RM Congress - Presentation - 07 Thiene

Rete Montagna Interna,onal Congress Eurac Conven,on Center -­‐ Bolzano/Bozen -­‐ IT November, 6th -­‐ 8th 2014

The economic value of environmental resources in the Alps: is it important?

MARA THIENE Dep. LEAF, University of Padua

2014

The economic value of environmental resources in the Alps: is it important?

THE ALPS IN MOVEMENT – PEOPLE, NATURE AND IDEAS NOVEMBER 6-­‐8 2014 -­‐ BOLZANO

Mara Thiene Dep. LEAF, University of Padua

Introduction The Alps tradiNonally generate a wide range of ecosystem goods and services to the populaNon and tourists: landscape beauty, outdoor recreaNon, cultural values, air quality, etc.

Non-­‐market valuaNon methods (Travel Cost, Choice Experiment) are used to esNmate the economic value of such services:

1. determinants of recreaNon demand (preference heterogeneity); 2. the probability of selecNng an alternaNve (within a set of Alpine recreaNon sites); 3. marginal WTPs (welfare measures) due to the implementaNon of environmental policies.

Why are such methodologies useful?

They allow to provide informaNon to policy makers who are in charge to manage the land and the environment.

The effects of Alpine park management policies on outdoor recreaNon are increasingly coming under public scruNny.

Alpine park agencies face controversial decisions: Ø preserve land and ecosystems Ø provide services to visitors.

It increasingly difficult to fund the services to facilitate the broad variety of outdoor recreaNon acNviNes (decreasing funds).

This is further exacerbated by the increasing expectaNons for high-­‐ quality experiences by recreaNonists .

The literature Thiene M., Boeri M., Chorus C. (2012) Random Regret MinimizaNon: ExploraNon of a new choice model for environmental and resource economics, Environmental and Resource Economics, 51(3), 413-­‐429

Scarpa R., Thiene M., Train K., (2008), UNlity in WTP space: a tool to address confounding random scale effects in desNnaNon choice to the Alps, American Journal of Agricultural Economics, 90(4), pp.994-­‐1010.

Olchewsky et al., (2012) Avalanche protecNon by forests — A choice experiment in the Swiss Alps, Forest Policy & Economics 15 108–113.

Gaho P., Vidale E., Secco L., Pehenella D. (2014) Exploring the willingness to pay for forest ecosystem services by residents of the Veneto Region, Bio-­‐based and Applied Economics 3(1): 21-­‐43.

Aims of the presentation Can modeling techniques be of help to implemenNng environmental policies in the Alps?

Between methodology & outcomes.

Topics: 1. MulN-­‐sites perspecNve: the Veneto mountains 1.1 Preference heterogeneity & constraints 1.2 Choices of site desNnaNons and subsNtuNon paherns

2. Single-­‐site perspecNve: Natural Park of the Regole D’Ampezzo 2.1 WTP esNmates for park ahributes and services 2.2 UNlity MaximizaNon or Regret MinimizaNon? 2.3 Structural Choice Models (SCM): individuals vs couples.

The Models The Random UNlity Model (RUM):

U in = Vin + in = βxin

ε

MulNnomial Logit Model

+ ε in

exp(λβ xin ) Prin = ∑ exp(λβ x jn ) j∈J

Latent Class Model

exp( β c xi ) Prn c (i ) = ∑ exp( β c x j ) j∈J

Marginal WTP

β attribute WTPx = − β cos t

n=individual i = alternaNve ε = error term x= ahribute λ= scale parameter

The Mountains of the Veneto Region: Site CharacterisNcs

The Mountains of the Veneto Region Most research in recreaNon demand focuses on modeling behavioral heterogeneity.

Two conjectures are invesNgated :

1. how onen one person recreates and where, are influenced by kids, fitness, BMI, skill, health, smoking and drinking, age, gender, and educaNon; 2. these are life constraints, not preferences.

Examples: a) injured athletes know too well the difference between what they want to do and what they can do b) being overweight, one can only play tennis with difficulty: he/she might have same preferences than a thin person, but have a different weight constraint! c) avoiding extended fishing trip because of paren1ng obliga1ons does not indicate less preference for fishing than a single friend.

