, the higher the estimation andprediction error. In the case of an incentive compatible dichotomouschoice (DC) CV model, the probability that someone would agree topay a specific bid price depends on the error involved as follows:

Pr yesð Þ = Pr tizbidið Þ = Pr βXi + eizbidið Þ = Pr eizbidi − βXið Þ

ll rights reserved.

where t is still the true value, X is a vector of observable factorsexplaining individual preferences and values, β the associated fixedterms and ε the random error term. Ignoring respondent uncertaintyin stated preference valuation studies may result in measurement bias(Li and Mattson, 1995).

A variety of empirical measurement and treatment methods havebeen developed and applied for addressing respondent uncertainty inCV studies (e.g. Shaikh et al., 2007). The existing measurementmethods can be divided into two categories: the polychotomous (PC)and the numerical certainty scale (NCS) approach. In the PC approach,respondents are able to express their uncertainty during the choicetask by choosing from multiple choice WTP responses such as‘Definitely Yes’, ‘Probably Yes’, ‘Probably No’, ‘Definitely No’. On theother hand, in the NCS approach the standard DC ‘Yes/No’ WTPquestion is followed up by a numerical certainty scale from 1 to 10.Advocates of the latter approach argue that this method providesmore precise information about respondents' level of certainty. Basedon the PC method, a categorical or qualitative instead of quantitativemeasure of certainty is obtained. The PC method is argued to have theadvantage that it does not force respondents to overstate theirconfidence (Whitehead et al., 1998).

Although a considerable amount of research has taken place sincethe 1990s to develop methodologies to measure respondent uncer-tainty in CV studies and investigate the impacts of differentuncertainty calibration methods on welfare estimation, very little isknown about the underlying sources of uncertainty (Akter et al.,2008). Only a few attempts exist to explain the variation in self-reported uncertainty based on the NCSmethod. In this study, we use aPC approach to examine how self-reported uncertainty affectscontingent WTP values, and which factors help explain the likelihood

1859S. Akter et al. / Ecological Economics 68 (2009) 1858–1863

of actually paying through a voluntary contribution to offset thenegative climate change effects of flying in a hypothetical carbonoffset program. More specifically, the paper's main objective is to shedfurther light onwhat explains respondent uncertainty and how this inturn affects stated WTP. The purpose of the paper is not to re-addressappropriate preference uncertainty measurement and calibrationmethods. The findings presented in this paper are part of a widerstudy investigating air traveler demand for carbon offset programs,the results of which are presented elsewhere (Brouwer et al., 2008).Note that these published results do not address drivers of respondentuncertainty, which are addressed in this article.

The paper is structured as follows. Section 2 first provides anoverview of existing CV studies that attempt to explain sources ofrespondent uncertainty. Section 3 details the case study, followed by asummary of the general CV results in Section 4. The respondentuncertainty results and how these affect stated WTP are presented inSection 5. The outcomes of the econometric uncertainty model arepresented in Section 6. Finally Section 7 concludes.

2. Empirical evidence for underlying sources ofrespondent uncertainty

The empirical evidence in the CV literature over the past 15 yearssuggests that respondents are uncertain about their responses(e.g. Ready et al., 1995; Champ et al., 1997; Alberini et al., 2003).However, a theoretical model explaining why respondents areuncertain and what determines the observed variations in respondentuncertainty is non-existent. Unfamiliarity with the good in questionand the non-market valuation task at hand is usually considered oneof the most important reasons for respondent uncertainty. In turn, themore uncertainty in someone's preferences, the more their expressedpreferences will be subject to procedural and descriptive influences(Schkade and Payne, 1994). Fischhoff and Furby (1988) argue that a‘satisfactory transaction’ in the traditional neo-classical sense inwhichpeople are fully informed, uncoerced and able to identify their ownbest interests, can only take place if the environmental good, themethod of payment, and the constructed market are well defined andwell understood by the individual.

The important role of respondent prior knowledge of the good inquestion to reduce respondent uncertainty is witnessed in Loomis andEkstrand (1998). Respondent familiarity with the environmental goodis the only significant explanatory factor together with bid price. In amail survey 1600 US households were asked for a voluntarycontribution in terms of WTP for preserving the Mexican SpottedOwl and its habitat. Following a DC WTP question, a post-decisioncertainty scale from 1 (not certain) to 10 (very certain) was used toelicit the level of respondent uncertainty. An ordinary least squares(OLS) regression model on pooled data (both Yes and No responses)was applied to determine the sources of variations in the self-reporteduncertainty scores. One other (non-significant) explanatory factorincluded in this model was a dummy for whether the respondent hadvisited the area proposed for protection. A significant quadratic effectof bid price was found, implying that self-reported certainty is highestaround the lowest and highest bids, and lowest for intermediate bidlevels.

