Willingness to pay for the conservation of yew trees in vietnam

In answering the above questions, this study is able to partially measure theeconomic value of conserving yew tree in Daklak, which will be helpful forpolicy makers to decide on the cons

VIETNAM - NETHERLANDSPROGRAMME FOR M.A INDEVELOPMENT ECONOMICS

WILLINGNESS

TO PAY FOR

THE CONSERVATION

OF YEW TREES

IN VIETNAM

BYNGUYEN THANH TUAN

MASTER OF ARTS IN DEVELOPMENT

ECONOMICS

VIETNAM - NETHERLANDSPROGRAMME FOR M.A INDEVELOPMENT ECONOMICS

WILLINGNESS

TO PAY FOR

THE CONSERVATION

OF YEW TREES

IN VIETNAM

A thesis submitted in partial fulfilment

of the requirements for the degree of

MASTER OF ARTS INDEVELOPMENT ECONOMICS

ByNGUYEN THANH TUAN

Academic Supervisor:

DR TRUONG DANG THUY

HO CHI MINH CITY, SEPTEMBER 2013

Yew tree has not only value in use of wood products but also in existence of itself which provides valuable opportunities to other fields of research such as biology, chemistry, pharmacology The number of Vietnamese yew trees, however, has reduced year after year and today there are only approximately 250 natural individuals locating in Daklak, Vietnam According to the IUCN and Viet Nam Red Data Book, Vietnamese yew trees are critically endangered The subject of this research is to measure the existence value of yew trees using contingent valuation method (CVM) with single-bound dichotomous choice (DC) The study finds out that the mean WTP for conservation of Yew in Vietnam is approximately VND 73,000 per household; and household heads with different socio-economic characteristics such as age, income, occupation, and education have significantly different levels of WTP.

I would like to thank my supervisor for his instruction and comments through my research Especially I am deeply impressed by his enthusiasm with all students working with him That is one of the motivations to help me accomplishing the thesis.

I also want to say thanks to all of professors, lecturers, and other people in this program.

Without knowledge from their classes and tutorials, my thesis cannot be possible

Eventually, I would like to express my gratitude to my family, my friends, and my company who did support me during the time of studying and working on my thesis.

Nguyen Thanh Tuan

Chapter 2: Literature Review 6

2.1 A brief history of CVM 8

2.2 Economic theory of CVM 10

2.3 Basic elements of CVM 12

2.4 Empirical applications 16

2.5 Empirical studies In Vietnam 17

Chapter 3: Methodology and Data 19

3.1 WTP estimation 19

3.2 Survey design 21

Chapter 4: Results and Discussions 26

Chapter 5: Conclusion 53

List of tables

Table 1: Survey mode 13

Table 2: Statements 33

Table 3: Response of WTP questions – at the first time 36

Table 4: Response of WTP questions – at the second time 36

Table 5: Calculated mean WTP – non-parametric estimate 43

Table 6: Definitions of variables included in the regression 44

Table 7: Results of simple regression with constant and BID 45

Table 8: Regression results 47

Table 9: Summary of parametric estimated WTPs for the case of dependent variable - Y22 51

Table 10: summary of estimated WTPs for the case of dependent variable – Y22 52

List of figures Figure 1: Distribution of respondents’ age 26

Figure 2: Cross - tabulation of marital status and group of age 27

Figure 3: Occupation by gender 28

Figure 4: Levels of education 29

Figure 5: Gender in levels of education 30

Figure 6: Distribution of reported household income 30

Figure 7: Country facing problems 31

Figure 8: Environmental issues 32

Figure 9: Ranks of proposal species 33

Figure 10: Attitude toward endangered species 34

Figure 11: Survivor function for the second time WTP question 37

Figure 12: Reasons of why respondents dislike the proposed payment vehicle – electricity surcharge 40 Figure 13: Discussion time to answer questionnaire 41

Figure 14: Survivor function after certainty adjustment for the first time WTP elicitation 42

Figure 15: Survivor function after certainty adjustment for the second time WTP elicitation 43

Chapter 1: Introduction

Yew (also known as waterconifer) is the scientific names Glyptostrobus pensilis listed in the IUCN and Vietnam red data Books as endangered situation (CR)1, and considered as the living fossil of gymnosperm industry The Decree 32/2006/ND-CP

-of the Vietnamese government has stated that this kind -of tree is classified into group IA: strictly banned from exploitation and use for commercial purposes.