Two objecNves: a) How to idenNfy behavioral heterogeneity?

Constraint heterogeneity

Preference heterogeneity

b) How to parsimoniously model their influence?

We look to life-­‐constraint heterogeneity to help explain and model behavior heterogeneity.

Average Estimated Responses, by Life-Constraint Class Average estimated responses

3,50 3,00 2,50 2,00

57%

lfClass 1

21%

lfClass 2

15%

lfClass 3

8%

lfClass 4

1,50 1,00 0,50 0,00

(Morey Thiene, 2012)

Percentage of trips to each site, by esNmated Class Pre-­‐Alps (total) Dolomites (total) PreAlps Feltrine Piccole Alpago Asiago Grappa Baldo Dolomites Antelao Pelmo CorNna Duranno Sorapis Agner Tamer Marmarole Lavaredo Civeha MarNno Marmolada

lfClass1 55.7 44.3

lfClass2 55.6 44.4

lfClass3 68.9 31.1

lfClass4 65.9 34.1

8.4 18.9 4.3 9.1 6.1 8.9

7.7 16.8 6.1 9.1 7.0 8.9

7.4 23.4 3.7 14.3 9.3 10.9

7.2 17.1 3.7 13.4 9.1 15.4

2.2 2.4 3.2 0.8 1.5 1.6 2.9 2.4 6.6 8.8 8.4 3.6

2.1 3.9 2.9 0.5 1.4 1.1 2.1 1.9 7.8 9.0 8.0 3.7

1.6 1.7 2.2 0.4 0.8 1.4 1.8 1.7 5.2 5.5 6.5 2.4

2.8 2.7 2.4 0.4 0.9 1.0 2.4 1.5 6.7 5.1 5.7 2.5

(Morey Thiene, 2012)

Site substitution patterns Two Policy simulaNons: comparing scenarios changes

(Thiene Scarpa, 2008)

The Natural Park of the Regole D’Ampezzo

Ahributes and Levels Variable

A:ribute descrip1on

ThemaNc iNneraries (n)

Building of 5 and 7 addiNonal themaNc iNneraries, focusing on flora, fauna and historical aspec (baseline 2)

Network of trails (km)

Decrease the network of trails and hiking paths to 300 km Increase the network of trails and hiking paths to 400 km (baseline 350 km)

Trail signs

VerNcal signs at juncNons plus painted signs every 200 mt along the path

VerNcal signs at juncNons plus painted signs every 50 mt along the path (baseline verNcal sign) Managed trails excursions New challenge iNneraries of 3 and 6 hours (baseline 1 hour) (hours) Climbing routes (n)

New 40 and 60 climbing iNneraries along cliffs and crags (baseline 20 climbs)

Via Ferrata

Iron cable along the whole path Iron cable along the whole path plus arNficial holds (baseline: iron cable part of the path)

Shelters (n)

Decrease of 3 alpine shelters Increase of 3 alpine shelters (baseline: 20)

CongesNon (n)

Number of people met along the trails (20-­‐50) Number of people met along the trails (more than 50) (baseline: less than 20)

InformaNon

Brochure providing a lihle more than basic informaNon of the area (baseline: leaflet) Book containing an extended descripNon of the florisNc, historic aspects and the wildlife

Cost

Entrance fee (2, 5, 7, 10 €)

Example of choice task in CE Which of the following alterna1ve would you choose?

Alterna1ve A

Alterna1ve B

5 in addiNon

5 in addiNon

Trails (km)

350 (baseline)

300 (1/7 less)

Trail signs

verNcal + horiz. 200m

verNcal only

Excursions (hours)

6

1

Climbing routes (n.)

40 in addiNon

20 in addiNon

Complete iron cable

Complete iron cable + arNf. holds

Alpine huts (n.)

23 (3 in addiNon)

17 (3 in addiNon)

CongesNon (n. of people)

between 20 e 50

more than 50

leaflet

brochure

Entrance fee (€)

5

2

Choice

ThemaNc iNneraries (n.)