In another mail survey in Madison, Wisconsin, Champ and Bishop(2001) examined household preferences for a voluntary wind energyprogram from a local private electricity provider, targeting 2500 oftheir customers. A split sample approach was used to identify possibledifferences in household behavior under hypothetical and actualpayment scenario. The NCS method was applied to measure the levelof certainty for the group of respondents who were asked to pay forwind generated electricity under the hypothetical scenario. Orderedprobit regression results showed that, respondent perception of andattitude towards the proposed program were, in part, responsible forthe observed variation in the self-reported uncertainty scores.

Respondents in favour of the program and willing to pay the extracost expressed higher certainty levels. No other significant explana-tory factors could be detected.

A third and last study in which an attempt was made to identifyfactors underlying self-reported uncertainty, concerns another mailsurvey in New Hampshire and Idaho (Samnaliev et al., 2005). Inthis study 1600 households were asked for their preferencestowards paying a user fee to access public land. Both a NCS and athree-option based PC certainty choice format were used in a splitsample treatment to test for the effect of different certaintymeasurement techniques. Only the NCS responses were regressedon possible explanatory factors. Two separate logistic regressionmodels for Yes and No responses were estimated, where thedependent variable takes the value 1 if the certainty score for theYes or No response equals 10 (very certain). Similar results werefound in this study as in Champ and Bishop (2001). Respondentswho objected to the imposed user fees in principle were morecertain in rejecting the bid price than others, reflecting respondentgeneral attitude towards the hypothetical market, usually referredto as protest response in CV.

3. Case study description and survey design

The current case study takes place in the context of anticipatedglobal climate change and increasing carbon dioxide (CO2) emissionsin the aviation sector. Aviation uses fossil fuels and consequentiallyemits CO2 and other greenhouse gases (GHG), including methane andnitrous oxide. Fuel use in aviation is projected to increase at 3%/year.This is lower than the projected growth in passenger kilometers due tocontinuing improvements in aircraft efficiency. In comparison toterrestrial sources of emissions, however, aviation is recognized ashaving an enhanced global warming effect due to the altitude at whichaircraft fly (IPCC, 1999). This enhanced effect is estimated to bebetween two and four times the global warming potential of the CO2

emissions from aviation. Given the harmful and growing contributionof the aviation sector to the global stock of GHG, many airlinecompanies have launched an option that allows the passengers tocontribute towards carbon offsetting projects. Carbon offsetting is theact of balancing GHG emissions from one activity with purposefulGHG reductions from another activity. Such activities generallyinclude investments in reforestation, renewable energy and energyefficiency projects.

The global carbon market, designed to combat climate change byputting a price on CO2 and other GHG, operates under two differentsystems of compliance imperatives, namely mandatory and voluntary.Mandatory carbon markets are underpinned by national and regionallegislation, whereas in a voluntary compliance system individuals andbusinesses choose to offset their emissions as part of their own senseof environmental responsibility and carbon strategy. Importantdifferences are observed in terms of participation, the number oftransactions and the price of CO2 depending on the nature of thecompliance imperative. For example, in the mandatory carbon marketthe total volume of carbon transactions exceeded $60 billion in 2007whereas the value of total carbon transactions in the voluntarymarketwas slightly over $300 million (World Bank, 2008; Ecosystem MarketPlace and New Carbon Finance, 2008).

In the context of increasing CO2 emission levels in the aviationsector and different compliance systems of the carbon market, a CVsurvey was designed to investigate air travelers' preferences for apotential carbon travel tax. More than 400 air travel passengers fromaround the world were interviewed face-to-face at AmsterdamSchiphol airport about their travel behaviour, awareness of theenvironmental impacts of their travel behavior and their WTP for atree plantation program to offset their contribution to the emission ofGHG. Full details of the survey design and the sampling procedure arefound in Brouwer et al. (2008).

Fig. 1. Mean WTP across the different payment likelihood categories.

