| ELSEVIER Ecological Economics 21 (1997) 105-122

ECOLOGICAL ECONOMICS

ANALYSIS

Willingness-to-pay for Borivli National Park: evidence from a Contingent Valuation

Nandini Hadker *, Sudhir Sharma, Ashish David, T.R. Muraleedharan Indira Gandhi Institute of Development Research, General Vaidya Marg, Film City Road, Goregaon (E), Bombay, 400 065. India

Received I August 1995; accepted 28 July 1996

Abstract

A study was conducted to survey the residents of Bombay and elicit their willingness to pay for the maintainance and preservation of Borivli National Park (BNP) using the Contingent Valuation (CV) method. The CV method has come under considerable criticism on account of biases that are either inherent to, or generated by the survey process. The present study acknowledges those, and adopts techniques to either circumvent or then minimise them.

The authors pay special attention to hypothetical bias, starting point bias, embedding effects and part-whole biases. The authors argue that indeed it is possible to improve the quality of a CV by using special survey as well as statistical techniques so that CV results can be used for the purposes of realistic decision making. This validation of the CV becomes an important objective of the study.

Despite India being a developing country with medium to low income levels, the evidence suggested that people are willing to pay for preserving environmental amenities. Having statistically adjusted for embedding and anchoring effects, households are willing to pay exclusively for BNP, on average, Rs 7.5, per month, for the next five years. Extrapolating to the city of Bombay, this amounts to a substantial Rs 20 million each month for the next five years, or a present discounted value of in excess of Rs 1 billion, suggesting a strong interest in environmental conservation.

Keywords: Contingent valuation; Double-dichotomous bid; Starting point bias; Hypothetical bias; Embedding effects

1. Introduct ion

The usefulness of economic valuations with re- spect to the conservation and management of natural resources has been well documented in the literature

* Corresponding author. Fax: 91 22 840 2026. E-mail: sudhir@agni.emet.in.

0921-8009/97/$17.00 Published by Elsevier Science B.V. PIl S0921 - 8 0 0 9 ( 9 6 ) 0 0 0 9 4 - 8

(Pearce et al., 1994). When environmental amenities are not jointly consumed with other market goods, a revealed preference framework, rather than a behav-

ioral linkage framework, can help measure people's preferences for the amenity in question. The Contin- gent Valuation (CV) method offers a further advan- tage: it has the potential to estimate both use as well as non-use values (the latter are referred to as be- quest motivation, option values and existence values in the literature) associated with environmental

106 N. Hadker et al./Ecological Economics 21 (1997) 105-122

amenities. J Given that much of the world's precious natural resources lie in developing countries, it is ironical that relatively few economic valuations, and even fewer CVs have been done in these parts of the world. The status of such studies in India is no different.

The present study undertakes a CV of the Borivli National Park (BNP), Bombay. In the absence of other Indian CV studies, the authors borrowed exten- sively from the findings of studies that have been done in other parts of the world, especially in devel- oped countries. The recommendations of the Blue Ribbon Panel (Arrow et al., 1993) are taken as a guiding framework.

Despite the Panel Report, and the fact that the US Government 'legitimized' the use of CV as a tech- nique for benefit estimation in 1980, numerous sig- nificant criticisms remain. Numerous biases are asso- ciated with the CV method and its administration. 2 However, it is equally true that the demand for economic values for the environment has never been greater (Knetsch, 1993). Keeping in view the poten- tial problems with the CV methodology, a pilot phase was conducted to test the questionnaire on the target population. An attempt was made to minimise biases associated with CV administration through a careful design of the questionnaire. Those biases that could not be dealt with through the survey instru- ment were addressed at the analytical stage.

This paper is organized as follows: Section 2 provides a brief introduction to the Borivli National Park. Section 3 discusses the objectives behind, and the design of the Interview Schedule that the present CV survey used. Objectives of questions asked and the reasoning that went into their design are exam- ined. The preliminary statistical findings of the sur- vey and the analysis of ,the stated willingness-to-pay is presented in Section 4. Section 5 presents the procedure used to estimate true willingness-to-pay,

For an excellent critical description of the CV method, and a definition of the semantics, see Cummings et al., 1986; Mitchell and Carson, 1989; Pearce et al., 1994; Imber et al., 1991; Arrow et al., 1993; Bateman et al., 1993.

2 For a comprehensive survey of biases and their definition, see Cummings, 1986; Mitchell and Carson, 1989; Hoovenagel, 1994; Arrow et al., 1993; Knetch, 1993, and Diamond and Haufsman, 1994.

with a critical discussion of the main findings. Biases arising out of the influence of the starting bid, and from embedding effects are addressed econometri- cally. Conclusions are presented in Section 6.

2. Borivli National Park

The Borivli National Park is unique amongst the world's national parks. It is the largest reserve lo- cated within the boundaries of a metropolis. It occu- pies a total land area of 103.09 km 2. This accounts for a sizable one-fifth of the Bombay Metropolitan Region. More than 2.5 million people visit BNP annually, making BNP the highest visited national park in the country. Within the park lie the water bodies that supply drinking water to Bombay. BNP is also a home for a large number of endangered mammals, birds and reptiles.

Despite all these assets that the park houses, in recent years, the park management has been facing severe financial constraints. Subsequently, the poten- tial of the park as a recreational spot, and as a habitat for wildlife is deteriorating. Further, the Park's fringes are being threatened by illegal encroachments and deforestation. Given BNP's size, uniqueness and significance as a natural resource and the assets it houses, these occurences are truly unfortunate.

3. Interview schedule: objectives and design

Given the controversy that shrouds the Contingent Valuation (CV) method and the lack of any baseline estimates with which to compare CV-generated val- ues, it is the survey instrument that bears a major portion of responsibility towards validating the sub- sequent findings. Often, it is the survey instrument that is accused as responsible for propagating biases. To the extent that no baseline numbers exist through which CV-generated numbers may be 'objectively' judged, it is the instrument through which prefer- ences were measured that receives the skeptical at- tention and criticism. Thus the design, as well as administration of the survey instrument becomes cru- cial to the CV's validity and therefore, its usefulness as a tool for decision making. Hence, this section concentrates on the procedure that the present study

N. Hadker et al./Ecological Economics 21 (1997) 105-122 107

adopted to design its survey instrument, and the considerations that moulded its blueprint.

Face-to-face surveys conducted through an inter- view schedule rather than a questionnaire were cho-

3 sen over mail survey or telephonic survey.

3.1. Evolution of the Interview Schedule (IS)

The designing of the IS proved to be an intensive task. Given the presence of numerous biases associ- ated with CVs, it was felt necessary that the present study either control for them through the IS itself, or else, measure their extent, so that they may be controlled in the subsequent analytical stage. In the absence of Indian experience with CVs, it was not clear that data about certain preferences was even collectable. Nor was it clear initially, that respon- dents would be willing to give their time and atten- tion, let alone true preferences, to interviews such as these.

Given this apprehension, a pilot phase was con- ducted [for the main findings, see Hadker et al. (1995)]. Certain issues and concern areas became clear during and after the pilot survey. Subsequently, the IS underwent a series of significant changes. As recommended by the Blue Ribbon Panel Committee, the IS used in the final phase is reproduced in Appendix A.

The IS was designed keeping a number of objec- tives in mind. First, the IS would have to make the objectives of the interview clear. The respondents must be told clearly what the IS requires them to do. Second. the IS must be capable of recording the preferences which respondents are expressing--what they are saying and what they are not saying. It must be able to collect as much relevant information as

3 Despite this method being costlier, it has significant advan- tages. Mail surveys are found to have a low response rate (the percentage of questionnaires returned, duly completed) and it also suffers from self-selection biases. In the Indian setting, telephonic surveys would bias the sample towards upper-middle and higher income bracket people. Further, face-to-face surveys have the advantage that trained interviewers can actually interact with respondents, and can clarify their doubts to minimize non-re- sponse rates. They also have the added advantage that trained interviewers may judge the sincerity of respondents. Subse- quently, the quality of the data generated can be expected to improve.

possible. Third, the IS must be designed keeping in mind the biases associated with the CV method, so as to correct, estimate, or control for them, in the initial information collection stage itself. Fourth, the emphasis was on defining the valuation scenario (of degradation of BNP) as realistically as possible, and creating a credible market situation wherein respon- dents could state their WTP. Also, some questions here were deliberately designed to check for consis- tency of responses. This would help remove incon- sistent respondents from affecting subsequent analy- sis.

