How much do people in Scotland value characteristics of marine and coastal areas

2. Literature Review

2.1 Economic Valuation of the Environment

Economic valuation is used as a way to measure how much something is worth to people or society as a whole. This can help to inform decision making by improving understanding of the potential welfare costs, benefits and trade-offs associated with allocating resources in different ways (HM Treasury, 2022).

The total economic value associated with environmental goods and services is often split into two broad categories – ‘use value’ and ‘non-use value’.

‘Use value’ relates to the value people place on the environment from directly using it. For example, people may benefit from the environment through the direct use of natural resources (e.g. eating fish) or indirect use such as recreation. Even if they don’t hold a use value, people may also value knowing that the environment exists, is preserved and/or is available for future generations to experience – this is known as ‘non-use value’.

When feasible, the economic value of a good or service is usually inferred from market prices. However, it is often difficult to apply this approach to capture the value of many characteristics of the environment that do not tend to be traded in markets. In cases where the good or service is not typically traded in a market, other valuation methods are usually required (HM Treasury, 2022).

It is important to recognise that economic value is only one way of estimating how much something is worth to people or society. People may hold other important values that cannot be measured in monetary term (e.g. spiritual value) and a discussion on this topic can be found in Dasgupta (2021).

2.2 Non-market Economic Valuation Methods

In the absence of market prices, two of the most commonly applied broad categories of valuation methods are ‘revealed preferences’ and ‘stated preferences’.

For some goods and services that are not directly traded in markets, revealed preferences methods can be used to estimate their economic value. This is done by observing people’s behaviour in related markets. Revealed preferences methods capture ‘use value’ but they tend to be unsuitable for estimating ‘non-use value’. As they require observing people’s actual behaviour in markets, they rely on this market data being available. This often limits their applicability, particularly in the case of economic values relating to key characteristics of the marine environment for which there is often limited or no market data available.

Stated preferences methods are an alternative valuation method which involve using carefully designed survey questionnaires to elicit respondent’s willingness to pay or willingness to accept a specified outcome (Bateman et al., 2002). The use of stated preferences methods is recommended in HM Treasury’s Green Book appraisal guidance when robust revealed preferences methods are not available (HM Treasury, 2022). These methods tend to be more flexible than revealed preferences and they can be applied to a wider range of contexts (Bateman et al., 2002). They are also the only established method to measure both ‘use value’ and ‘non-use value’ (Jonhston et al., 2017).

The two most established and widely applied stated preferences methods are contingent valuation and choice experiments. Contingent valuation is a survey-based method which involves a single attribute (i.e. price) scenario, where people are asked directly what they are willing to pay for a particular good or service. In contrast, a choice experiment is a multi-attribute valuation approach where the scenario includes a set of goods or services described by its attributes.

Respondents report their preference from a combination of several options. A cost or price attribute is usually included to allow for the estimation of willingness to pay for marginal changes in the other attributes.

A key decision to make in the development of a stated preferences valuation study is whether a contingent valuation or choice experiment approach is more appropriate. Contingent valuation tends to be recommended when the researcher is interested in the value of a good or service as a whole (Bateman et al., 2002; Johnston et al., 2017). In contrast, choice experiments are usually more appropriate when investigating the willingness to pay for changes in the individual attributes of a good or service (Bateman et al., 2002; Johnston et al., 2017).

As a choice experiment was deemed to be more suitable to fulfil the research aims of this project, the rest of this section focuses on literature relating to choice experiments (see Section 3.1 for more details on the rationale for adopting this approach).

Every non-market valuation approach offers pros and cons. Stated preferences valuation techniques present their specific limitations. One of these limits is design issues that can impact the validity of choice experiment results. Respondents are assumed to answer truthfully and report values that they are actually willing to pay. However, due to the hypothetical nature of a survey, various biases may impact results and it is important that this is considered during the survey design process (Johnson et al., 2017). Problems can arise if respondents find the survey difficult to understand or do not believe the choice experiment to be realistic or plausible. The reliability and validity of results is often monitored by pre-testing the survey and using follow-up questions to check respondent’s understanding (Johnston et al., 2017).

2.3 Choice Experiments in a Scottish Marine Context

Choice experiments have been widely applied in areas such as environmental, transport and health economics since the 1970s. They are underpinned by consumer theory presented in Lancaster (1966) combined with random utility theory (Thurstone, 1927; McFadden, 1974). Their use as a non-market valuation method has accelerated since the beginning of the 21^st century ((Haghani, Bliemer and Hensher, 2021). They are often used to study people’s preferences for attributes related to a wide range of topics including recreational choices, biodiversity conservation and ecosystem restoration.

Although choice experiments have been widely applied to value different aspects of the environment, there are a limited number of studies that have focused specifically on marine and coastal areas in Scotland.

Philips et al. 2018 investigated the value of bathing waters and the influence of bathing water quality to people in Scotland. The study involved a mixed methods approach which included stated preferences (an online choice experiment), revealed preferences (travel cost method from an onsite survey) and qualitative research from focus groups. The choice experiment focused on four attributes: bathing water quality, amount of litter at beach most visited by respondents, number of beaches failing to meet water quality standards and the annual water charge for households in Scotland. Results from this study indicate that households in Scotland hold positive preferences for improving bathing water quality, reducing litter on beaches and reducing the number of beaches failing to meet water quality standards.

Kenter et al. 2013 used a combined choice experiment and contingent valuation approach to estimate the value of potential marine protected areas to divers and sea anglers in the UK. Results from Kenter et al. 2013 suggests that divers and anglers hold significant values associated with attributes related to the protection of the marine environment in Scotland. The study assessed preferences for policy proposals that were being discussed at the time, however these have since been superseded^[2].

Jobstvogt et al. 2014 conducted a choice experiment on Scottish households to assess their willingness to pay for additional marine protected areas in Scotland’s ‘deep-sea’ region. The study aimed to estimate the existence value for deep-sea species and the option value of deep-sea organisms as a source for future medicinal products. The attributes chosen to represent these values were the number of protected species and the potential for the discovery of new medicinal products from deep-sea organisms. Overall, results suggested that respondents had positive and significant willingness to pay for both attributes.

There are a number of other relevant studies that have estimated values for attributes of marine and coastal areas in places outside of Scotland (e.g. Börger et al. 2014; Grilli et al., 2022; Paltriguera et al. 2018; McVittie and Moran, 2010). A wide range of attributes have featured in previous studies including (but not limited to): biodiversity levels, protection of specific species or groups of species, marine litter, access restrictions, educational content and water quality. While these studies help to understand the scale of monetary values for different aspects of marine and coastal areas, it is very difficult to directly apply these values to a Scotland specific context.