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Before introducing the valuation question, respondents wereprovided with information about anticipated global climate changeand the carbon offset program. Respondents were informed about therelative contribution of air traffic emissions compared to road traffic intotal global CO2 emissions/year and were briefed about a number ofpossible ways to avoid future climate change. At this stage, ahypothetical ‘Trees for Travel’ program was introduced. After adescription of how tree plantations help to store the CO2 emittedinto the atmosphere by airplanes, the respondents were asked if theywere willing to pay a carbon travel tax over and above their currentairplane ticket to support such a carbon offset program using a doublebound (DB) WTP question. The start bid varied between 5 and100 Euros/flight. Depending on their response to the start bid (yes orno), respondents were asked a similar second WTP question.

In view of the fact that the DB WTP does not measure maximumWTP, respondents were subsequently asked to indicate their max-imum WTP for the proposed carbon travel tax in an open ended (OE)format. The respondent uncertainty question was introduced in thispart of the questionnaire. Based on a 5-category PC question format(Extremely unlikely, Fairly unlikely, Not sure, Fairly likely, Extremelylikely) respondents were asked to indicate the level of likelihood thatthey would actually pay the stated OE WTP value if the carbon traveltax would be voluntary. Comparing OE and DC WTP values to avoluntary fund for forest protection, Veisten and Navrud (2006) findno difference between hypothetical and actual payments for the OEWTP values, also not when inducing truth-telling, only for the DCvalues, even though the hypothetical CV estimates were expected tooverstate ‘true’ WTP in the case of a voluntary payment mechanism.Other research examining respondent uncertainty using differentelicitation formats (Ready et al., 2001) shows that DC respondentswere less certain of their stated WTP (in this case for the avoidance ofepisodes of respiratory ill health) than respondents who answered thesameWTP questionwith the help of a more continuous payment card.

4. General survey results

Most interviewed passengers were male (60%), ranging in agebetween 18 and 83 years, with an average age of 38 years. 40% of therespondents traveled by plane for business, the rest for pleasure or acombination of business and pleasure. Respondents who traveled forbusiness purposes were explicitly asked during the interview toanswer the WTP questions as if they would have to pay for their airtravel and the additional bid price self. The sample population wasclose to the inter-regional passenger movements from Schipholairport. A high share of the interviewed passengers had the Dutchnationality (27%), followed by British (18%) and other Europeans(20%). Almost 20% of the interviewed passengers came from Asia, and12% from the United States and Canada. A small number of passengers(b5%) live in Australia, Africa and South-America.

Three quarters of all travelers were in principle willing to pay for acarbon travel tax in addition to the price of their current airplaneticket. These passengers were primarily motivated by a sense of moralobligation and responsibility to pay for their contribution to climatechange, concern about the environment in general and futuregenerations. As expected, a significant correlation exists betweenpassenger knowledge and awareness of the impacts of flying on theenvironment and concern about global climate change (r=0.476,pb0.001). Two thirds of the sample was both aware of the harmfulimpact of flying on climate change and, at the same time, concernedabout the negative impacts of climate change. Significant differenceswere found between respondents in terms of how responsible they felttowards contributing to climate change. One in every five respondentsdid not feel responsible for contributing to climate change, and one thirdsomewhat responsible. The rest (45%) considered themselves respon-sible or highly responsible. Two thirds of the sample agreed with thestatement that the environment has the right to be protected

irrespective of the costs to society. It is important to point out thatrespondents were asked to what extent they agree or disagree with thisstatementafter theywere asked to trade-off theirmoney incomeagainstthe public good involved during theWTP questions.We now turn to thespecific focus of this paper, the uncertainty reported by respondentsregardingwhether theywould actually pay their statedmaximumWTP.

5. The effect of uncertainty on stated WTP

As expected, respondents differed in terms of how certain theywere that they would actually pay a carbon travel tax to offset theirCO2 emissions due to flying. From the responses given to therespondent uncertainty question, it appears that respondents wereable to consider and admit to a difference in behavior when faced witha voluntary tax as opposed to a compulsory tax, even in thehypothetical setting of a CV study. The lack of respondents' confidenceabout their participation under a voluntary compliance systemindicates that hypothetical CV responses are consistent with beha-viour observed in actual markets. If the tax is not mandatory, only 35%was fairly sure they would pay and 10% was very sure (Fig. 1). Almost15% said it would be extremely unlikely they would actually pay. Onein every five respondents said it would be fairly unlikely they wouldpay, while another 20% was not sure. No significant differences can befound between air travelers from North America and Europe.However, the location and shape of the distributions across the PClikelihood categories vary significantly between air travelers fromEurope and Asia (Kolmogorov–Smirnov Z=1.360; pb0.050) andfrom North America and Asia (Mann Whitney Z=−1.881; pb0.060),suggesting cultural differences. Asian air travelers were less uncertainthat they will actually pay if the tax would be voluntary thanEuropeans, and more certain than North American travelers.

