Contingent valuation study of uncertain environmental gains

Acid deposition is a present and future cause of biodiversity losses in vulnerable upland areas of Scotland important for nature conservation. However, the exact nature of damage under the status quo, and both the timing and extent of recovery of upland ecosystems if deposition is reduced, are subject to uncertainty. This uncertainty complicates damage cost estimation. In this paper, we have explored the use of CVM to measure the willingness to pay (WTP) of the Scottish population for uncertain recovery/damage scenarios from reduced acid rain deposition. An optimally-designed referendum format was used utilising the distribution of open-ended bids from a pilot study to determine bid amounts and sampling size for each bid amount. Eight explanatory variables, including future damage level were selected in a non-linear step-wise regression analysis. Average household WTP for abatement of acid rain was pound 247 and pound 351 per year when faced with low and high future damage levels respectively. Recovery level and recovery time did not significantly influence WTP. When faced with risky outcomes regarding future damage and recovery level, respondents were found to be risk averse to both environmental gains and losses.