HAWASSA UNIVERSITY
WGCF-NR
Department of Urban Greening & beatification
Assignment of Valuation of urban green infrastructure
Course title: Valuation of urban green infrastructure
Course Code: UfGr4094
Full Name: Aschalew Bibiso
Id/no: 0385/13
Submitted to: Mr. Beamalaku
Submission Date: May 30, 2024
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1. Suppose you want to study economic valuation of urban green infrastructure (especially lack
Hawassa) for recreational purpose using contingent valuation method. In order to make survey to
visitors or residents for your study entitled above, prepare least three paragraphs Valuation
Scenario Valuation Scenario.
Urban forests are a significant and essential, but frequently ignored, component of urban
landscapes. In many cases, only the resource's commercial value is taken into account when
developing policies. To this end, the contingent valuation method (CVM) was applied to
evaluate the economic value of urban forest parks (UFPs) in Hawassa City. This paper is
estimating households’ maximum willingness to pay (WTP) for urban forest parks (UFPs) and
identifying factors affecting households’ (HH's) WTP for conservation and development UFPs
using double bounded (DD) CVM. The data was analyzed using a bivariate probit and probit
model. Using the double bounded and open ended (OE) strategy choices, it was found that the
communities' joint WTP was worth 23,209,329.6 Ethiopia Birr (ETB) and 14,761,008 ETB,
respectively. The cost of conservation and development of UFP was found to be 1,696,000 ETB.
According to the research, age, sex, marital status, family size, income, ownership status,
education level, and bid amount have significant impact on the project's WTP. In general, the
study showed that residents might gain approximately (23,209,329.6 - 1,696,000ETB)
21,513,329.6 ETB as a welfare enhancement by comparing the cost of conservation and
development of UFPs with their benefits; consequently, such projects would benefit them more.
As a result, the government should place greater emphasis on its UFP policies and projects.
Besides, specific socioeconomic aspects should be considered when developing a project or
policy for the conservation and development of UFPs in urbanValuation Scenario: Imagine you
are a resident or visitor in Hawassa, a bustling city known for its vibrant culture and beautiful
landscapes. Recently, there has been a growing interest in enhancing the city's green
infrastructure, particularly for recreational purposes. As part of a study on the economic
valuation of urban green infrastructure in Hawassa, you are invited to participate in a survey
using the contingent valuation [Link] this scenario, you will be asked to imagine a proposed
project to develop new green spaces and recreational areas in Hawassa, such as parks, gardens,
and walking trails. These green spaces are intended to provide residents and visitors with
opportunities for leisure activities, relaxation, and connection with nature. The survey will seek
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to understand your willingness to pay for the development and maintenance of these green
infrastructure projects.
As a participant in the survey, you will be presented with a series of questions that will ask about
your preferences for urban green spaces, the value you place on recreational opportunities in
Hawassa, and your willingness to financially support the development of new green
infrastructure. Your responses will help researchers assess the economic benefits of investing in
urban green infrastructure for recreational purposes in Hawassa and inform decision-making
processes related to city planning and development.
2 Is it possible for an individual's valuation of an environmental commodity to include both
user and existence value? Explain briefly
Existence value can be defined as the knowledge of an environment and its potential but it is not
utilized where the user value is the opposite in that individuals utilize the environment and its
resources. Because the two are opposites I think it is impossible for a person’s valuation to
include use and existence value.
The valuation of environmental commodities and explore how both user value and existence
value can be considered.
Direct Use Value (DUV)
DUV arises from the extraction, consumption, and direct use of goods or services provided by
the environment. For instance, timber products, recreational activities, or non-timber products
like ecological functions fall under this category
IUV refers to non-extractive use value commodities derived from the services provided by
environmental resources. It includes two components:
Option Value
This value is derived from maintaining the option to use the environmental resource at some
point in the future.
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Existence Value
Existence value represents the value people place on knowing that a particular environmental
asset exists, even if they do not directly use it. It encompasses the preservation of biodiversity,
habitats, and species for future generations12.
Pure existence value is a subset of existence value. It reflects the intrinsic value associated with
the mere existence of an environmental asset, regardless of any direct or indirect use. People
appreciate nature for its own sake, recognizing its inherent worth.
Bequest value is another form of existence value. It represents the value individuals attach to
preserving environmental assets for the benefit of future generations. It’s about leaving a positive
legacy for those who come after us.
