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Managing groundwater in a mining region: an opportunity to compare best-worst and referendum data

Citation

Hatton MacDonald, D and Rose, JM and Johnston, RJ and Bark, RH and Pritchard, J, Managing groundwater in a mining region: an opportunity to compare best-worst and referendum data, Australian Journal of Agricultural and Resource Economics, 59 pp. 1-25. ISSN 1364-985X (2019) [Refereed Article]

Copyright Statement

Copyright 2019 Australasian Agricultural and Resource Economics Society Inc.

DOI: doi:10.1111/1467-8489.12326

Abstract

In nonmarket valuation, practitioners must choose a format for the valuation questions. A common approach in discrete choice experiments is the ‘pick‐one’ format, often with two alternative policy proposals and a status quo from which the respondent selects. Other proposed formats, include best‐worst elicitation, where respondents are asked to indicate their most and least favoured alternative from a set. Although best‐worst formats can offer efficiency in data collection, they can also lead to responses that are difficult to reconcile with neoclassical welfare estimation. The current article explores methodological issues surrounding the use of pick‐one versus best‐worst data for nonmarket valuation, focusing on framing and status quo effects that may occur within three‐alternative discrete choice experiments. We illustrate these issues using a case study of surplus groundwater use from Western Australian mining. Results identify concerns that may render best‐worst data unsuitable for welfare estimation, including a prevalence of serial choices in which the status quo is universally chosen as the worst alternative, rendering part of the choice process deterministic. Asymmetry of preferences and serial choices can be obscured when models are estimated using ‘naively’ pooled best‐worst data. Results suggest that caution is warranted when using best‐worst data for valuation, even when pooled results appear satisfactory.

Item Details

Item Type:Refereed Article
Keywords:willingness to pay, best-worst scaling, mining, habitat, Aboriginal cultural sites, groundwater
Research Division:Economics
Research Group:Applied Economics
Research Field:Environment and Resource Economics
Objective Division:Economic Framework
Objective Group:Microeconomics
Objective Field:Microeconomics not elsewhere classified
UTAS Author:Hatton MacDonald, D (Associate Professor Darla Hatton MacDonald)
ID Code:134660
Year Published:2019
Deposited By:Economics and Finance
Deposited On:2019-08-26
Last Modified:2020-01-10
Downloads:0

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