Welfare measures

Welfare measures can be estimated for each class of respondents, with the assumption being made that everyone within that class is identical. To determine whether respondents are willing to pay more for particular actions to improve biodiversity, the WTP can be calculated. The implicit price of an attribute is calculated, using the following equation.

ܫܲ ൌ െߚ௞ ߚ଻

(11)

Where IP is the implicit price

ߚk is the parameter of the non-marketed attribute of interest where

k= 1,2,…..6

ߚ7 is the parameter of the monetary attribute (CTR)

The delta method was used to estimate the confidence intervals for the implicit price as shown in Table 11. This method is shown to be able to determine the variance of the ratio of parameter estimates and makes three assumptions (Bliemer & Rose 2013). These are, that the WTP is normally distributed around its mean, the estimated model has used an appropriate sample size, and the cost parameter coefficient is accurate (Hole, 2007). Hensher et al. (2005) simplifies this expression as

ݏǤ ݁Ǥ_൬ఉೖ ఉ_ళ൰؆ ඨ ͳ ߚ଻ଶቈܸܽݎሺߚ௞ ሻ െʹߚ௞ ߚ଻ Ǥ ܥ݋ݒሺߚ௞ǡ ߚ଻ሻ ൅ ൬ ߚ௞ ߚ଻൰ ଶ ܸܽݎሺߚ଻ሻ቉ (12) where:

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ߚk is the parameter for attribute k

ߚ7 is the parameter for the cost attribute

The resulting values can be substituted into equation (13) shown below (Hole, 2007, p. 829) ܥܫݏ ൌ െ ൬ߚ௞ ߚ଻൰ േ ͳǤͻ͸ඨݒܽݎ ߚ௞ ߚ଻ (13)

The implicit prices and confidence intervals for the six-class LCM are presented for each class for which the cost parameter was attended to. This represents 0.393 of respondents. The 95% confidence intervals for these estimates are given in the parentheses directly under the estimates. These have been made on a ‘ceteris paribus’ basis, and should be viewed from the perspective of being an estimate of a respondent’s willingness to pay for an increase in utility of that particular attribute, should everything else remain constant (Bennett & Adamowicz, 2001).

Table 11 Marginal willingness to pay for actions to maintain or improve biodiversity on agricultural land.

Class

membership Class probability LII ECM ECE

1 All attributes attended to 0.157 – $98.29 - $0.15 $-49.22 $8.71 - $79.00 $43.90 $31.18 - $88.12 $59.65 2 LIM nat 0.166 $27.31 $16.05- $38.57 $8.71 - $79.09 $43.90 $31.18- $88.12 $59.65 3 ECE nat 0.070 -$49.22 -$62.11- -$36.32 $56.24- $60.81 $58.52 4 LIM, CTR nat 0.320 5 LIM, ECE, CTR nat 0.151 6 HAP,HAE,LIM, LII,ECM, ECE,CTR nat 0.136

Note: nat = ‘not attended to’

The results shown in Table 11 indicate that where all attributes are attended to in (class 1), Waikato farmers showed a $43.90 WTP for maintaining

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actions to protect ecosystem services and $59.65 for increasing actions to enhance ecosystem services annually for ten years. In addition to this class, members indicated they would be willing to accept (WTA) a payment of $49.22 annually for 10 years to ‘control possums and other pests’ when undertaking actions to improve biodiversity.

For class 2, farmers in the region attending to all attributes except ‘possum control’, were willing to pay $27.31 annually for 10 years for the protection of locally important species using ‘control of possums and other pests’. Within this class, farmers were willing to pay $43.90 annually for ten years towards ‘maintaining of ecosystem services’ and $59.65 annually for 10 years to ‘increase actions to maintain ecosystem services’.

Where respondents ignored enhancement of ecosystem services (class 3), there was an increase in their WTP towards actions that maintain ecosystems services of $58.52 annually for 10 years. In contrast to this, where respondents attended to both attributes describing actions to protect locally important species within this class, respondents indicated they would be WTA a payment of $49.22 to do more to control possums and other pests.

5.3.2 Summary

This chapter has provided a detailed analysis of the choice data and presented the results of the choice model. Data obtained from the survey have been analysed and an overview of the survey results and the demographics of the sample population provided. The results of the model

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have illustrated that attribute processing strategies have taken place by respondents, in the form of attribute non-attendance.

This chapter presents the results, in terms of the model output and welfare estimates. The key findings indicated that farmers had a positive utility for management actions which maintain and enhance ecosystem services. However, farmers had a disutility towards the protecting of locally important species using both ‘possum control’ and ‘possum and other pest control’. In contrast, respondents that ignored the ‘possum control’ action had a significant positive utility towards the protection of locally important species using ‘possum and other pest control’.

Farmers in the Waikato showed that they would be willing to pay annually for 10 years for some biodiversity preservation actions. Specifically, across 3 classes, farmers were willing to pay up to $58.52 annually for ‘maintaining current actions to protect ecosystem services’. In comparison, farmers attending to both attributes describing taking actions to protect locally important flora and fauna, would be willing to accept a payment of $49.22 to do more to protect locally important species by ‘controlling possums and other pests’.

Attribute non-attendance towards certain attributes was present amongst farmers. Notably only 16% of respondents considered all attributes but nearly 40% of respondents attended to either all attributes or all but one of the attributes. An example of the attribute processing strategies that were adopted by respondents are indicated by the low probability (0.227) of combined class membership where both management actions to protect

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locally important flora and flora are considered. Approximately 64% of respondents are likely to consider actions that ‘maintain current actions to protect ecosystem services’ and ‘increasing action to enhance ecosystem services’.

The next chapter will discuss the key findings of this research within the context of the literature on valuing biodiversity. The implications of these results, in terms of the management of biodiversity on Waikato farmland, will also be discussed.

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Chapter 6

6

Discussion

The preceding chapter presented the results of this research, including the estimation of a non-market value for indigenous biodiversity on agricultural land identified by rural landowners. These were presented in the form of marginal WTP values from different membership classes. The purpose of this chapter is to discuss the key findings of this research. The first section will detail the importance of the economic value of biodiversity. The second section will discuss the importance of the results for the management of biodiversity in the Waikato region. This will be followed by investigating the specific aspects of the disutility shown in the results in terms of management actions involving pest control. Finally, comment will be made on the results in terms of the importance of ecosystem services to the agricultural system and the attendance to the status quo attribute.