In summary, an individual’s valuation of an environmental commodity can indeed include
both user value (direct and indirect) and existence value. Whether appreciating nature for its
practical benefits or recognizing its intrinsic worth, these various dimensions contribute to our
overall understanding of environmental valuation
The method has great flexibility, allowing valuation of a wider variety of non-market goods and
services than is possible with any other non-market valuation technique. It can be used to
estimate both use and non-use values, and it is the most widely used method for estimating non-
use values.
3. One of the strengths of the contingent valuation method (CVM) is its ability to capture
existence value. How can the researcher take advantage of this, yet avoid some of the biases of
such a survey based approach?
Range bias: In this case, respondents may perceive that the range presented reflects the
acceptable bids and therefore, they may adjust their offered bids. Relational bias: In this case,
respondents link their valuations to another environmental amenity value, which used as
benchmark. Some of the benefits of using CVM for valuing non-market goods and services are:
It is flexible and adaptable. CVM can be applied to a wide range of goods and services,
such as environmental amenities, public health, cultural assets, and social welfare. It can
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also be tailored to different contexts and scenarios, such as hypothetical or actual markets,
discrete or continuous choices, open-ended or closed-ended questions, and single or
multiple bids.
It is consistent with economic theory. CVM is based on the revealed preference approach,
which assumes that people's preferences are revealed by their actual or hypothetical
behavior in the market. CVM also follows the compensating variation or equivalent
variation measures of welfare change, which are theoretically valid and consistent with
consumer surplus.
It can provide policy-relevant information. CVM can estimate the aggregate willingness
to pay or aggregate willingness to accept for a given population, which can be used as an
indicator of the social benefit or social cost of a policy intervention
Bias and uncertainty: CVM surveys are prone to various types of biases and uncertainties
that can affect the quality and accuracy of the valuation estimates. For example, respondents may
overstate or understate their WTP or WTA due to strategic behavior, altruism, protest, or
ignorance. Respondents may also be influenced by the wording, framing, or context of the
survey questions, or by their own preferences, beliefs, or attitudes. Additionally, respondents
may face uncertainty about the good or service being valued, their own income or budget
constraints, or the hypothetical payment scenario. These factors can introduce noise, error, or
inconsistency in the valuation estimates, making them difficult to interpret and compare.
Validity and reliability: CVM surveys need to ensure that the valuation estimates are valid
and reliable, meaning that they reflect the true economic value of the non-market good or service
and that they are consistent and replicable across different samples, methods, and contexts.
However, achieving validity and reliability is not easy, as it depends on many factors, such as the
choice of elicitation method (e.g., open-ended, closed-ended, or iterative), the specification of the
payment vehicle (e.g., tax, fee, or donation), the definition of the policy or program (e.g.,
quantity, quality, or availability), the description of the good or service (e.g., attributes, benefits,
or impacts)Ethical and political issues: CVM surveys may raise some ethical and political issues
that can affect the acceptability and legitimacy of the valuation estimates. For example, some
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critics argue that CVM is unethical because it implies that everything has a price and that people
can buy or sell anything, regardless of its intrinsic or moral value.
4 Consider a project that would involve purchasing marginal farmland that would then be
allowed to return to forest plantation. Researchers designed a survey to implement the
dichotomous choice method. They reported the following data. What is the mean
willingness-to-pay for the sampled population? Hint: mean WTP the increment level of
price times the sum of the stated bid
Stated Price (annual payment in Fraction of Respondents Accepting Stated
dollars) Price (%)
0 98
5 91
10 82
15 66
20 48
25 32
30 20
35 12
40 6
45 4
50 2
Let's calculated the mean WTP for the sample population based on the provided
date, To find the mean WTP, we will follows these step
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1 multiple each stated Price by the corresponding fraction of respondent accepted the
2 sum up the resut from step 1
3 divide the total by no_of data population
Solution
For each price level
0*98%=0
5*91%=4.55
10*82%=8.20
15*66%=9.9
20*48%=9.6
25*32%=8
30*20%=6
35*12%=4.2
40*6%=2.4
45*4%=1.8
50*2%=1
Sum up result from step1
0+4.55+8.2+9.9+9.6+8+6+4.2+2.4+1.8+1=55.45
The mean of total value increment level of price divide the number of price point
55.45÷11 = 5.04