3.2. Information brochure

Information on the possibilities offered by the good is an important input into users' value forma- tion. To provide all respondents with the same level of information, so as to ensure that they were valuing the same good, all respondents were provided with the information brochures of BNP.

The brochure contained photographs of the park along with brief write-ups. The brochure highlighted the features of BNP, provided information about its vital statistics, its valuable flora and fauna, and then went on to describe some of the problems it is facing. Those who could not read English could still look at the photographs, while interviewers trans- lated the captions into local languages.

3.3. Administering the IS

Interviewers who were already well-trained and experienced during the pilot testing of the project were recruited. 4 In view of the objectives of the

4 Interviewers were degree college students of science, pre- dominantly biology and chemistry. They had been trained by the authors in three separate sessions during October and November 1994, prior to pilot testing. The sessions consisted of basic introductions to environmental economics, economic valuation techniques, and the Contingent Valuation Method in particular. Training sessions instructed interviewers about the numerous bi- ases associated with the CV method, and indeed with the inter- view process itself. The sessions also prepared them on how best to deal with those problems. A total of 35 students conducted interviews for the pilot phase. A debriefing session followed. Of these, 20 students were identified lbr the final phase. Another training session preceded the final phase in late December 1994. Interviews were carried out during January and February 1995.

108 N. Hadker et a l . / E c o l o g i c a l Economics 21 (1997) 105-122

project it was decided to interview residents of Bom- bay who were decision-making members (defined as eaming members of the household or above 21 years of age). After the pilot phase, which yielded a fairly homogenous sample, it was decided to interview at least 500-600 respondents for the final phase. Each interviewer interviewed 30 respondents, distributed around Bombay city. Interviews were conducted at various times of the day, and at various locations. Interviewers were instructed to interview a pre-fixed number of high-, medium- and low-income respon- dents corresponding to bid values. Three ISs were designed with varying double-dichotomous bids (Rs 5 -10-15 , 20-30-45 , and 45-60-75 for low in- come, middle income, and high income groups, re- spectively) (see Fig. 1 for the sequence of the bids). It was hypothesized that WTP will increase with income. 30% of the sample was randomly adminis- tered with bid values not corresponding to groupings based on income levels.

3.4. Discussion of the IS

At the outset, the interviewer introduced himself/herself to the respondent as a volunteer on behalf of the Indira Gandhi Institute of Development Research. Respondents were told about the nature of the institute and the work it was associated with. The nature of the interview was explained, and the issue of BNP was introduced. Confidentiality was guaran- teed. The respondent was also assured that responses were to be used for research purposes, that their co-operation to this effort was sought, and confiden- tiality would be maintained. The latter would per- haps act to counter social- and peer-desirability bias.

The first section of the interview contained a 'Personal Profile' section. This section was designed to gain information about the respondent's social, economic and demographic characteristics, and es- tablish a conversational rapport with the respondent. The section enquired into the age, gender, occupa- tion, education level, residential area, family size and income level of the respondent.

Section 2 contained questions to gauge attitudes on 'development' and 'environment' of the respon- dent. Roughly, three categories were made while designing these questions: one dealt with the ex- tremely 'green' people. One could expect them to

b (middle)

b (low) b (high)

\ \ No " ~ Yes No s

T<b(low) b(Iow)~T<b(mid) b(mid)~T<b(high) r~(high)

Fig. 1. Willingness-to-pay questioning sequence adopted. Explana- tion: Each respondent is first offered the middle bid [ b(middle)]. If the respondent volunteers to pay the bid amount, (s)he is then asked the higher bid [b(high)], and if not, is offered the low bid [b(Iow)]. So each respondent is offered two bids. The second (lower) half of the diagram comments on the respondent's true WTP. If the respondent is unwilling to pay both the middle and the lower bid, it can be assumed that his /her true WTP is even lower than the lowest bid. If the respondent rejects the middle bid but is willing to accept the lower bid, it can be assumed that his /her true WTP lies between the lower and the middle bid. If the respondent is agreeable to the middle bid, but not agreeable to the high bid, it can be assumed that the respondent's true WTP lies between the middle and the high bid. If the respondent is agreeable to both the middle as well as the high bid, his /her true WTP can be assumed to be equal to or exceeding the high bid.

have greater willingness-to-pay (WTP) for maintain- ing and preserving BNP. The second category of people who needed to be identified were those that were strereotyped as 'pro-development'. In the ex- treme, these people would vote for development programs irrespective of associated environmental costs. Another category that needed identification was one that lay between these two extremes, essen- tially those that would need a cost-benefit type of framework before deciding in favour, or otherwise, on development policies that would affect the envi- ronment.

An attempt was also made to gauge whether or not the respondent demonstrated intrinsic value for the environment and non-use values. These prefer- ences were measured on a five-point-scale ranging from 'strongly agree', 'agree' , 'neutral', 'disagree' to 'strongly disagree'. Interviewers were trained to listen to the respondent's answer carefully and then categorize the response in one of these categories.

In Section 3 interviewers presented respondents with the information brochures. Respondents were asked how 'new' the information in the brochure

N. Hadker et al. / Ecological Economics 21 (1997) 105-122 109

was to them. They were also asked to describe what they thought was 'valuable' about BNP. This ques- tion checked use- and non-use values. The hypothe- sis was that those who perceived greater value from the park would be willing to pay more for it, ceteris paribus. In the subsequent analysis, this information was used to study embedding effects.

At this point in the interview, respondents were provided with two placards, of Scenario A, if present trends that damaged BNP continued, and Scenario B, where the detrimental trends would be halted with the inception of Management Program. Scenarios A and B are reproduced in Appendix A. It is possible that respondents lack belief in the scenario that they are presented with, and this might affect WTP. Hence a question was asked to record this view. Respon- dents were also asked to state how severe, if at all, they believed damage from Scenario A (the scenario where BNP continued to suffer losses) would be.

Section 4 contained the questions on WTP. Re- spondents were asked to assume that an autonomous body, reputed for doing efficient and honest work undertook the task of protecting the National Park so that Scenario B was attained. The idea behind this insistence was to reduce the number of protest bids, and to elicit the exclusive WTP for BNP, rather than an all-encompassing value that covers all govern- mental execution of such projects. The credibility in the autonomous body, its dissociation from the gov- ernment, and its honesty were stressed. Respondents were informed that the set of questions concerned the ,funding of such an agency. To emphasize the fact that one needed commitment to the cause of natural resource protection and to simulate a situa- tion more akin to a real one, respondents were told that they were not being asked to make a one-time payment. Respondents were told that the set of ques- tions being asked of them needed consideration for the next 5-year period. In effect respondents were encouraged to think about their real preferences seri- ously before agreeing to the first bid they were offered without much thought. A date for collection was also specified to reduce the hypothetical nature of payment.

Further, respondents were instructed that (quoted from the IS): 1. The issues discussed here are only a few among many other environmental problems Bombay faces.

2. Borivli National Park is only one among India's great forest treasures. 3. Income is limited and has important alternative uses. 4. Focus must be solely on the Borivli National Park, not on other environ- mental issues, or other national parks around the country. India may be facing other environmental problems that you may be concerned about. However this interview is about Borivli National Park only. 5. There are other alternative recreational spots apart from Borivli National Park.

This list is important because it addresses people's budget constraints, possibilities that they make 'part-whole', 'embedding' and 'symbol' bias type miscalculations, or are overcome by 'warm-glow'. Respondents were also given the value of monthly as well as annual contributions, because the former seem smaller than the latter and cause fallacies in perceptions.