According to the reports of Forest Protection Department (FPD) of DakLak province, this species of yew trees in the world now exists only in Ea Ral (Ea H'Leo district), Trap K'sor (Krong Nang district) and a few dozen has been scattered in Krong Buk district, DakLak province (Bao Huy, 2010) This ancient species facing extinction needs urgent solutions for propagation, conservation and development.

Yew wood is un-attackable to termite, warping, and fragrant Therefore, it isnormally used to produce furniture, household goods, musical instruments,etc The breathing roots which are smooth, porous, and light have been used

to produce cork, hat Moreover, its branches, leaves, and ripe cones are used

as arthritic medications, pain reducing, and skinny tightening It also has finegrain, many patterns, and especially the longer soak in the water or mud, theshinier it is Additionally, yew shape is beautiful, then, one could grow yews forornamentation, or for protection the coastal land from erosion

Population and habitats of yew tree in Daklak, Vietnam:

The number of yew currently is 255 individuals2 which only locate in Daklakprovince (Bao Huy, 2010) There are 219 individuals of yew in Ea Ral, Ea H’leo

1 CR – according to classification of IUCN and Vietnam red data book, CR means critically endangered The order

of classification is that Extinct (EX), Extinct in the wild (EW), Critically endangered (CR), Endangered (EN), Vulnerable (VU), Lower risk (LR), Data deficient (DD), and Not evaluated (NE) Find more details in

Vietnam Red Data Book, Part II Plants (Dang et al., 2007).

2 According to the managers of the conserving yew tree project in Daklak for period 2011 –

2015, this number was updated as 162 individuals in Aug, 2012.

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Willingness to Pay for the Conservation of Yew-trees in Vietnam

district; 31 individuals in Trap K’sor, Krong Nang district; and 5 old trees in Cu

Ne, Krong Buk district

The existence of yew has not only meaning to itself, but also to the whole area of primary forest with biodiversity in which they locate According to Bao Huy (2010), with the biological characteristic that they have just lived in the seasonal wetlands, yews only exist in some specific areas in Vietnam or in the world With the thousand- year existence, yews and biological system in the area of conservation have been a very valuable place for researches If there is no action or intervention from the government from now, the risk of permanent loss of the thousand-year primitive forest is inevitable by the growing and strengthening effects of timber extraction and yew-wood trading activities That would be a large detriment for studies have not been done as well as the discovery of biodiversity here.

Figure 1C (in Appendix C) illustrates the current distribution of yew individuals

in Trap Ksor (Krong Nang) Each individual has been numbered as shown inthe figure The distribution is dispersed widely in a large area In Trap Ksor(Krong Nang, Daklak), on March 24, 1987 the local government of Daklakprovince established a Decision about scheming and forbidding Trap Ksorforest area, and identified that this zone had become a protection area of yewtrees’ gene The total area is about 98.6 hectares and under the control of 2rangers and 3 contractual officers The surrounding area is agricultural land,separated from the core zone by simple barbed wire The current problemswith this preservation area are that there are not sufficient human resourcesfor protection purpose, low budget (about 16 million VND per year), and longdistance from here to the managerial office (10 kilometers) This explains whythere are still a lot of timber extraction activities here Moreover, theagricultural activities of farmers in surrounding area have reduced the waterresource that supports for growing and fire protecting of yew (Bao Huy, 2010)

Figure 2C (in Appendix C) describes the current distribution of yew population in

Ea Ral (Ea H’leo) In comparison with population in Trap Ksor, the individuals’location is quite close This would be a good condition in planning this area forconservation program In Ea Ral (Ea Hleo), the Yew management station hasbeen established and under control of Ea Hleo forest protection unit (FPU) in

1994 But according to the manager, there has been not an official decision forthis establishment The number of rangers here is just five persons Similarly toTrap Ksor, this lack of management gives more opportunities to illegal loggers.The statistic number of FPU shows that during 2009 there have been 22 violatingcases caught and prosecuted (Bao Huy, 2010)

The number of yew trees in Cu Ne (Krong Buk) is just five individuals In addition,these trees are very old and without top of trees All of them locate far away fromthe residential area, then, the officers face many considerably difficulties inprotecting activities (Bao Huy, 2010) According to scientists (Bao Huy, 2010;Tran, 2012 in Thai, 2012), the number of current yew trees is going to be reduced

in the near future due to the increasing illegal logging and trading

Current efforts of conserving yew tree in Daklak province: In 2011, the government of

