Contingent valuation and choice experiment of citizens’ willingness to pay for forest conservation in southern Finland

Environmental quality has a direct effect on citizens’ welfare. To quantify this effect, the four articles of this thesis analyse Finnish citizens’ willingness to pay (WTP) for increased forest conservation using the contingent valuation (CV) and choice experiment (CE) methods. These methods are based on neo-classical welfare economics augmented with the choice process framework originating from psychology and behavioural economics. Using the CV method, we analyse how WTP is affected by respondents’ uncertainty, by the share of nonrespondents and by the considerably high share of “yes” responses at the highest proposed costs to households. The CE data are used to study the effects of different conservation programme characteristics on WTP. The results show that Finnish citizens support increased forest conservation. The median WTP in the contingent valuation was 72 EUR, i.e. 50% of respondents supported increased conservation if the costs per household did not exceed 72 EUR. The mean WTP estimates were sensitive to modelling assumptions and assumptions concerning the nonrespondent preferences. This emphasises the need for careful sensitivity analyses when results are used for welfare measurement and policy planning. Respondents’ choices in the valuation questions were affected by the household costs of conservation and other socioeconomic characteristics. The results suggest that the choices in valuation tasks are affected by economic and psychological factors. The study gives important insights into the choice behaviour and lower and upper bound estimates of WTP. These estimates are somewhat lower than those in comparable earlier Finnish studies. In CV, respondents seemed insensitive to programme size while the extent of the proposed project had a significant effect on the choices in CE.