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Presenter: Jenny Chen 陳瑩珍

Instructor: Dr. Pi-Ying Teresa Hsu

November 12, 2009 1

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Saz-Salazar, S. D., & Rausell-Koster, P. (2008). A

double-hurdle model of urban green areas valuation:

Dealing with zero responses. Landscape and Urban

Planning, 84(3-4), 241-251.

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Contents

I. Introduction

II. Methodology

III. Results

IV. Conclusion

V. Personal Reflection

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Introduction

In Spain, 77% of the population lives in urban areas.

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Introduction

Public parks and open spaces:

1. improve physical and psychological health

2. provide substantial environmental benefits

3. have an important aesthetic value in an environment

designed around the automobile

4. are important for wildlife

5. are valuable contributors to wider urban objectives

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Introduction

hedonic pricing method travel cost method averting behaviour

contingent valuation method (CVM)

Revealed Preferences Techniques

Stated Preferences Techniques

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Purpose

to estimate the social benefits arising from the use of an urban park in the city of Valencia (Spain)

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Study Site

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Study Site

El Jardín del Túria

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Methodology

Time spring 2005

Participants 1455

Sampling stratified

Payment Vehicle annual increase in local taxes

Elicitation Approach open-ended

Survey face-to face interview

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Methodology

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Methodology

First Section attitudinal questions behavior

Third Section demographic and economic

questions

Second Section

valuation question “Now I want to ask you how much you would be willing to pay each year in extra property taxes considering the whole array of benefits that you receive every time you visit the park.”

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Methodology

indirect utility function

V = U [x(p, y, z), z] = V (p, y, z) (1)

x : vector of private goods

p : prices

y : income

z : provision or quality of environmental commodities

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Methodology

change in utility

Δ V = V (p, y, z1) – V (p, y, z0) (2)

V (p, y – CV, z1) = V (p, y, z0) (3)

p : prices

y : income

z : provision or quality of environmental commodities

CV: WTP for an improvement14

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Methodology

Zero WTP

preference unfamiliarity

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Methodology

Ordinary Least-Square Regressions

biased and inconsistent estimates

of the parameters

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Methodology

only allows for one type of zero observations

(corner solution)

treats the decision to participate in the market and the stated degree of support together

Tobit Model

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Methodology

two stages of estimation

considers the possibility of zero outcomes in

the second hurdle

distinguishes between factors affecting the

decision to participate and the stated amount

of WTP

Double-Hurdle Model

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Methodology

Participation decision

yi = yi * , if yi * > 0 and Di > 0

yi = 0 , otherwise

Di = Zi θ + ui (4)

Di : latent variable

Zi : a vector of explanatory variables

θ : a vector of parameters

Double-Hurdle Model

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Methodology

WTP decision

yi = yi * , if yi * > 0

yi = 0 , otherwise

yi * = Xi β + ei (5)

yi : revealed WTP for individual i

yi * : corresponding latent value of individual i’s actual WTP

Xi : vector of the individual’s characteristics

β : vector of parameters20

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Methodology

Probit Model

to evaluate the

censoring rule (Zi θ)

Truncated Regression Model

to obtain the bid function

(Xi β) for the subsample

of censored observations

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Results

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Results

Average expenditure:

total cost

number of households

＝ 4.62 €

× relative surface (26.76%)

＜ 7.60 €

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Results

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Results

H0: Tobit model is the correct specification

H1: Tobit model is not the appropriate specification

λ = － 2(LT- LP – LTR) (6)

LT : log-likelihood for the Tobit model

LP : log-likelihood for the Probit model

LTR : log-likelihood for the truncated model

α = 0.01Reject H0

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Results

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Results

Aggregation

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Conclusion

WTP increases with income and education as

expected.

WTP varies depending on which section of the park

the interview was conducted in.

Distinct sets of variables influence the decision to

participate and the decision about how much the

individual is willing to pay.

Demand for various green areas is culturally

dependent.

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Personal Reflection

Sampling procedures were careful.

WTP question was not detailed and clear

enough.

The WTP question should be revised to induce

both use and preservation values.

Strategic bias was very likely to occur in this

study because of the payment vehicle.

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