Daklak province has approved the project of conserving habitat and yew trees in DakLak for period 2011 - 2015 The project was designed with funding from the state budget and partly from the contributions of the people and the international donor organizations However, this project had not been implemented until August 2012, and at that time, only Ea Ral area was taken over by the project managers The remaining areas in Krong Buk and Krong Nang have just been handed over in March

2013 This slow procedure is due to lack of personnel and funding3 According to the project design, the Ea Ral area needs at least 7 people on patrolling duty However, three of them are general staff, and handle concurrently

3 Mr Phuoc – current director of Yew conservation program – answered reporter of Da Nang Polices Newspaper on May 20, 2013 Online version is available at

http://cadn.com.vn/new/65_10471_-tha-p-tu-ng-ba-u-va-t-thu-y-tu-ng.aspx.

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Willingness to Pay for the Conservation of Yew-trees in Vietnam

jobs as official and patrolling staff in reality Infrastructure and equipment are notfully equipped This has made limited in ability to protect yew populations in EaRal, especially patrolling activities in protected areas With flooded and marshyproperties, the movement of patrol is very difficult In heavy rain conditions, thisproblem is even more difficult Another concerning problem is the area aroundthe belt has not been cleared; there are many individuals of yew being on theboundary and adjacent areas of agricultural crops of the local residents.Therefore, it is very easy for illegal loggers to intrude the reserves At the sametime, farming operations, irrigation of the surrounding population directly affectwater resources and ecological conditions of the yew populations

As mentioned above the number of yew individuals in Ea Ral area was counted as

219 at the time of conducting the project research by a group of researchers from the Tay Nguyen University in 2010 However, until the project management was officially formed and accepted the transfer of management, this number is only 140 yew trees The main reason is due to destruction of illegal loggers If the loss of control is continued, there will be more individuals of yew ruined annually The reduced number of yew also means that the resource for research and breeding will decrease Reducing the number of individuals and increasing of competing species which have been dominated habitats, plus the impacts of unfavorable natural elements from the surrounding agricultural activities will directly affect the habitat of yew environment This increases the risk of loss of yew in the future.

Research problems

In summary, the lack of resources for research and management has constrained the conservation of yew trees Moreover, the low ability and quantity of rangers make this task limited One important thing should be considered is that during 35 years the scientists who were tracking these areas did not recognize any regeneration of young yew tree by seed, just only a few plants regenerated by buds Most individual

Annually plants still flower and fruit set, but the results are flat-seeds (BaoHuy, 2010).

Research questions

The above problems raise a question of whether resources should be devoted toconserve yew trees A full cost-benefit analysis is required to answer thisquestion This study contributes by measuring the economic benefits of theconservation of yew trees This research analyzes attitudes and preferences onthe issue of Vietnamese yew trees through a public survey This paper’s aims are

to (i) assess the public awareness of yew trees; (ii) to answer the question “Arepeople willing to pay for the conservation of Vietnamese Yew?” If yes, how muchare they willing to pay?; and (iii) to determine the impacts of socio-economiccharacteristics on the respondents’ WTP

In answering the above questions, this study is able to partially measure theeconomic value of conserving yew tree in Daklak, which will be helpful forpolicy makers to decide on the conservation of yew trees, especially in thefunding for a project if it would be conducted

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Willingness to Pay for the Conservation of Yew-trees in Vietnam

Chapter 2: Literature Review

Most of goods and services from natural resources and environment are considered public goods, such as the forest, breathable atmosphere, water, recreational sides, and wildlife Unlike marketed goods which have market prices, these public goods have neither market nor price Public goods and services are not sold or bought in markets; and markets do not regulate any activities of supplying or changing them A system of decentralized market is not believable to conduce to the optimization of using natural resources (Freeman, 2003, chapter 1, p.6) Meanwhile, the measures

of welfare from these providing or changing of environmental goods and services in term of money are very crucial for efficient use of natural resources Up to now, there are many methods that have been developed to monetize the welfare generated by these goods and services.