Respondents could either answer in the affirma- tive (accept the bid), in the negative (reject the bid), or have a 'no response'. Reasons for each response were recorded. Possible protest bids to do with who should pay (users, government, etc.) were also recorded. Following the double-dichotomous WTP questions, respondents were asked their maximum WTP. This would help the subsequent analysis to deal with range and anchoring effects better. Respon- dents were also asked what their preferred vehicle for payment was, in an open-ended question,

Respondents were asked if they were willing to contribute their time towards the maintenance of BNP. This provided an opportunity for those who could not pay for BNP but had the willingness to actually do service for the park. Tasks for volunteers involved working in the information centre, pa- trolling the park area, guiding tourists, etc. Respon- dents were asked how many days per year they would be willing to work in the park as such volun- teers. Their reasons for paying for the funding of the caretaking agency too were noted.

Lastly, respondents were asked what expenditure of the household they would reduce in order to make the payment for BNP. This again reminded respon- dents of the 'real' world where income and budget constraints operated. Following this, they were told that they could even revise their stated WTP at this point if they so desired.

110 N. Hadker et aL /Ecological Economics 21 (1997) 105-122

Section 5 was for the interviewer to complete. They were asked about the level of understanding and sincerity of the respondent. If interviewers were not confident about the respondenrs comprehension and sincerity, it was decided not to include that IS for further analysis. Finally, interviewers recorded the time, place, and date of the interview, along with the language in which it was conducted.

3.5. Preliminary findings

The preliminary findings and statistics of the sam- ple of 494 respondents are presented here. For a detailed discussion of the findings, see Hadker et al. (1995) A Contingent Valuation o f Borivli National Park, IGIDR Project Report.

The basic statistics of the sample are presented in Table 1; a discussion follows.

The sample had a mean age of 37.36 years, with respondents ranging from 21 to 64 years of age. More than 70% of the sample consisted of male respondents. The average years the respondents had lived in Bombay was 27.65 years. The mean house- hold size was 4.35 members and ranged from 1 to 16 members.

With respect to occupation, 54 (10.9%) respon- dents classified themselves as 'professionals', 76 (15.4%) as engaged in 'business' , 249 (50.4%) as doing 'service' , 76 (15.4%) as 'housewives', 13 (2.6%) as 'retired' and 26 (5.3%) as doing menial work. The latter category included domestic ser- vants, house maids, taxi drivers and street vendors.

Table 1 Basic findings, n = 494

Variables Mean Std dev Min Max

AGE 38.01 10.88 21 72 YRSCH 12.18 4.63 0 17 RSPINC 4970.55 4765.9 0 30000 HHSIZ 4.45 1.97 I 18 HHINC 8268.42 6653.29 200 60000 PCINC 2112.97 1974.24 150 25000 FNLWTP 20.3 28.19 0 166

AGE = respondenrs age in years; HHSIZ = the size of the house- hold; YRSCH = years of schooling the respondent has undergone; RSPINC = respondenrs monthly income; HHINC = household's monthly income; PCINC = per capita income of the household; FNLWTP = the respondenrs final and highest WTP.

About 22% of the sample had not visited BNP. Of those who had, 261 (52.8%) had visited once or twice so far, while 122 (24.7%) were frequent visi- tors.

With respect to educational qualifications, 62 (12.6%) respondents had obtained a Master's Degree or higher, and 182 (36.8%) had obtained a Bachelor's Degree. About 6% of the sample, (29 respondents) had received vocational training, 76 (15.4%) had a Higher Secondary Certificate, 134 (27.7%) had less than 12 years of schooling, and 11 (2.2%) were illiterate.

When asked if India should pursue development programs that hurt the environment, if environmental costs are small, 72 (14.6%) strongly disagreed, 148 (30%) disagreed, implying that they were rather 'green', and inclined strongly towards environmental protection, while 903 (18.2%) were neutral, 161 (32.6%) agreed, and 23 (4.7%) strongly agreed that India should pursue development programs if envi- ronmental costs were low. Effectively, a 38.3% of the sample was pro-development if environmental costs were low.

Only 19 (3.8%) felt strongly, while 77 (15.6%) felt that they should not have to invest in the environment, and sacrifice incomes and standards of living for the benefit of future generations. Sixty-one (12.3%) respondents were neutral. A sizeable 248 (50.2%) respondents disagreed and 89 (l 8%) strongly disagreed and felt that they should indeed have to pay now, to invest in the environment for the benefit of future generations.

On the subsequent question, 22 (4.5%) and 143 (28.9%) strongly agreed and agreed, respectively, that no matter what the environmental costs are, India needs to exploit her natural resource base to increase jobs and incomes. 56 (11.3%) respondents were neutral, while 190 (38.5%) and 83 (16.8%) respectively, disagreed and strongly disagreed with such a proposition.

With regard to the question about the relevance of panthers to the value of BNP, only 17 (3.4%) and 71 (14.4%) felt that the value of BNP was the same with or without panthers. While 104 (21.1%) were indifferent, a larger portion--235 (47.6%) and 67 (13.6%) disagreed and strongly disagreed.

Only 17 (3.4%), 52 (10.5%) and 51 (10.3%) strongly agreed, agreed and were indifferent, respec-

N. Hadker et al. / Ecological Economics 21 (1997) 105-122 11 I

tively, that 1000 hectares of BNP lost due to en- croachment is 'okay'. A much more sizeable group, 232 (47%) and 142 (28.7%) disagreed and strongly disagreed, respectively.

Asked if respondents should have to contribute to parks and nature reserves that they do not even visit, 40 (8.1%) and 116 (23.5%) strongly agreed and agreed that they should, while 65 (13.2%) respon- dents were neutral. Of the remaining, 219 (44.3%) and 54 (10.9%) disagreed, and felt that they should have to pay for environmental amenities, so that these may be preserved, whether or not they person- ally visited.

Of the sample, 261 (52.8%) strongly agreed that animals had a right to exist even if they may be of no use to human-kind. About 38% of the sample, (187 respondents) agreed, while only 12 (2.4%) were neutral. Of the sample, 27 respondents (5.5%) dis- agreed and 7 (1.4%) strongly disagreed.

The next section of the IS dealt with the specific problem of BNP. The respondents were given the information brochure. On the question of attributes of BNP that respondents valued, respondents could identify multiple aspects.

The most popular reason for visiting and preserva- tion was the quietude and aesthetic beauty of BNP which 425 (86%) valued; 123 (24.9%) valued the fact that BNP protected water bodies that supplied Bombay with drinking water; 208 (42.1%) valued BNP's natural flora and fauna; 68 (13.8%) valued its uniqueness; 111 (22.5%) remarked on its use as a get-away from Bombay city for the future genera- tion; 103 (20.9%) valued its historic and educational importance while 37 (7.5%) valued BNP because it was a frequently visited nature reserve for other visitors.

When respondents were presented with scenarios of damage (if business-as-usual continued and noth- ing was done to maintain and protect BNP), 232 (47%) respondents were 'very concerned' and 212 (42.9%) were 'a little concerned'. Only 50 (10.1%) claimed that they were 'not concerned'.

Respondents were presented with the scenario depicting a management strategy via which BNP could be improved. They were asked to judge these improvements against the severity of the damage from the business-as-usual, degradation scenario. With no action and no management plan, 194 (39.3%)

felt that the damage to BNP would be 'very severe', 205 (41.5) felt it would be 'severe', 84 (17%) felt it would be 'not so severe', while 11 (2.1%) felt it would be 'not at all severe'.

With respect to respondents' WTP for BNP, 290 (58.7%) rejected the first bid they were offered (the middle bid), 176 (35.6%) accepted it, while 28 (5.7%) gave no answer. When offered the lower bid, 260 (52.6%) of the respondents rejected the second bid they were offered (the lower bid), while 60 (12.1%) accepted it. Those respondents who accepted the first (middle) bid were presented the upper bid. Of these, 87 (17.6%) rejected it and 86 accepted it.

A number of protest bids were recorded. 123 (24.9%) respondents said that the government should pay for environmental preservation. More than 11% (57 respondents) said users and visitors of BNP should be made to pay, while 133 (26.9%) respon- dents said that their income was limiting their ability to pay. More than 9% did not respond to the offered bids and did not disclose why.

