Theory of Willingness to Sell to Valuate Ecosystem Services in the Contingent Valuation Method

Abstract

Willingness to Pay (WTP) and Willingness to Accept (WTA) is the mainstream of the contingent valuation method (CVM) and especially the willingness to pay techniques is widely used in valuating public goods and ecosystem services in many areas in the world. The main technique of WTP in CVM is to achieve the maximum value that public would like to pay for some ecosystem services; unfortunately, it is always accompanied by a psychological phenomenon as free rider, since actually, everyone can enjoy the public goods equally no matter how much they paid, which is also the definition and feature of the public goods. While, although recent advances have considerably reduced the biases and shortcomings of CVM such as embedding effect and hypothetical bias. Researchers still faced with a need for a new method, which is fundamentally interfered with less psychological factors. This paper presents a first attempt to build the theory of Willingness to Sell (WTS) to quantify the economic value of the ecosystem services on the basis of the combination of existing environmental science and economics. WTS is a method to achieve a reasonable equilibrium price through the public judgment on the value of public goods or ecosystem services rather than the production costs of the supplier. The theoretical construction, mathematical modeling, implementation of the process, and survey method and question designs of WTS have been discussed and presented in this research. We believe that a more objective and reliable economic value of ecosystem service could be drawn through the combination of the new method and existing WTP and WTA skills, and the validity of CVM method research will also be greatly improved.

Keywords: Contingent valuation method, willingness to sell, willingness to pay, willingness to accept, willingness to depreciate