Willingness to Pay for Rural Landscape Improvements: Combining Mixed Logit and Random-Effects Models

Authors

  • Danny Campbell

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      Danny Campbell is a Research Fellow in the Gibson Institute for Land, Food and Environment, Queen's University Belfast, Northern Ireland. E-mail: d.campbell@qub.ac.uk for correspondence. The author would like to thank Prof. George Hutchinson and Prof. Riccardo Scarpa for their expert guidance. This work was supported by funding from the Irish Department of Agriculture and Food under the Research Stimulus Fund and Teagasc under the Walsh Fellowship Scheme. The comments of JAE chief editor, David Harvey, and those of three external editors are gratefully acknowledged.


JEL classifications: C33, C35, Q24, Q51.

Abstract

This paper reports the findings from a discrete-choice experiment designed to estimate the economic benefits associated with rural landscape improvements in Ireland. Using a mixed logit model, the panel nature of the dataset is exploited to retrieve willingness-to-pay values for every individual in the sample. This departs from customary approaches in which the willingness-to-pay estimates are normally expressed as measures of central tendency of an a priori distribution. Random-effects models for panel data are subsequently used to identify the determinants of the individual-specific willingness-to-pay estimates. In comparison with the standard methods used to incorporate individual-specific variables into the analysis of discrete-choice experiments, the analytical approach outlined in this paper is shown to add considerable explanatory power to the welfare estimates.

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