Examining the mean and median OE WTP values across these fivePC categories, the null hypothesis of equality is convincingly rejected atthe 5% level with the help of the Kruskal–Wallis (KW) andMedian test(KW chi-square=11.003; pb0.026; Median test chi-square=11.548;pb0.021). Mean OE WTP values and their standard errors arepresented across the PC categories in Fig. 1. Respondents who werenot very sure they would actually pay under a voluntary tax regimestated, on average, a slightly, but significantly higher (15%) OE WTP.MeanOEWTP for those respondentswhowere unlikely to actually payis 50 Euros/flight and for those respondents who were likely to pay43 Euros. Mean OE WTP for the whole sample, not accounting forrespondent uncertainty, is also 43 Euros/flight or 8% of the averageticket price paid by the air travelers in this sample. Trimming off the 5%minimum and maximum values, average WTP becomes around35 Euros/flight or 6% of the average ticket price. Relating the estimatedmean OE WTP values to the sample's travel distance and correspond-ing GHG emissions, average WTP is between 3 and 4 Euros/100 km ofair travel and 47 Euros/tonne CO2-eq.

Table 1WTP results with and without uncertainty calibration

MeanWTP

95% CI

WTP without uncertainty calibrationDouble bound WTP 23 19–27Open ended WTP 43 37–49

OE WTP with uncertainty calibrationExtremely unlikely=0 37 31–42Extremely unlikely and fairly unlikely=0 25 21–30Extremely unlikely, fairly unlikely and unsure=0 20 16–25Extremely unlikely, fairly unlikely, unsure and fairly likely=0 5 3–7

Table 2Random effects Tobit regression results

Variable Value range Parameterestimate

Standarderror

Pb

Fixed effectsConstant −125.590 35.755 0.001Flying frequency 1–60 (times/year) 0.596 0.209 0.004Start bid 5–100 (€) 0.367 0.085 0.001Household income 450–5000 (€/month) 8.022 4.285 0.061Price airplane ticket 10–3915 (€/ticket) 14.166 2.720 0.001Attitude paying 0–4 6.718 3.255 0.039

Random effectsSt. dev. uncertainty 8.394 4.168 0.044

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Using the information about respondent expected likelihood ofpaying to calibrate the estimated mean OE WTP value, the resultspresented in Table 1 are found. Uncertainty calibration means here therecoding of uncertain WTP responses to zero. In the DC CV literature,uncertainty calibration typically consists of the asymmetric recoding ofuncertain yes responses as certain no responses, hence reducingestimated WTP. As expected, the calibrated mean OE WTP values aresubstantially lower thanmean OEWTPwithout uncertainty calibration.Stepwise inclusion of the different PC categories in the calibrationprocedure yields steadily decreasing mean OE WTP values. A relativelyminor to moderate decrease of 14% can be observed when recoding‘Extremely Unlikely’ responses to zero only, while mean OEWTP dropssubstantially further when also recoding the ‘Fairly Unlikely’ (decreaseof mean OE WTP by 42%) and ‘Unsure’ responses to zero (furtherdecrease by 52%). Recoding the ‘Fairly Likely’ responses generates asubstantial drop in the mean OE WTP value (88%).

Table 1 also shows the mean WTP estimate obtained through theDB elicitation format (see Brouwer et al. (2008) for further details).Mean OEWTP is significantly higher than themean DBWTP value dueto (among other reasons as we will show below in the WTPmultivariate regression analysis) the anchoring of the OE WTP valueon the value cues provided by the DB WTP elicitation procedure. Thetwo values are in that sense not directly comparable1. Interestingly,the calibrated OE WTP values closely resemble the DB WTP estimate.The DBWTP estimate lies within the 95% confidence interval of the OEWTP values recoded based on the unlikely and unsure responses.