One of the primary elements to reach the efficient uses of natural resources is toassure that the valuation of environmental assets is appropriate Asheim (2000)

in Amirnejad et al., (2005) states that the concept of environmental valuationbrings on questions about the ability to account for the environmental value interms of finance According to Howard and Farber (2002), efforts to assess themonetary value of ecosystem services act as various roles in management of thelinks between natural systems and human At the macro level, there is thecontribution of ecosystem valuation into the construction of indicators of humanwelfare and sustainability At the micro level, the studies of valuation are based

on both the structure and function, and the varied and complex roles ofecosystem in supporting human welfare to reveal information

The total economic value of a natural resource consists of use and non-use values Use value includes actual value (for instance, relaxing in a national recreational area) and option value (value that is not planned to use at the present but preserved the existence to use in the future as an option) Non-use value relates to the WTP to maintain existence of some goods even though they have no actual or option uses.

Non-use value includes altruistic value, existence value, and bequest value Altruistic value is welfare generated from the fact that a good or service is available to other people in the society Bequest value is the welfare from knowing that goods and services are available to the future generation The existence value reflects the value that an individual is willing to pay to maintain existence of goods, given that individual knowing there is no value of actual use or planned use for anyone (Bateman et al., 2002).This study aims to measure the existence value of yew tree in Vietnam by estimating the WTP of yew tree conservation.

Several techniques have been developed to elicit the attitudes and preferencesfor, and thus monetize the total economic value of public goods such asenvironmental services, forest, and recreation These techniques are usuallyclassified into revealed preference method and stated preference method.However, the most popular technique to measure existence value is the statedpreference (SP) Researchers could apply this method to ask people about theirWTP for public goods, or their willingness to accept (WTA) a decrease in publicgoods, or to suffer the bad services, based on a hypothetical setting Amongstated preference methods, contingent valuation method (CVM) and choicemodeling (CM) are popular to analysts In CVM, respondents are asked to givetheir WTP or WTA for a change in supplying or quality improving of natural andenvironmental resources In CM, respondents will face a series of choice sets Ineach set, they have to choose the preferred alternative among several alternativegoods, or rank the alternatives (Mogas, Riera & Bennett, 2006) Bateman et al.(2002) suggests that if it is required the WTP for the total values of environmentalgood or service, then the contingent valuation method (CVM) should be chosen,instead of choice modeling (CM), because the latter is more suitable formeasuring the WTP for one or some attributes of that good

The following parts of this section will provide a brief history of CVM,economic theory of CVM, and basic elements of CVM

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Willingness to Pay for the Conservation of Yew-trees in Vietnam

2.1 A brief history of CVM

Among the stated preference techniques, this paper applies the contingent valuation method CVM has been accepted by both academics and policy makers for the purpose of valuation of resources, environmental goods and services (Han, 2011) CVM has become the method to be used most widely for environmental valuation with stated preference information, with the value estimates obtained are contingent

on the information which has been early provided to interviewees in the survey.

CVM was firstly introduced by Bowen (1943) and Ciriacy-Wantrup (1947), but Davis

in 1963, was the first person who used CVM in an empirical study; in which he conducted a survey within hunters’ sample and estimated the goose hunting’s benefits The two important components in the total economic values were gained after that in the environmental economics literature: option and existence values These values are not able to be estimated by the revealed preference methods such

as travel cost method (Smith, 1993); only the CVM or CM could capture the estimation of these values (Desvousges et al., 1993) In this line of thought, Hanemann (1994) states that this method is one of the methods that provide the standardization and flexibility to measure the economic values CV method is based

on questionnaire to estimate non-market goods’ economic values In the survey, people will be asked to give out monetary bids for hypothetical goods with the provided information of products However researchers in doing CVM need to consider its possible shortcomings Problems of CVM pointed out and criticized by Diamond and Hausman (Hanemann, 1994) are validity of surveys, surveys’ vulnerability to response effects, creating the values of survey process, respondents’ prior experience or training for valuing the environment, and unable verification of survey responses Hanemann (1994) argues that it is theoretically possible to establish experiments of CV scenario which avert problems in terms of economic models commonly occurred with observed data.

There are some ways assuring the reliability of survey that are avoidingconvenience sampling and self-administered surveys; confronting subjects withsituation that is specific and realistic, instead of abstraction; applying closed-ended question; adding an interrogating section at the bottom of questionnaire tocheck whether respondents understand and accept the important parts of thescenario; and applying appropriate statistical procedures in data analyzing.

