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Accounting for subsistence needs in non-market valuation: a simple proposal

Abstract : Revealed and stated preference techniques are widely used to assess willingness to pay (WTP) for non-market goods as input to public and private decision-making. However, individuals first have to satisfy subsistence needs through market good consumption, which affects their ability to pay. We provide a methodological framework and derive a simple ex post adjustment factor to account for this effect. We quantify its impacts on the WTP for non-market goods and the ranking of projects theoretically, numerically and empirically. This confirms that non-adjusted WTP tends to be plutocratic: the views of the richest – whatever they are – are more likely to impact decision-making, potentially leading to ranking reversal between projects. We also suggest that the subsistence needs-based adjustment factor we propose has a role to play in value transfer procedures. The overall goal is a better representation of the entire population’s preferences with regard to non-market goods.
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https://hal-amu.archives-ouvertes.fr/hal-03620225
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Submitted on : Wednesday, November 30, 2022 - 9:14:51 AM
Last modification on : Thursday, December 1, 2022 - 3:15:16 AM

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Victor Champonnois, Olivier Chanel. Accounting for subsistence needs in non-market valuation: a simple proposal. Journal of Environmental Planning and Management, In press, pp.1-24. ⟨10.1080/09640568.2021.2008884⟩. ⟨hal-03620225⟩

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