On the question regarding the motivation behind respondents' willingness to pay, about 21.6% of respondents wanted to pay for present use, and men- tioned several use values. More than 7% of the sample mentioned the importance of preserving BNP for the benefit of future generation. About 4% of the sample wanted to pay so that BNP would enjoy better management, which it deserved. 8.3% of the sample said that they were willing to pay because it was their duty to, because they felt guilt, or because they would get satisfaction from having paid to help BNP. A little more than 0.5% mentioned vicarious value, i.e., they valued the fact that other people visited BNP and that it was a popular recreational spot. More than 19% of the respondents said they were paying to help the 'cause of the environment'. This question had been designed to check for embed- ding effects where respondents were paying for the environment in general, rather than BNP in particular so that final valuation may be appropriately adjusted.

Only 138 respondents (28%) were willing to be volunteers for the BNP. Many of them however, expressed that it was unfortunate that due to time/responsibilities constraints, they were unable to volunteer, but that in principle it was a very good idea and they would have liked to be part of such a scheme. Respondents who were willing to volunteer

112 N. Hadker et a l . / Ecological Economics 21 (1997) 105-122

were willing to set aside about 6 days on average for volunteer work in BNP, usually on weekends, rang- ing from 1 to 104 days per year.

4. Analysing stated willingness-to-pay

This section discusses the willingness-to-pay that respondents stated. An analysis of the stated willing- ness-to-pay (SWTP) will provide an opportunity to check whether expectations as per economic theory hold. It also provides an opportunity to study the content and context validity of the interview sched- ule, to study if the questions asked were communi- cated to respondents accurately, if they responded to what they were asked, and if their replies fit into the expectations of standard economic theory.

In earlier CV surveys, certain variables have re- curred as significant, across studies and countries. These variables are the respondenrs income, visita- tion rate to the CV site, membership in a national 'environmental' club, preferences for environment- related activities, and attitudes (Bateman et al., 1993; Hoovenagel, 1994). Variables related to the above mentioned factors, as used in the estimation, are discussed here.

'YRSCH' denoted 'years of schooling', a vari- able created from the 'education' variable. VSTSCL denoted visitation rates to the park per annum. DAYS counted the number of days per annum respondents were willing to spend working as volunteers in BNP. YRSTY reflected the number of years the respondent had lived in Bombay.

A variable 'GREEN' was created from the atti- tudes of respondents to capture those that demon- strated environmentalist inclinations. The index was designed as follows: those respondents who wanted to reject development policies even when environ- mental costs were small, who wanted to sacrifice present income for investing in the environment so that future generations could benefit from it, who cared strongly that panthers in BNP added to BNP's value significantly, and who were strongly opposed to India disregarding even small environmental costs were given 'green' points (one each for each such 'green' response).

Another variable ' INDUS' representing those that wanted development policies for India now, even if

it meant substantial environmental costs, who did not consider that panthers added value to BNP, and who did not wish to sacrifice present income for environ- mental concerns so that future generations could benefit from it, was created by similarly assigning them 'development' points.

Those that valued BNP's uniqueness, its biologi- cal diversity, its role in protecting water bodies, and its potential as a good get-away for the future gener- ations, were willing to pay more for its preservation. A value scale 'VALSCL' that reflected the number of values respondents felt were embodied in BNP was created with a unit point added for each attribute of BNP valued. This variable too affected SWTP significantly.

CNCRN denoted the concern the respondent felt about BNP's present condition and SVRDAM re- flected how intense the damage being done to BNP was without an appropriate management strategy.

The basic statistics are listed in Table 2. An Ordinary Least Squares (OLS) regression was used to analyse SWTP. The regression revealed that the variables attained the expected signs as presented in Table 3.

AGE did not correlate with SWTP substantially, although it had a positive sign. The explanation that is commonly entertained claims that although old people discount the future heavily, as compared to the young, it is the old, not the young, who can spare the money to accept CV bids.

Table 2 Statistics of important variables

Variable Mean Std dev Min Max

AGE 37.36 10.51 21 64 YRSCH 12.52 4.36 0 17 YRSTY 27.65 13.32 1 64 HHSIZ 4.35 1.86 1 16 RSPINC 4872.86 4743.03 0 30000 HHINC 8350.28 6845.94 200 60000 CNCRN 1.52 0.61 I 3 SRVDAM 1.68 0.71 1 4 DAYS 5.85 14.62 0 99 VALSCL 2.34 1.63 0 7 GREEN 1.83 1.23 0 5 INDUS 0.53 0.75 0 4 SWTP 27.78 29.66 0 166 PCINC 2173.19 2089.51 150.0 25000

N. H adker et al. / Ecological Economics 21 (1997) 105-122 113

Table 3

Multiple regress ion est imates

Dependent var iable S W T P

Multiple R 0 .7178

R square 0 .5153

Adjusted R square 0 .4989

Slandard error 21.16

Analysis o f var iance

DF Sum of squares Mean square

Regression 11 155216.62 14 t 10.60

Residual 326 146004.94 447.86

F = 3 1 . 5 0 6

S~gnificance F - 0 .0000

Variables B SE B Beta T S i g T

D1ST 0.215 0 .126 0 .067 1.7 0.09

OCC 1 7.6 3.42 0.088 2.2 0.03

A T I ' 6 2.2 1.16 0.081 1.9 0.06

P R O T E S T - 16.12 3.68 - 0 .176 - 4.4 0.00

DAYS 0.163 0 .079 0.081 2. I 0 .04

PCINC 0 .002 6.0E - 4 0.205 4.8 0.00

"~ A L S C L 2.34 0.75 0 .129 3.1 0.00

£ N C R N - 5.49 2.06 - 0 .112 - 2.7 0.01

N O P A Y 3 - 20.29 2.76 - 0 .302 - 7.4 0.00

BID 0.46 0 .064 0.311 7.2 0.00

G R E E N 1.84 1.07 0 .076 1.7 0.08

Constant 1.05 6.13 0 .172 0.9

EDUSCL was positively correlated with SWTP and was significant, but was not included in the estimation as it correlated with per capita income. Years of stay in Bombay of the respondent did not correlate strongly with SWTP although it had a positive sign showing that those who stayed in Bom- bay longer were willing to pay more for BNP. All variables measuring income of the family/respon- dent correlated strongly with SWTP.

The concern for BNP (CNCRN) correlated very strongly with the respondent's perception of the severity (SVRDAM) of damage caused if steps were not taken to check BNP's degradation. Hence it was decided to use only CNCRN. The variable attained a negative sign as expected, as a smaller number de- noted higher concern.

Everything else constant, businessmen were will- mg to pay more than even professionals, as reflected by the variable OCCI. This finding has important policy implications because this is the group that has the capacity to finance environmental improvements.

Variable SEX correlated with years of schooling and occupations. It was decided to include the vari- able on occupation and drop SEX. Years of school- ing correlated with per capita income levels and was hence dropped. The variable INDUS did not add to the equation's explanatory power, nor was it signifi- cant. It was dropped.

Surprisingly, the variable DIST measuring how far the respondent lived from BNP attained a posi- tive sign, and was significant. The index created to reflect values respondent perceived in BNP was more significant than the values taken individually. Hence the index rather than individual variables were in- cluded in the subsequent estimation. The data sug- gested that the respondent's attitude regarding who should pay for nature reserves (ATT6) was signifi- cant, and an important variable, and was included as an independent in the regression equation.

The variable BID is highly significant, showing that the FNLWTP correlated strongly with the bid respondents were offered. This shows that respon-

114 N. Hadker et aL / Ecological Economics 21 (1997) 105-122

dents suffer from anchoring effects also known as starting point bias.

The variable PROTEST indicated that those who protested to the CV with respect to who should be paying for BNP's improvement and maintenance were not willing to pay. Indeed the variable attained a negative sign. Similarly the variable NOPAY3, representing those who believed that their income constrained their desire to pay for BNP, attained the expected negative sign. Both variables were highly significant.