Survey responses could be significantly influenced by some small changes inthe order or words used in the survey instrument (Schuman and Presser,

1981 cited in Hanemann, 1994) But in some cases, the effects such as order,shifting meaning, and framing effects can be controlled For example, onechoses the sequence to create a cautious result or randomizes items’ orderacross interviews to deal with the sequence effects Or by using stringenttests with techniques of cognition, researchers can understand what themeaning of instrument to people is, and what the responses mean

CV has been asserted that its respondents place an unreal value on item, andthe interview process generates the values that it is looking for to measure.Hanemann (1994) stated that it is theoretically possible by debriefing section

to identify that whether one had inattention or no focus and stated “hasty or considered responses”, and researchers can discard them if desire

ill-By eliciting the suggestion of NOAA Panel, Hanemann (1994) confirmed thatprior experience or training is not relevant if the purpose of CV survey is todraw out preferences of people

To defend the idea that survey responses cannot be verified, Hanemann(1994) listed a lot of studies and concluded that “replication, comparison withestimates from other sources, and comparison with actual behavior wherethis is possible” are the ways to make validation of CV results

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Willingness to Pay for the Conservation of Yew-trees in Vietnam

2.2 Economic theory of CVM

In term of welfare economics, there should be a public intervention when the total benefits of this intervention are greater than its costs However, the problem here is that how can we measure this overall benefits? The starting point is the estimation of individual benefit which then will be used to aggregate to the relevant population to come up with the social benefits The net change in income associated with the change of public goods provided in terms of quality or quantity is the accurate measure in the estimating procedure of an individual’s benefits The information observed from the CV survey will be employed to discover the willingness to pay (WTP) distribution for a change in hypothesized provision of environmental goods A combination of the utility function in the economic theory and the error term in econometric theory is the framework of CV method In a discrete-choice CV survey, respondents are asked to vote for or reject a program that provides an environmental good or services, associated with a given monetary cost (T) Respondents are assumed to have a utility function, U, which is a function of income (A), and a set of conditioning factors (S): U (A; S) This means respondents know which factors are important to their utility levels But the true utility function may be unknown to the researchers; therefore, they have to build up a simplified model of real one Of course, it also captures important factors that are in establishing their welfare changes The analyst’s model is given by u(a; s; ɛ) The lower cases a, s are used to reflect the fact that including factors by analyst will not be exactly the same as considered respondent’s ones To take into account the differences, the researchers’ model contains a random element ɛ, which analyst cannot observe in the real utility function of respondents We can write the utility function as:

environmental good (yew trees in this study) with a payment of specifiedmonetary amount, T People will accept the suggested amount if

uj(q1, aj-T ; sj) + ɛ1j ≥ uj(q0, aj; sj) + ɛ0j

and reject otherwise (Hanemann, 1984; Lee and Han, 2002)

However, the unobservable component ɛj is captured in this function Whichmeans that analyst cannot observe it and is unable to predict the value taken by

ɛ, but can only estimate the probability of it taking any specific value Therefore,the probability of a “yes” response could be estimated by the followings:

Willingness to Pay for the Conservation of Yew-trees in Vietnam

Pr(yesj) = Pr (ɛ < ∑− )

where ɛ ≡ ɛ − ɛ The model can be estimated by assuming a distribution for

ɛ When a logistic distribution is assumed, the model can be estimated by alogit model

Once identifying the target population achieved, there will be a need to obtain arelevant sample represented for this population A sample is defined as therepresentative group for target population and a subject that survey will beimplemented By sampling, instead of entire population, time and expenses aresignificantly saved Designing sample includes both the types and the number ofinterviewees The principle of sampling is that the target subset must berepresentative for the entire population and sufficiently large to produce unbiasedand precise estimations Otherwise, there could be errors in sampling such assampling error or sample selection bias To minimize the sources of these errors,

an appropriate approach of sampling must be taken There are two maintechniques of designing sample: non-probabilistic design and probabilisticdesign The former reflects that the probability of being chosen of interviewees isnot fixed and decided by the researchers, meanwhile in the latter, individualshave a fixed and non-zero probability of being chosen (Bateman, et al., 2002).Due to the importance of this, sampling is a crucial part of CV study