Vie-­‐ferrate

InformaNon

Sequence of 12 choice-­‐tasks

Neither

-1,00

-3,00 TRL_SIGNS2

TRL_SIGNS1

NET_TRAILS2

NET_TRAILS1

IT_THEMES2

Serial ANA

Choice Task ANA

1,00

Estimated Marginal WTP

INFO2

INFO1

3,00

CROWD2

5,00

CROWD1

7,00

SHELTERS2

SHELTERS1

FERR_SAFE2

FERR_SAFE1

NEW_CLIMBS2

NEW_CLIMBS1

MNGD_TRAILS2

MNGD_TRAILS1

-5,00 IT_THEMES1

Willingness to Pay Estimates for Park Management Attribute Level Ignored ANA

-7,00

(Scarpa, Thiene, Hensher, 2010)

Minimizing Random Regret RUM: strong econometric foundaNons & conceptual elegance.

Nevertheless, RUM partly lacks of behavioral realism.

Random Regret MinimizaNon paradigm (Chorus, 2010): i. people aim to minimize future regret when choosing, rather than aiming to maximize future uNlity. ii. regret is what one experiences when a non-­‐chosen alternaNve performs beher than a chosen one.

Why should RRM be relevant in environmental economics?

i. RRM adds on understanding visitors decision making process: rather than focusing exclusively on the maximizaNon of uNlity, it minimizes anNcipated regret, which is crucial informaNon to implemenNng environmental policies.

POLICY SCENARIO: Predicted change in choice probabiliNes due to an increase of entrance fee by 15 % Which of the RUM Alterna1ve

following alterna1ve A Total would you choose? Change in choice

ThemaNc iNneraries (n.)

Trails (km)

AlternaNve affected Trail signs (Average effect) Excursions (hours)

Climbing routes (n.)

Other AlternaNve Vie-­‐ferrate

(Average ffect) Alpine huts (en.)

CongesNon (n. of people) Status Quo InformaNon

(Average e(ffect) Entrance fee €)

Choice

RRM Alterna1ve B choice Change in

Neither Total

5 in addiNon

5 probability in addiNon probability change

change 350 (baseline) 300 (1/7 less)

verNcal + horiz. 200m verNcal only

-­‐3.10% -­‐100.00% -­‐2.06% -­‐100.00% 6 1

40 in addiNon 20 in addiNon

Complete iron cable Complete iron cable + arNf. holds

1.52% 48.81% 0.98% 47.53% 23 (3 in addiNon) 17 (3 in addiNon)

between 20 e 50 more than 50

leaflet brochure

1.58% 51.19% 1.08% 52.47% 5 2

(Thiene, Boeri, Chorus, 2012, ERE)

Structural Choice Models Outdoor acNviNes are onen performed by visitors jointly as a couple. Members of a couple may display different preferences, but outdoor experiences are usually the outcome of joint decisions.

SCM is a new approach designed to:

1. incorporate latent variables and structural equaNons (SEM) into choice processes; 2. specify simultaneous equaNons and correlaNons;

simultaneously modeling more than one DCEs.

Three idenNcal DCEs conducted separately: 1) DCE1 women; 2) DCE2 men; 3) DCE3 couples.

QuesNons: 1. Is preference heterogeneity due to some latent factor?

2. Do individual preferences of men and women influence their joint deliberaNons (Influence Model)?

Who wears the trousers?

Which ahributes in joint decision are most influenced by each gender?

A9ributes

Par11on of the Joint Variance Influence of Influence of Women Men

ThemaNc INneraries Network of Trails VerNcal Signs Challenge excursions Climbs Via Ferrata Alpine Shelter CongesNon InformaNon

40% 1% 42% 52% 23% 0% 26% 55% 15%

60% 99% 58% 48% 77% 100% 74% 45% 85%

Average Ahribute

28%

72% (Thiene, Rungie, Scarpa, 2014)

Conclusions Dedicated surveys and analysis among visitors are crucial: • they allow the invesNgaNon of aytudes and variaNon in taste of visitors towards a selecNon of environmental services already in place or that could be provided; •

in the light of a gradual decrease of public funds, alpine parks might be forced to introduce an entrance fee;

•

Joint decisions: one member of the couple cannot be taken as representaNve of the couple;

•

if the goal of policy makers is to really tailor acNons on both members of the couple (see via ferrata), then they may take into account to propose alternaNve & specific acNviNes to women only.

Thanks for the ahenNon!

2014