Turning to the OEWTPmultivariate regression results presented inTable 2 (estimated in Stata 10.0), both the current price paid for anairplane ticket and the start bid used in the DB WTP elicitationprocedure provide significant value cues. Given the censoring of theOE WTP values at zero, the WTP value function is estimated using aTobit regression model (e.g. Greene, 1993). Willingness to pay isfurthermore, as theoretically expected, significantly constrained byrespondent ability to pay measured through household income. Howoften someone flies and general disposition towards paying for theenvironment as a public good also have a significant positive impacton stated OE WTP. Of particular interest here is the role of self-reported likelihood of paying the stated OE WTP value if thecontribution would be voluntary. Including this as a separate randomvariable in the regression analysis, respondent uncertainty accountsfor a significant share of the unobserved heterogeneity in stated OEWTP between the identified likelihood categories. This is reflected bythe significant standard deviation for this randomvariable and impliesthat OE WTP values are significantly clustered around the PCcategories. The standard deviation of the error term has the usualmeaning and represents the remaining unexplained heterogeneity.Hence, part of the random error in the value function is picked up bythe self-reported likelihood of paying the carbon travel tax to offset

1 Previous research (e.g. Ready et al., 1996) typically shows that DC elicitationformats produce significantly higher WTP values than the OE format.

carbon emissions, indicating that not accounting for respondentuncertainty increases estimation errors.

6. Explaining respondent uncertainty

Following Champ and Bishop (2001), this study uses an orderedprobit model (through maximum likelihood estimation procedures inStata 10.0) to estimate a model in which the ordinal self-reportedlikelihood of paying is the dependent variable. Self-reported uncer-tainty merely reflects that one respondent is more (or less) likely thanother respondents to actually pay their stated WTP amount for thecarbon offset program if payment is voluntary. The responses to thisquestion do not provide any information about how much higher orlower the likelihood is that one respondent would actually paycompared to another respondent.

Based on the limited previous work in this area (see Section 2) andexpectations from cognitive psychology (e.g. Payne et al., 1999),respondent uncertainty or the likelihood of actually paying (L) isexpected to be a function of individual respondent characteristics suchas a priori knowledge and familiarity with the good in question KNOWand socio-economic characteristics RESPCHARS, including culturaldifferences between air travelers from different continents, policyscenario uncertainty POLICYUNCERT measured in this study throughrespondent belief in the effectiveness of the good provision in thevaluation scenario and protest beliefs, and uncertainty related to thebid price BID:

Li = β1KNOWi + β2RESPCHARSi + β3POLICYUNCERTi + β4BIDi + θi

In the ordered probit model, Li is assumed to be a linear combi-nation of the above mentioned regressors and the disturbance term θi,which has a standard Normal distribution N(0,1).

Several ordered probit models were estimated using backward andforward elimination techniques, including a variety of demographic,socio-economic and attitudinal sample population characteristics, suchas respondent occupation, education, household size, income, member-ship of an environmental protection organization, ticket price, therelative importance respondents attach to the climate change problem,flying frequency, distance traveled and purpose of the air travel. In viewof the fact that the statedOEWTPquestion followed aDBWTPquestion,possible response sequenceeffects (YY, YN,NYandNN)on the likelihoodof paying were also tested. However, no statistically significant effectcould be detected for any of the abovementioned variables. Respondentcharacteristics such as sex, age, and which continent the respondentscome from are also not statistically significant at the 10% level. Inaddition,whether theflightwas for business or pleasure, the respondentflew business or economy class, with or without family members didalso not have any influence on stated uncertainty.

St. dev. error term 43.584 2.049 0.001Model fit

Log likelihood −1202.150Wald chi square 81.34 0.001N 231

Table 3Ordered probit regression results for stated uncertainty levels

Variable Value range Parameter estimate Standard error pb

European air traveler 0–1 0.079 0.173 0.648Asian air traveler 0–1 0.368 0.226 0.103Sex 0–1 0.027 0.126 0.829Age 18–83 −0.003 0.005 0.503Knowledge 0–4 −0.081 0.053 0.124Attitude paying 0–4 0.199 0.073 0.006Responsibility 0–4 0.198 0.067 0.003Effectiveness 0–4 0.248 0.068 0.001Start bid 5–100 −0.004 0.002 0.043Model fit

Log likelihood −426.764LR chi square 51.68 0.001N 296

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InTable 3,wepresent themultivariate uncertainty regression results.We find a significant negative relationship between start bid and thestated likelihood of paying a voluntary tax. This finding supports ourinitial hypothesis, and corresponds with the results reported in Loomisand Ekstrand (1998) regarding the relationship between uncertaintyand bid levels. Whilst accounting for a variety of other explanatoryfactors, theuncertaintyexperiencedwhenasked topayavoluntary tax ishigher for passengerswhowere offered a higher bid price and value cuewhen going through the valuation task. Respondents were less likely topay voluntarily if they were initially asked to pay a higher compulsorytax. No significant quadratic effect can be detected as in Loomis andEkstrand (1998), only a significant linear effect based on the applied PCformat.