Another part of survey structure in CVM is choosing the survey mode There aregenerally three main survey modes including mail surveys, telephone interviews,

and face-to-face interviews which could be taken place in respondents’homes or outside the home of respondents (Bateman, et al., 2002) The firsthas advantage in cost among these modes Due to the travel to respondents’home, face-to-face mode has the highest expense and time consuming Themediate one, telephone interviews, is more expensive than mail surveys, butwith the normally short calls its cost is still lower than face-to-face interviews.However, the response rates are inverse to the cost-based ranking, whichmeans that the face-to-face survey mode can touch the response rate at 70per cent or even higher; while the rates of telephone and mail survey modesare normally at 60-75 per cent, and 25-50 per cent, respectively.

In term of bias, the mail surveys can make self-selection bias when the large ratio of returned mails implies that they are interested in the survey’s topic Meanwhile the attendance of interviewers can also generate both negative and positive effects For example, respondents could feel uncomfortable to answer the sensitive questions related to income or political attitudes with the appearance of interviewers Or interviewees could react with the answers that make them nice to interviewers.

The telephone survey mode can quickly get the results with calls but they arealso easily refused There are some characteristics of these modessummarized in the following table

Table 1: Survey mode

Mode

Mail surveys

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Willingness to Pay for the Conservation of Yew-trees in Vietnam

Telephone interviews

Face-to-face interviews

Willingness to Pay for the Conservation of Yew-trees in Vietnam

demonstration aidsHigh response rates 70% +Greatest sample controlSource: Bateman et al., (2002, p.106)

Each of them has both advantages and disadvantages that researchers shouldconsider to select in order to come up with a qualitative data collection

In constructing questionnaire, the scenario and elicitation format are considerablyimportant As any survey, CV survey also depends on the contexts, which meansthat with different prospects of the provided scenario and questions, theestimated values are contingent Bateman et al (2002) suggests that three maindescribing elements should be included in a valuation scenario: the policy (orprogram, or project) change of interest; the constructed market; and the paymentmethod More details will be introduced in the section of survey design

After being provided with information about the goods and the scenario, respondents will be asked questions to decide the value of goods if they face the chances to reach it under some certain conditions In other words, that is the purpose of measuring monetary values In principle, elicitation method could be performed in various ways: the open-ended format, the bidding game, the payment card, the single-bounded dichotomous choice, and double-bounded dichotomous choice (Bateman, et al., 2002) The open-ended format is the most straightforward to apply for discovering values Respondents decide the values by themselves, thus the maximum WTP can be directly elicited from responses However, this method could lead to some problems, for instance, large number of non-responses, protest and zero answers, and outliers Moreover, this format is able to bring on unsound responses as argument of Mitchell and Carson (1989) in Bateman et al (2002) In the bidding game format, respondents will be repetitively asked whether they are

whether respondents have accepted the previous offers or not This iterativeprocess will stop when a convergence of estimated WTP is achieved.Payment cards present to individuals a list of values (the values could bepoint estimate or a range of estimates) to make choice In a dichotomous ordiscrete choice CV format, respondents are asked to make decision of “yes”

or “no” for voting a hypothesized change of goods provision

Therefore, a good design of scenario and an appropriate paymentmechanism are important parts that will crucially contribute to the reliabilityand accuracy of responses

Because the CV method is based on survey, then the questionnaire structure

or the ordering of questions is also an important stage in designingquestionnaire Bateman et al (2002) argues that the reasons of thisimportance are the effect of earlier questions on the answers of the laterstage, and the encouragement to answer the rest questions

Beside the main and crucial parts above of survey designing, surveyadministration that consists of tasks from survey designing, pretest, to conductingsurvey needs crucially paying attention from the researchers, especially in thestages of pre-test and conducting main survey where the tasks are conducted by

a group of people This allows the research to be on the right way as designed

2.4 Empirical applications

As mentioned above, this paper explores the attitudes and preferencestowards the Vietnamese yew tree, and measures the WTP for theconservation of yew trees using CVM

To the best of my knowledge, there is no study valuing yew tree during last decade

by using CVM There are several studies applying CVM to measure the welfare changes of conservation of forest or avoiding deforestation Chopra (1993) stated that existence value of tropical forests is about 91% of total use and option values.

