Comparing welfare estimates across stated preference and uncertainty elicitation formats for air quality improvements in Nairobi, Kenya

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Authors

Ndambiri, Hilary
Brouwer, Roy
Mungatana, Eric Dada

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Publisher

Cambridge University Press

Abstract

The effect of preference uncertainty on estimated willingness to pay (WTP) is examined using identical payment cards and alternative uncertainty elicitation procedures in three split samples, focusing on air quality improvement in Nairobi. The effect of the stochastic payment card (SPC) and polychotomous payment card (PPC) are compared with a conventional payment card (PC). Substantial financial support is found for improved air quality in Nairobi, with approximately 85 per cent of the whole sample stating a positive WTP. The way WTP values are elicited, with and without ability to express preference uncertainty, has significant effect on WTP welfare estimate. Allowing respondents to express experienced uncertainty when statingWTP value yields more conservative but less accurate WTP values for inclusion in policy analysis. The PPC seems to hold more promise since it is easier to understand and imposes less cognitive burden on survey participants than the SPC in a developing country context.

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Keywords

Preference uncertainty, Air quality, Nairobi, Willingness to pay (WTP), Stochastic payment card (SPC), Polychotomous payment card (PPC), Payment card (PC)

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Citation

Ndambiri, H, Brouwer, R & Mungatana, ED 2016, 'Comparing welfare estimates across stated preference and uncertainty elicitation formats for air quality improvements in Nairobi, Kenya', Environment and Development Economics, vol. 21, no. 5, pp. 649-668.