The constant dropped out of significance once explanatory variables were added.

The R-squared is very encouraging. So is the F-statistic. This, despite measurement errors that are associated with primary data collection, especially with data concerned with social and personal charac- teristics of people. Also, although FNLWTP could not take negative values, the distribution estimated was from negative to positive infinity.

For the entire sample, using means of variables, the estimated willingness to pay for BNP is Rs 27.75 per month, per household.

4.1. Dealing with biases

4.1.1. Starting point bias Biases can be econometrically corrected if they

have been captured by a proxy variable. In the present study, the variable BID, for example, can be used to measure starting point bias. Including this variables in the estimation, we get a SWTP. To demonstrate:

SWTP = a + b ( x ) + c(BID)

Removing the effects of the BID variables, by setting BID = 0, we can get the actual WTP, as shown below:

SWYPactual ~-- a + b ( x )

In the present study, the BID variable is highly significant and implies that SWTP depends upon the bid respondents were offered. It is argued that the unfamiliarity of the respondent with the valuation process for an environmental amenity is responsible for such a bias. This is called the starting point or anchoring bias. In the present sample, a unit increase in the bid offered will increase SWTP by 0.46 units.

To remove the effect of starting point bias from SWTP, we estimate SWTP setting BID equal to zero. This reduces SWTP to about Rs 14.

4.1.2. Embedding effects Embedding effects arise when the respondent pays

not just for the good in question (BNP) but rather, for all of the environment, as a whole. This effect is known as embedding, or as the part-whole bias. If the sample suffers from embedding effect, the SWTP does not refer exclusively to BNP but for other goods, as well as other good deeds as well.

To address part-whole/embedding effects, and remove SWTP that is not specific to BNP, we set the value scale of BNP to zero (to reflect those that were WTP although they said they did not attribute value to any of BNP's assets). This reduces the qualified SWTP further by about Rs 5.5, to a about Rs 8.50.

5. Analysing true willingness-to-pay

Statistical analysis of data from the CV survey is carried out to estimate the welfare measure from BNP's preservation, and to test the construct valid- ity. The estimation methods used are dependent on the purpose of analysis and the type of data col- lected.

In CV surveys there are three distinct methods of asking a valuation question: (i) 'open ended' ques- tion, where the respondent is asked to quote the sum; (ii) 'sequential bids', where the respondents are asked whether or not they are willing to pay the specified sum. The sum is continuously bid up (down) if the respondent says yes (no) till the respondent says no (yes) to the sum; and (iii) 'close ended', the respon- dents are asked whether or not they will pay a single specified sum.

The open ended question format has been argued to give unreliable answers as the respondents may be unfamiliar with questions that the CV survey asks. Also, this format is not able to address possible strategic behavior on the part of the respondents. The 'close-ended' format gives a value to the respondent which is easier to evaluate. Secondly its 'take-it-or- leave-it' format precludes possible strategic behavior on respondents' behalf. In the open-ended format, as the explained variable (willingness to pay) is directly

N. Hadker et al. / Ecological Economics 21 (1997) 105-122 115

observed and is a continuous variable, it is easier to analyze. However, in a close-ended format what is observed is a proxy variable for the WTP and is a qualitative variable (the respondent's decision in- volves a dichotomous choice, the answer is either a 'yes ' or a 'no') . This necessitates the use of qualita- tive choice models for subsequent analysis.

Bishop and Heberlein (1979) used the 'close- ended' (CE) format and a logit model to analyze the data. Hanemann (1984) exploited the similarity of CE data and the qualitative response models to give a utility-based interpretation of the respondent's de- cision and a framework for the derivation of a welfare measure. The respondent evaluates the utility in the two states, the pre-payment state and the post-payment state, and if he finds the utility in state 1 to exceed the utility in state 2 then he would refuse the offer or else accept it.

Hanemann's formulation does not afford estima- tion of absolute parameters for the TWTP function (Cameron, 1988). The estimated equation gives the probability of respondent's accepting or rejecting a bid value.

One can evaluate the following integral to extract the WTP function:

E(WTP) = f ~ " b . g ( b ) db

= f ~ m ( 1 - G ( b ) ) d b

C,(b) and g(b ) are the CDF and PDF of the bid value, respectively. The G(b) function is equivalent to the estimated distribution function for the yes /no response. G(b) =- F ( r x , l ) :

E(WTP) = f0xm(1 - F ( r l x , l ) ) db

For the equation form of the E(WTP), a close- lbrmed solution of the integral should exist. This poses problems for confidence interval estimation.

Cameron and James (1987) and Cameron (1988) gave an alternative formulation which exploited the variation of the bid values across the sample. She assumed the unobserved continuous dependent vari- able to be the true WTP (TWTP) for the resource. TWTP is the area under the compensated demand function for the resource, between base price and the choke price. One can estimate the absolute parame- ters of the equation and the estimated equation can be interpreted the way an OLS is. McConnell (1990)

showed that Cameron's welfare estimation is based on expenditure functions whereas Hanemann's is based on the utility function, and hence are duals of each other.

We have adopted a Double Bounded Dichoto- mous Choice (DBDC)5 formulation as it is more information intensive and is asymptotically more efficient than the single bounded dichotomous choice formulation (Hanemann et al., 1991). The underlying valuation function, following Cameron, is the TWTP function of the respondent. The respondent uses this valuation function to evaluate the two bid amounts offered to him in a sequence.

The following functional form was used for the TWTP: TWT P = x'/3 + e. The probability that the re- spondent will accept the bid offered is given by 6:

Pyy = P ( b m <_ TWT P andb~ < T W T P )

= P ( b m <_ TwTp/b u <- YwTP ) * P ( b u < TwTP)

= P(bL, < TwTP) = e ( b o <x' f l + E)

= P(e>_ b u - x'/3)

= P ( z > ( b , , - x ' ~ ) l o - )

= 1 - ~ [ ( b , , - x ' f l ) / o ' ]

Pyn = P ( b m <_ TWT P and b u > TwTP)

= , V [ ( < - x ' t 3 ) l ~ ) - q ' ( ( b , . - x ' . e ) / o ' ]

P.y = e ( b , <_ TwTP andbm >__ TwTp)

= - - * [ ( b , -

P., = P ( b ~ > - T w T p a n d b L > - T w v p )

= P(b,n > TwTp/b , > TwTP) * P ( b , >_ rwTv)

= P ( b, >_ TWTP)

' P [ ( b , - x ' ~ ) / ~ ]

5 In D B D C format the respondent is offered two bid amounts in

sequence. Second bid amount is dependent on the answer to the

first one. b m = the first bid amount , b u = second bid amount if the

first bid is accepted ( > bin). b I = second bid amount if the first

bid is not accepted ( < b m). 6 The ' L I F E R E G ' utility in the ' S A S ' package is used. It

a l lows analys is o f such a l ikelihood function as: Y = x'/3 + o-E and

is a s tandard distr ibution and ~r is its scale parameter , b = bid

level (1 = low, m = middle, h = high). The error term E random

variable with distr ibution N(0 ,c r ) .

116 N. Hadker et a l . / Ecological Economics 21 (1997) 105-122

The following Log-Likelihood function is maxi- mized:

L = ( r i P . . • n P . y • r l P y ° , r i P , )

Cameron and Quiggin (1994)have argued that the valuation function used to evaluate the first bid and the second bid may not be the same and hence a more general model is in order. Their argument is that the second bid is contingent on the first bid and hence is not randomly chosen. Though it is true that the second bid value is endogenous in the sense it is dependent on respondent's response, it should not affect the valuation function of the respondents.