Conform the findings by Loomis and Ekstrand (1998), betterinformed respondents were expected to experience lower uncer-tainty. Here no significant relationship can be found. Besides askingrespondents how informed they feel about the relationship betweenflying and climate change in a closed-ended question and on a 5-pointmeasurement scale (0=not informed at all … 4=very informed),theywere also askedwhether they were aware of the impacts of flyingon the environment and if so which impacts (open-ended question),and whether they had ever heard of the Kyoto protocol and what theyknow about its objectives (again open-ended question). Thesealternative variable specifications also did not have a significantimpact on the self-reported likelihood of paying. A possible explana-tion may be that a majority of two thirds of the respondents feltsomewhat to very informed, only 13% said that they did not feelinformed at all. Moreover, respondents were provided detailedinformation about climate change and different possible climatechange mitigation measures including tree plantation during thesurvey. This information supply was extensively pre-tested (seeBrouwer et al. (2008) for more details).

Although no significant effect is detected of protest response onself-reported uncertainty levels as in Champ and Bishop (2001) andSamnaliev et al. (2005)2, we find evidence in this case study whichsupports the relationship between respondent attitudes and uncer-tainty levels. First, respondent perceived responsibility for contribut-ing to climate change as an individual had a significant positiveinfluence on the likelihood of actually paying stated WTP. A highersense of responsibility results ceteris paribus in a higher likelihood ofactually paying. Second, air travel passengers who believed that theenvironment should be protected irrespective of the costs were morelikely to pay a voluntary carbon tax than respondents who disagreedwith this. Note that respondents who agreed with this latter

2 Protest was measured among others by asking respondents to indicate on a Likertscale to what extent they (dis)agree with the statement that the environment shouldbe protected by law, not by asking people to pay for it.

statement were nevertheless willing to trade-off money incomeagainst the benefits of mitigating the impact of carbon emission due totheir flight, taking into account their limited income.

Finally, the regression analysis reveals that respondent belief in theeffectiveness of the proposed tree plantation program on climatechange mitigation has a highly significant positive impact on the self-reported likelihood of paying. This is interpreted here as respondenttrust in the good they are being asked to pay for. Respondents withlow trust in the good provided are less likely to actually pay if paymentconditions are voluntary than respondents with high trust.

7. Conclusions

The main objective of this paper was to provide additionalempirical evidence of respondent uncertainty and its underlyingdriving forces. To this end, a PC uncertainty elicitation format wasused in the context of a voluntary payment to offset carbon emissionsdue to flying. Comparing the results from the uncertainty modelestimated in this study with the limited available literature based onNCS approaches, we find that the PC responses are able to capturerespondent uncertainty in a fairly similar way. The bid price signif-icantly affects the likelihood of actually paying stated WTP if thehypothetical carbon offset market would be voluntary. The bid price inthemandatory carbonmarket provided an important value cue for thefollow-up OEWTP value, and significantly decreased the likelihood ofpaying if the market would be voluntary. Most importantly,respondent belief and trust in the good provided is one of the mainfactors underlying self-reported uncertainty, more so than respondenta priori knowledge and awareness, which had no significant impact onthe experienced uncertainty. This suggests that despite extensive pre-testing the survey did perhaps not fully meet the conditions of whatFischhoff and Furby (1988) labeled a ‘satisfactory transaction’.

When changing the market compliance imperative in this casestudy from amandatory carbon tax to a voluntary contribution, a thirdof all respondents consider it unlikely they would actually pay theirstated WTP amount. This finding resembles the situation in the realcarbon market where the transaction value in the regulated(mandatory) market was 200 times that in the voluntary market in2007. As a voluntary compliance system provides the participants theopportunity to free ride (or ‘free fly’ in this case), a potentialparticipation effect may have influenced consumers' decision-makingunder the voluntary compliance systemwhere passengers are willingto participate only if other passengers do so too. On the other hand,the theoretical expectation under a (hypothetical) voluntary paymentstructure is that the individual has an incentive to overstate WTP toensure actual provision of the public good in question (strategicbehaviour). Calibrating the OE WTP values in this case for thelikelihood of actually paying substantially reduced, as expected, meanWTP. Further research is needed, however, to establish a more reliablerelationship between self-reported respondent uncertainty underdifferent payment compliance regimes.

Acknowledgements

The useful comments from two anonymous referees are gratefullyacknowledged. We would also like to thank the students from theEnvironment and Resource Management Master's programme forconducting the CV survey. Any errors in this paper are the soleresponsibility of the authors.

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