Valuation Study

Value of Preserving A Tropical Rain Forest

Attributes

Medium: Land

Country: Papua New Guinea

Analytical Framework(s): Contingent Valuation

Unit(s): Mean WTP

Study Date: 1998

Publication Date: 1998

Major Result(s)

Study Note: This study is an extension of Kramer and Mercer's analysis of the economic value of tropical rain forest preservation. Kramer and Mercer estimated United States (US) resident's willingness to pay (WTP) to preserve an additional five percent of the world's tropical rain forests. This study expanded on this work in three respects. First, the analysis was expanded to compare the WTP of Port Moresby, Papua New Guinea (PNG) and Portland, Maine (US) residents. Not only is preserving tropical rain forests a truly global issue, it has often been framed as a developed country versus developing country issue as evidenced by the 1992 Rio Conference. Second, the extent of differences in WTP between Portland residents and Port Moresby residents was examined based on cultural orientation, motives and socioeconomic differences. Third, this study, which focused primarily on existence value, investigated the motives underlying existence value and identified the economic and non-economic components of WTP.

Study Details

Reference: Billy Manoka. 1998. Existence Value: A Re-Appraisal and Cross-Cultural Comparison. EEPSEA Research Report, No. 1998-RR.

Summary: This research compared existence values held by Portland, Maine (United States) and Port Moresby (Papua New Guinea) residents for the preservation of an additional five percent of the world's tropical rain forests and identified economic and non-economic components of existence value and use values. Existence value was narrowly defined as cognitive in nature; it is the value placed on simply knowing tropical rain forests exists independent of current and future use values. Between November 1998 and February 1999, a 16 page mail-back questionnaire was sent to a random sample of residents in Portland and Port Moresby. A total of 330 and 461 questionnaires were returned from Portland, and Port Moresby, respectively for an overall response rate of 41 and 49 percent, respectively. The results indicated that non-economic components of mean willingness to pay (WTP) accounted for at least 50 percent of the total value for both Portland and Port Moresby residents. Non-economic components of existence value (intrinsic value, good cause, moral duty etc) and use value (non paternalistic altruism) were excluded to avoid presenting overestimated benefits. Portland and Port Moresby WTP estimates were found to be statistically different from each other. This finding invalidated the assumption that benefits could be directly transferable between countries, especially between developed and developing countries. This result was also supported by evidence of statistical differences in motives and socioeconomic variables between Portland and Port Moresby respondents. Portland residents generally had a higher value for existence (as a proportion of total mean WTP) than Port Moresby residents. Both the Portland and Port Moresby WTP estimates were lower than Kramer and Mercers' (1997) US estimates. Results from the attitudinal models showed that Port Moresby respondents were more environment oriented than Portland respondents were. The latter were more development oriented. Port Moresby respondents expressed the sentiment that the rich nations of the world (including the US) should bear the responsibility of preserving tropical rain forests.

Site Characteristics: PNG is one of the very few countries whose total land area is still largely covered with forests. Over 70 percent (36 million hectares) of the total land area is still forested. However, only a mere 0.02 percent (7,300 hectares) of these is protected. The pattern is the same in other tropical countries, where very little is being protected. Like most tropical rain forests, PNG's rainforests have very high species diversity. In PNG, 95 percent of the total land area is still under customary tenure. That is, land is communally owned. A group or clan (referred to as landowners) retains control over land use and transfer. The government has over theyears passed various Acts to acquire customary land for development (e.g., industrial logging, mining, oil drilling, and agriculture) and conservation purposes.

Comments: The study was motivated by two concerns. First, in general the concept of existence value has not been carefully defined. As a result, empirical existence value estimates often included non-economic components (intrinsic value, ethical, moral and social values) that should not be included in benefit-cost analysis and damage assessment. Second, existence values for environmental goods such as rain forest preservation are global, but little is known about the value of these resources to those living outside the US. This research compared existence values held by Portland and Port Moresby residents for the preservation of tropical rain forests and examined whether or not these were legitimate economic values for use in benefit-cost analysis and damage assessments.

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