5.1. Characteristics determining WTP

The TWTP is assumed to be a function of the respondent's personal characteristics and income level. The absence of markets and substitutes for markets where environmental goods can be traded suggests that one cannot use price in the demand function. Income levels indicate the capability of paying for the good and one would expect an in- crease in WTP values with increasing income. Re- search into attitude-behavior linkages have shown that well-formed attitudes are good indicators of a person's actual and intended behaviors. The degree of congruence is higher if the person perceives that h is /her peers in society consider it a 'good' cause (social and peer desirability bias). Closely associated with this bias is the 'warm-glow' effect discussed earlier. Qualitative attitude variables were included to explain peoples' WTP. The attitudes recorded were based on a person's stand on development versus environment, use and nonuse values of forests and on 'representative' questions such as the ethical question of the existence of animals. For example, a person favoring not postponing the costs of natural resource use, perceives both use and nonuse value and believes that animals have a right to exist irre- spective of their use to humans, is expected to have higher WTP compared to others.

The formulation of a person's WTP depends upon the benefits s / he sees in preserving the park. People were asked to spell out the benefits they got from BNP's existence. These responses were used to for- mulate a 'value scale' variable. It is expected that

higher the score on the 'value scale', greater would be the WTP for BNP.

Education level was used as an explanatory vari- able. Greater number of years of schooling would arguably increase the knowledge a person has about social, political, economic and environmental hap- pennings. Perhaps education would help a person comprehend news about the environmental effects of economic development. However, attention would be due to multicolinerarity if education was correlated with income levels.

Age and gender were also used as explanatory variables. Respondents were asked how frequently they visit BNP. This is an indicator of a person's demand for the good. A person who has expressed his demand for the good would be willing to pay more towards the park to ensure the quality of amenity and perhaps in a bid to buy 'insurance' for its consumption in the future.

5.2. Estimating TWTP

Of the 494 respondents, bids of 133 respondents were identified as protest bids. It was not clear how much they in particular were willing to pay for BNP, but they expressed that either the government or the users of BNP should pay for BNP. These 133 cases were removed from the sample so that genuine SWTP could be analysed. A total of 361 sample points were used to carry out the analysis, after removing protest bids and other inconsistent responses.

The response to bid values indicated that the underlying TWTP function is right skewed. A log- normal distribution was fitted to the response values. Other forms too were tried but log-normal gave the maximum likelihood value. TWTP values are non- negative making the procedure consistent.

The findings are reported in Tables 4-7. Short discussions follow.

Mean TWTP for the sample was Rs 21. TWTP 2

Table 4

Log likelihood for LNORMAL - 528.18

Variable Estimate Std err Chi-square Pr > chi

INTERCPT 3.04 0.09 1368.65 0,00 SCALE 1.35 0.09

N. Hadker et al./Ecological Economics 21 (1997) 105-122 117

Table 5

Log likelihood for LNORMAL - 519.274

Variable Estimate Std err Chi-square Pr > chi

INTERCPT 3.86 0.21 340.63 0.00

CNCRN - 0 . 5 4 0.13 17.41 0.00

SCALE .31 0.08

standard deviations on either side of the mean are Rs 1.40 and Rs 3.11.

Respondents were asked how concerned they would be if the scenario 'A ' (the degradation sce- nario) presented to them were to became reality. A qualitative variable was formed to see if the concern translated into WTP. Data in Table 5 reveals that persons who showed 'least' concern had a mean TWTP of Rs 9.70 as compared to Rs 27.66 for those who expressed the 'deepest' concern.

Some attitude-related questions posed to the re- spondent were to ascertain the respondent's stand on the development versus environment debate. Based on the response people were divided into 'green', "pragmatic' and "developmentalist'. Average TWTP for pragmatic was Rs 12.81, for greens Rs 40.85, and for the developmentalist's Rs 10.

The explanatory variables considered and found significant in explaining TWTP are listed in Table 7.

Apart from these variables, age, gender, visits, concern, severity of damage, information, occupation dummies for housewives and retired citizens, attitude statement 1, 4 and 7 too were included but were found to have coefficients which were not signifi- cantly different from zero. With age, given other things constant, a person's WTP would presumably decrease with increasing discount rates. But if the bequest motive is strong then the above may not necessarily be true.

Average WTP by gender group was found to be significantly different, but for the TWTP it was

Table 6

Log likelihood for LNORMAL - 517.23

Variable Estimate Std err Chi-square Pr > chi

INTERCPT 2.55 0.17 236.29 0.00

GREEN 0.29 0.07 18.92 0.00 INDUS - 0.06 0. I 1 0.30 0.58

SCALE 1.29 0.08

Table 7

Log likelihood for LNORMAL - 4 3 3 . 9 3

Variable Estimate Std err Chi-square Pr > chi

INTERCPT 0.59 0.29 4.29 0.04

PCINC 0.5e - 4 0.00 5.68 0.02 YRSCH 0.05 0.01 17.70 0.00

VALSCL 0.10 0.03 11.56 0.00

BID 0.02 0.00 63.13 0.00

OCC1 0.21 0.14 2.33 0.13

OCC2 - 0.21 0. I 0 4.09 0.04

OCC4 - 0.34 0.31 1.18 0.28

ATT2 0.09 0.05 3.75 0.05

ATT3 0.06 0.04 2.32 0.13

ATT5 - 0.08 0.05 2.95 0.09

ATT6 0.20 0.05 19.82 0.00

SCALE 0.72 0.05

found to be insignificant. The reasons could be that characteristic differences, (like income, education, or attitudes) in men and women must have actually been the real reason for the difference in their WTP.

One would assume that concern for the damage will also be expressed in the respondent's attitudes and preferences, and hence their inclusion in the equation would make the variable 'concern' insignif- icant. Attitude statement 7 enquired into the respon- dent's attitude towards animals' rights to exist on earth irrespective of their use to humans. Most of the respondents agreed that animals did have an inherent right to co-exist even if they had no use for humans. This led to low variation in responses to that ques- tion, and hence, its insignificance in explaining TWTP.

5.3. Discussion

The income elasticity is almost zero. Income elas- ticity in studies done in developed countries too are small, but much larger than that observed in our case. This may be an indication of the income effect at the national income level. As our income levels grow the income elasticity may improve for environ- mental goods. Education level (YRSCH) was found to increase the WTP. Every one-year increase in education increased the WTP by 5%. Value scale (VALSCL) formed from respondents' stated reasons for valuing the park had a positive sign. This implies that larger the number of reasons to value BNP, the greater is WTP, as expected.

118 N. Hadker et al. / Ecological Economics 21 (1997) 105-122

A dummy variable reflecting the occupation of the respondent was created. The variable for busi- nessmen, service class, and retired citizens was sig- nificant. One would expect education and income to explain the group effect for various occupation groups. Everything else constant, a businessman would have a higher WTP compared to a profes- sional. This is contrary to the findings mentioned earlier. The data collected revealed that businessmen are generally very less educated compared to service class and professionals. Education has a positive effect on WTP and, hence, these two facts put together could explain the sign of dummy for busi- nessmen.

The significance of the coefficient for the attitude variables increases with confidence in the numbers reported by the respondents. As explained earlier in this chapter, attitudes are good predictors of a per- son's actual and stated behavior.

As explained earlier, the TWTP was adjusted for starting point bias and enbedding effects as follows.

Mean WTP for the sample is Rs 21. To subtract the effect of starting point bias, bid value is put to zero. Doing this reduced the mean WTP to Rs 11.10. To calculate the base value which the respondent would have paid to any good cause, attitude and value scale variable were put equal to zero. This implies that the respondent attributed no value to BNP and was neutral on the environment vs. devel- opment debate. The rest of the variables were evalu- ated at sample average. The base value was calcu- lated at Rs 3.57. The difference was then taken as the sample average WTP specific to Borivli National Park, which is about Rs 7.50.

5.4. Extrapolat ing to B o m b a y ' s W T P

was a heartening finding [for performance compar- isons, see Hadker et ai. (1995)].

However, it must be noted that the mean WTP values used to extrapolate from the sample to the population refer to the ones after the protest bids have been removed.

Extrapolating to Bombay, using a population size of 10 million with a family size of about 4.5, we get a WTP for Bombay of Rs 20,685,000 per month for the maintenance and preservation of BNP. This amounts to an annual value of Rs 248 million. As the payment will be made over the period of five years, the total net present value of annual amount equals Rs 1033 million.

