Journal of Natural Environment

Application of nested logit model in ecosystem services valuation (Case study: Ganjname recreational site)

Document Type : Research Paper

Authors

1 Econometrics PhD Candidate, University of Isfahan, I.R. Iran

2 Associate Professor, Economic Department, University of Tehran, I.R. Iran

3 Professor, Economic Department, University of Isfahan, I.R. Iran

4 MA Graduated of Economics, Isfahan University, IRAN

Abstract

Today, environment is an important part of any country's economy. One of the main issues in environmental economics is non-market value estimation. Recognizing the importance of environmental and tourism of recreational sites, the purpose of this study is economic valuation of Ganjname recreational ecosystem attributes, estimation of implicit price, impact assessment of socio- economic variables such as age, marriage status, indigenous status, family size and education stand on the mentioned values and analyzing welfare and compensation variation due to variation of hypothetical policy and movement from a hypothetical policy to another one. It has been used choice experiment approach that it is subset of choice modeling procedure and stated preferences methods. Data needed extracted from six different choice experiment questionnaires filled out by 300 random households in Hamedan city. Each questionnaire contained 72 hypothetical policies, 36 choice sets, 1296 observations and 3888 rows of data. In order to estimation of visitors willingness to pay for improving attribute levels for Ganjnameh site, nested logit models and full information maximum likelihood method were used which is on the basis of multinomial discrete choice analysis of preferences, Lancaster's theory of value and the theory of random utility function. Results showed that the visitors have willingness to pay for conservation of forest diversity, preservation of monument and environmental health by sequence 17810, 33518, 36121 Rial, while no positive willingness to pay for reduction of overcrowding. Some socio- economic variables have a positive impact on willingness to pay.

Keywords

Amemiya, T. 1985. Advanced Econometrics. Cambridge, MA: Harvard University Press.
Arcidiacono, P., Bayer, P., Blevins, J.R., Ellickson, P.E., 2012, Estimation of dynamic discrete choice models in continuous time, Working Paper, http://www.nber.org/papers/w18449. National Bureau of Economic Research, Massachusetts, Cambridge.
Askari, A,. Mehregan, N,. 1993, Estimation of WTP for visitors of cultural and historical heritage use of CVM, Journal of Economic Research. (in Persian)
Bateman, I.J., Lovett, A.A., Brainard, J.S., 2003. Applied environmental economics: a GIS approach to Cost-Benefit Analysis. Cambridge University Press, Cambridge
Carson, R., Louviere, J. J., Anderson, D., Arabie, P., Bunch, D., Hensher, D. A., Johnson, R., Kuhfeld, W., Steinberg, D., Swait, J. D., Timmermans, H., Wiley, J., 1994, Experimental Analysis of Choice. Marketing Letters, 351–368.
Danaher, P., Dagger, T., 2012, Using a nested logit model to forecast television ratings, InternationalJournalofForecasting28, 607–622.
Deshazo, J.R., fermo, G., 2002, Designing choice sets for stated preference method: the effect of complexity on choice consistency, journal of environmental economic and management 44, 123-143
Fleuret, A, Ppirier, J., 2010 , Using the choice experiment method for valuing improvements in water quality: a simultaneous application to four recreation sites of a river basin, Working paper.
Green, W. H. 2012. Econometric Analysis. 7th ed. Upper Saddle River, NJ: Prentice Hall.
Hanemann, W.M. 1994, Valuing the Environment through Contingent Valuation, Journal of Economic Perspect.8.
Hanley, N., Mourato, S., and Wright, R. 2001. Choice modeling approaches: A superior alternative for environmental valuation? Journal of Economic Surveys 15(3):435-462.
Hausman, J. A., and D. L. McFadden. 1984. Speciļ¬cation tests for the multinomial logit model. Econometrica 52:
Heiss, F. 2002. Structural choice analysis with nested logit models. Stata Journal 2: 227–252.
Jalili kamjo, S.P., 2011, Evaluation of GANJNAME site use of Choice modeling, M.A thesis, economic department, university of Tehran. (in Persian)
Kotz, S., and S. Nadarajah. 2000. Extreme Value Distributions: Theory and Applications. London: Imperial College Press.
Lancaster, 1996, A new Approach to Consumer Theory, Journal of Political Economy.
Louviere, J., J., Hensher, D. A., Swait, J. D., 2000, "Stated Choice methods: Analysis and Applications", Cambridge University press.
Manski, C., 1977, ‘The Structure of Random Utility Models’, Theory and Decision.
Saraghi, E., Ghorbani, R., Jeidari, R,. 2008, Recreational and economical evaluation of GANJNAME cascade and determination factors in WTP use of CVM, Geographical journal area planning, Azad Islamic university of Malayer. (in Persian)
Sharzie, GH.A., Jalili kamjo, S.P., 2012, Choice modeling: A new approach to valuation of environmental goods Case study: Hamadan Recreational and historical site, journal of Economic Research. (in Persian)
Sharzie, GH.A., Javidi, N., 2012, Internalizing of electricity production externality cost use of choice experiment, journal of Energy Economics Studies, 1-29. (in Persian)
Vega,D.C., Alpizar,F. 2011 , The Case of the Toro 3 Hydroelectric Project and the Recreo Verde Tourist Center in Costa Rica, Environment for Development: : Discussion Paper Series.
Journal of Natural Environment
Volume 67, Issue 3 - Serial Number 3
February 2014
Pages 253-265