6. Concluding comments

To the question 'Are people.., willing to pay for BNP?' , the authors find that the answer is an em- phatic ' yes ' . The survey was recieved positively by the masses, who were forthcoming in discussing their views and perceptions about the use, the preser- vation, and the significance of environmental ameni- ties and assets. Most respondents were very articu- late in both positive as well as negative answers to the question about WTP, as well as in giving their general views and perceptions about the true nature of the problem of degradation. This interest and zest suggests a keen potential role for environmentally friendly urban policy. 7

The study reports a true willingness to pay of Rs 7.5 per household per month amounting to a total net present value of Rs 1033 million. From the perspec- tive of policy, this number should be juxtaposed against the present spending on BNP, which amounts to only a meagre Rs 17 million per annum.

In extrapolating from the sample to Bombay, the sample characteristics and limitations must be borne in mind. If a sample bias exists, the projection too will be biased. The authors, mindful of the sensitiv- ity of sample effects, referred to a government study on economic and demographic aspects of Bombay ' s population (Bombay Metropolitan Region Develop- ment Authority, 1990). It was found that household characteristics (income, family size, mean age) were very close to the sample from the present study. This

"7 It is possible that having stated a positive, even high WTP, respondents fail to repeat or remember their response at a later date. If WTP was indeed an inherent and real value in the agent's decision making, this should not have been the case. Such find- ings could suggest insincerity of responses. While the face-to-face interview method by well trained and alert interviewers should help to catch and therefore eliminate this bias, the possibilities of its existence cannot simply be ruled out. A follow-up interview, of even a small sample of respondents would help estimate the extent of such a bias. However, the present study did not conduct such a follow-up interview.

N. Hadker et al./Ecological Economics 21 (1997) 105-122 119

The present study has conducted face-to-face in- terviews as opposed to mail or telephonic ones. Further, the study has elicited WTP as opposed to willingness-to-accept compensation for loss. High response rates were attained. A conservative design was selected. Low bid levels were used and every question was placed in context of the household's budget constraint, reminding respondents of the al- ternative and varied uses of their money.

It was not entirely possible to provide examples of undamaged alternative resources given the uniqueness of BNP. The IS specifically called the attention of the respondents to the existence of other recreational possibilities, and the fact that BNP was only one of the environmental problems that Bom- bay faced. Time dependence was minimized by con- ducting all interviews within a month. No environ- mental crisis occurred during this time period.

On a general front, in keeping with the Panel's recommendations, non-response rates are low so that the best use of the small sample can be made. The OLS multiple regression on stated WTP reveals that attitudes of respondents, their willingness to accept the financial burden of environmental improvements, their visitation rates, and the number of aspects of BNP they considered valuable, are an important determinant of WTP for BNP.

Embedding and part-whole effects have been dealt with systematically by helping the respondent place the good in question (BNP) in context. Several con- texts have been explicitly stated: that of the house- hold budget, that of competing uses of income, that of other environmental problems Bombay faces, and that of other environmental concerns the respondent may have. Further, embedding effects were later reduced at the analytical stage.

The commitment of a 5-year payment period also encouraged only the dedicated and staunch to accept the payment bids. Moreover, to reduce warm glow effects from overstating WTP, the interview schedule as well as the interviewers made it clear that it was alright if the respondent chose not to accept the bid.

A double dichotomous bid, followed by a open- ended question eliciting maximum WTP was used to maximise information of WTP. This method is effi- cient in terms of information collected. At the same time, it does not truncate higher WTP amounts that people may be willing to pay.

These techniques that serve to improve confi- dence in CV-generated values were an important part of the present project. They certainly help make a case for overcoming some of the problems associ- ated with the CVM. They also make CVs more relevant and useful for decision makers for invest- ment and policy purposes.

From the point of view of the park management, the study has resulted in very encouraging results. First of all, it proved that people in Bombay were aware of the Borivli National Park (BNP) and its importance. Second, it was clear that a high willing- ness to pay in terms of both cash and kind exists in the metropolis for contributing towards the upkeep and improvement of BNP.

Acknowledgements

The authors thank Dr. Kirit Parikh (Director, IGIDR) and Dr. Jyoti Parikh (Senior Professor, IGIDR) for their sustained support and guidance. The authors also thank Dr. Robert Solow (Mas- sachusetts Institute of Technology, USA), Professor Huib Jansen (Institute for Environmental Studies, The Netherlands), and Dr. lan Bateman (University of East Anglia, UK) for their encouragement, their interest in our work, and their valuable comments on the interview schedule. Acknowledgement is also due to two reviewers for their encouragement and positive comments; the paper has benefited from their suggestions. The usual disclaimer applies.

Appendix A. The Interview Schedule

INDIRA GANDHI INSTITUTE OF DEVELOP- MENT RESEARCH

GOREGAON, BOMBAY SURVEY ON ECONOMIC VALUE OF

BORIVLI NATIONAL PARK

INTERVIEW SCHEDULE Hello. My name is _ _ I am conducting a

survey for the Indira Gandhi Institute of Develop- ment Research. I am a volunteer. The Institute is involved in advanced social and economic research.

This particular survey is being conducted to find

120 N. Hadker et al. / Ecological Economics 21 (1997) 105-122

out how much the residents of Bombay value the Borivli National Park. For this survey I need respon- dents who are atleast 21 years of age and are decision makers in their households. I would like to ask you a series of questions. Your responses will be kept confidential.

I PERSONAL PROFILE

1. HAVE YOU VISITED BORIVLI NATIONAL PARK? (1) HAVE NOT YET VISITED (2) HAVE VISITED ONCE OR TWICE SO FAR (3) HAVE VISITED VERY OFTEN _ _ / Y E A R 2. WHAT IS YOUR AGE? YRS 3. GENDER FEMALE/MALE 4. WHAT IS YOUR OCCUPATION? (1) PROFES- SIONAL (2) BUSINESSMAN (3) SERVICE (4) HOUSEWIFE (5) 5. WHAT IS YOUR EDUCATIONAL QUALIFI- CATION? (1) MASTER'S OR HIGHER (2) BACH- ELOR'S DEGREE (3) VOCATIONAL DEGREE (4) 12th PASS (5) YEARS OF SCHOOLING_ (6) ILLITERATE 6. WHICH SUBURB OF BOMBAY DO YOU LIVE IN? 7. HOW MANY YEARS HAVE YOU LIVED IN BOMBAY? YRS 8. HOW MANY PEOPLE LIVE WITH YOU IN- CLUDING YOURSELF? 9. WHAT IS YOUR NET MONTHLY INCOME? (probe) Rs _ _ / M O N T H 10. WHAT IS THE NET INCOME OF YOUR HOUSEHOLD PER MONTH? Please include your own income. (probe) Rs _ _ / M O N T H

II ATTITUDINAL QUESTIONS

I am going to read out a few statements. Please indicate your opinion on a scale of 'strongly agree' to 'strongly disagree'. There is no right or wrong answer; I only need your frank opinion. 1. India should not pursue development programs that damage the environment regardless of how small the e n v i r o n m e n t a l c o s t s m a y b e . S A / A / N U / D A / S D A 2. We should not have to invest in the environment, sacrifice our income and standard of living so that the next generation may benefit from the plants and animals on Earth. S A / A / N U / D A / S D A 3. No matter what the environmental costs are, to-

day, India needs to exploit her natural resource base (forests, seas, and land) to increase jobs and in- comes. S A / A / N U / D A / S D A 4. The value of the Borivli National Park would be the s a m e , wi th or w i t h o u t p a n t h e r s . S A / A / N U / D A / S D A 5. The Borivli National Park is 10,000 ha large. It does not matter if about 1,000 ha of parkland is lost due to encroachment. S A / A / N U / D A / S D A 6. I should not have to pay for parks and nature reserves that I do not visit. S A / A / N U / D A / S D A 7. Animals have a right to exist even though they may be of no use to mankind. S A / A / N U / D A / S D A

III PROBLEMS FACING BORIVLI NATIONAL PARK

I am now going to give you some information about the Borivli National Park and introduce you to some of the environmentally sensitive issues that the Na- tional Park is facing today. Please take your time to go through this brochure carefully. (present brochure and ensure that respondents read it carefully). 1. IS THIS INFORMATION NEW TO YOU? (1) YES, VERY NEW (2) ONLY SOME OF IT IS NEW (3) I KNOW ALL THIS ALREADY 2. WHAT ASPECTS OF THE PARK DO YOU VALUE? (probe fully) (1) Q U I E T U D E / G E T - A W A Y F R O M B O M B A Y / A E S T H E T I C / S C E N I C B E A U T Y / P I C N I C / (2) PROTECTION OF WA- TER BODIES (TULSI & VIHAR) THAT SUPPLY WATER TO BOMBAY (3) NATURAL FLORA AND FAUNA, VALUABLE STORE OF BIO-DI- VERSITY (4) UNIQUE TO BOMBAY AND THE WORLD'S METROPOLIS (5) A GOOD GET- AWAY FOR THE NEXT GENERATION (6) HIS- TORIC AND EDUCATIONAL VALUES (7) VI- CARIOUS VALUE

Present the two placards: Scenario 'A ' and Scenario 'B ' . Ensure respondent reads through.

3. HOW CONCERNED ARE YOU ABOUT SCE- NARIO 'A ' ? (1) VERY CONCERNED (2) A LIT- TLE CONCERNED (3) NOT CONCERNED 4. HOW SEVERE IN YOUR OPINION IS THE LIKELY DAMAGE TO THE BORIVLI NA- TIONAL PARK IF THE TREND, HIGHLIGHTED

N. Hadker et al. / Ecological Economics 21 (1997) 105-122 121

IN SCENARIO 'A ' CONTINUES? (1) VERY SE- VERE (2) SEVERE (3) NOT SO SEVERE (4) NOT AT ALL SEVERE

IV CONTINGENT VALUATION QUESTIONS

I am now going to ask you the last set of questions. Assume that an autonomous body, reputed for doing efficient and honest work undertakes the task of protecting the National Park so that we attain Sce-

nario 'B'. The next set of questions is concerned with the funding of such an agency to maintain and improve the Park. Although this work of preserva- tion continues over the years, the set of questions I will ask, needs you to consider the next five years period. Please bear the following points in mind when you answer. (ensure that you read out all the points below clearly). 1. The issues discussed here are only a f ew among many other environmental problems Bombay faces. 2. Borivli National Park is only one among India's great forest treasures. 3. Your income is limited and has important alternative uses. 4. The following set of questions asks you to focus solely on the Borivli National Park, not on other environmental issues, or other national parks around the country. India may be facing other environmental problems that you may be concerned about. However this interview is about Borivli National Park only.

5. Note also, that there are other alternative recre- ational spots apart from Borivli National Park.

la. WOULD YOU BE WILLING TO PAY Rs 10 OF THE MONTHLY INCOME OF YOUR HOUSEHOLD, OR Rs 120 PER YEAR, FOR THE NEXT FIVE YEARS, STARTING FROM JAN- UARY 1st 1995, TOWARDS THE MAINTE- NANCE OF THE NATIONAL PARK? PLEASE NOTE THAT THIS DOES NOT INCLUDE THE ENTRANCE FEE IF YOU VISIT THE PARK. Y E S / N O / N O ANSWER lb. IF 'NO ANSWER', WHY? _ _ IF 'NO AN- SWER', GO TO QUESTION (4a). l c. IF YOUR ANSWER WAS 'NO' , ARE YOU WILLING TO PAY Rs 5 OF THE MONTHLY INCOME OF YOUR HOUSEHOLD, THAT IS Rs 60 PER YEAR FOR THE NEXT FIVE YEARS

TOWARDS THE MAINTENANCE OF THIS NA- TIONAL PARK? Y E S / N O ld. IF YOUR ANSWER IS 'NO' WHY ARE YOU NOT WILLING TO PAY FOR THE PRESERVA- TION AND MAINTENANCE OF THE NA- TIONAL PARK? (1) THE GOVERNMENT SHOULD PAY (2) THE USERS SHOULD PAY (3) MY INCOME IS LIM- ITING MY ABILITY TO PAY (4) OTHER REA- SONS: le. WHAT IS YOUR MAXIMUM WILLINGNESS TO PAY FOR THE MAINTENANCE OF THE PARK PER MONTH FOR THE NEXT FIVE YEARS? Rs _ _ / M O N T H lf. ARE YOU WILLING TO PAY RS 15 OF YOUR MONTHLY INCOME, THAT IS RS 180 PER YEAR, FOR THE NEXT FIVE YEARS FOR THE PRESERVATION AND MAINTENANCE OF THE NATIONAL PARK FOR THE NEXT FIVE YEARS? AGAIN, I AM REQUIRED TO REMIND YOU THAT YOUR INCOME HAS SEVERAL IM- PORTANT AND COMPETING USES. ALSO, THIS IS NOT A ONE TIME PAYMENT. Y E S / N O 2. WHAT IS YOUR MAXIMUM WILLINGNESS- TO-PAY PER MONTH FOR THE MAINTE- NANCE AND PRESERVATION OF BORIVLI NATIONAL PARK? Rs / M O N T H 3. IF YOU ARE WILLING TO PAY, WHAT IS YOUR PREFERRED METHOD OF PAYMENT?

4a. ASSUME THAT THE AUTONOMOUS BODY NEEDS VOLUNTEERS ON WEEKENDS TO DO ONE OF THE FOLLOWING: (1) WORK AT THE INFORMATION CENTRE GIVING INFORMA- TION ABOUT THE PARK TO VISITORS AND STUDENTS (2) POLICING THE PARK AREA TO ENSURE THAT VISITORS ARE NOT DAMAG- ING THE ASSETS OF THE PARK AND HARM- ING THE ANIMALS (3) CONDUCTING GUIDED TOURS, ETC. WOULD YOU BE WILLING TO ACT AS SUCH A VOLUNTEER? Y E S / N O 4b. IF 'YES' , HOW MANY DAYS WOULD YOU BE WILLING TO MAKE YOURSELF AVAIL- ABLE PER YEAR? PLEASE REMEMBER THAT YOUR TIME HAS SEVERAL COMPETING USES. DAYS/YES 5a. WHY ARE YOU WILLING TO PAY/SPEND YOUR TIME IN THE BORIVLI NATIONAL PARK?

122 N. Hadker et al. / Ecological Economics 21 (1997) 105-122

5b. WHAT EXPENDITURE OF YOUR MONTHLY HOUSEHOLD BUDGET WILL YOU REDUCE IN ORDER TO MAKE THIS PAYMENT?

You may revise your willingness to pay number at any point. Please tell me now, if you wish to do so.

THANK YOU, SIR/MADAM. The Indira Gandhi Institute of Development Research too thanks you for your time and effort. Your responses will help their research efforts. If you do not mind, please, could I have your name, address and telephone number? NAME & ADDRESS: - - - TEL. NO.:

V Q U E S T I O N S FOR THE I N T E R V I E W E R

How well do you think the respondent understand the questions about Borivli National Park? WELL/NOT TOO W E L L / N O T AT ALL How confident do you feel about the sincerity of the respondent's answers to your questions? VERY CONFIDENT/NOT SO CONFIDENT/NOT AT ALL CONFIDENT NAME OF INTERVIEWER: _ _ PLACE WHERE INTERVIEW WAS CON- DUCTED: LANGUAGE: DATE AND TIME:

S C E N A R I O 'A' With the present state of affairs

• Recurring deficit of Rs.116 iakhs per annum • Forest loss of 18 hectares per annum (that's 40

football fields) • No fencing, BNP borders vulnerable to illegal

encroachment & deforestation • Deteriorating recreational facilities • Increasing rate of Man-Animal conflict

Continued illegal deforestation and encroachment

S C E N A R I O 'B' Proposed management plan

• Fencing and improved patrolling to protect SGNP borders Improved recreational facilities for tourists Improved wildlife and habitat management

• Reduced Man-Animal conflicts • Protection of water bodies and our water supply • Funds for improved information center and re-

search • Protection of endangered species

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