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Willingness to Pay for the Conservation of Yew-trees in Vietnam

By using contingent valuation approach, Echeverria et al (1995) reported thatthe estimated WTP of existence value of cloud forest in Costa Rica is U.S

$121.05/respondent Kramer and Mercer (1997) applied the contingent valuationmethod to estimate the WTP valuation of U.S citizen on the world tropicalrainforests On average, respondents presented a one-time of WTP around $21-

31 per household to protect an additional 5% of tropical rainforests In recentyears, there were studies about forest of Amirnejad et al (2005) and Andrea et

al (2010) By using CVM, Amirnejad and partners found that the estimated WTPfor forests’ existence value was $2.51 per household/ month in Iran In the paper

of Andrea et al., the mean WTP value of Swiss citizen for conservation of tropicalforests was approximately CHF (Swiss franc) 110 per year

2.5 Empirical studies In Vietnam

In recent years, there are more and more researches applied stated preference techniques in Vietnam, especially in health care and environmental field Dang & Chennat (2010) applied the CVM to estimate the loss of value water resources causing by pesticide pollution They employed payment cards as elicitation method, in-person interview, and payment fees as payment vehicle4 The results showed that the WTP for improving water quality is VND 98,520/year/household Pham, Le, Petrie, Adams & Doran (2008) conducted a research about the households’ WTP for

a motorcycle helmet in Hanoi, Vietnam with changes in price of a helmet The authors used CV survey with both discrete-choice and open-ended questions to elicit the WTP Their finding was that the estimated WTP in average for a helmet is VND 163,794 By using both CVM and choice modelling (CM) methods, Tran & Navrud (2007) estimated the social benefits of restoration and preservation programmes for the My Son (a world cultural heritage site) in Vietnam In the application of CVM, they employed dichotomous choice questions with four bid levels for both

4 This is not correct in term of definition of payment vehicle (PV) PV is the channel through which the money is collected, for example: income tax, property tax, electricity bill.

subsamples of residents and foreigners They found out that the two methods produce almost the same estimate Instead of using WTP, Navrud, Tran, & Bui (2012) used willingness to contribute (WTC) labour to a flood prevention program in

a CV study The face-to-face survey was conducted in Quang Nam province, Vietnam with sample size of 706 households They suggested that this CV approach

of WTC labor is applicable to the estimation of total welfare loss of natural disasters Truong (2005) studied about the WTP for conservation of Vietnamese rhinoceros by employing CVM In the drop-off survey, the author employed the single - bounded questions in eliciting the WTP, and electricity bill as payment vehicle The estimated WTP is approximately VND 40,000 per household.

In health care segment, CV is also applied to find out the demand for some types

of vaccines Do, Whittington, Le, Utomo, Nguyen, Poulos, Dang, Kim, Nyamete,

& Acosta (2006) aimed to discover the demand function for typhoid fevervaccines by using CVM with a sample size of 1065 households in Hue, Vietnam.The authors gave evidence that estimated mean WTP for a single vaccine variesfrom US$2.30 to US$4.80 In another healthy study, Kim, Do, Poulos, Le, Cook,Nguyen, Nyamete, Deen, Clemens, Vu, Dang, & Whittington (2008) conducted asurvey on 800 randomly selected respondents for purchasing an oral choleravaccine in Hue, Vietnam Their finding was that the estimated median WTP for50% effective for 3 years vaccine is approximately US$5

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Chapter 3: Methodology and Data

This chapter introduces the methodology that this paper applied, especiallythe method to estimate the WTP including non-parametric and parametricestimation, and the data collected from the CV survey

3.1 WTP estimation

This section describes the procedure to estimate the non-parametric andparametric WTP that will be employed to estimate the WTP based on single-bounded CV questions

For the linear random utility model defined in equations (8) and (9), the

willingness to pay (WTP) can be identified as:

The left hand side of equation (12) is the utility of respondent j-th with the CVprogram and net of the required payment - The right hand side is the utility ofthe status quo of that respondent In general, the WTP is the amount ofmoney that makes respondents indifferent between the proposed CV scenarioand the status quo.

,|,, =∏

where N is the number of households in the sample (N = ∑ N ) The log of thelikelihood function is used to calculate the maximum likelihood estimates fromthe above function Then, the log-likelihood function is

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ln , |,,

= + 1 −

In order to explore the factors that might affect the respondent’s WTP for yewtrees conservation, there are several variables included in this paper: bid,education, age, gender, and attitudes The model of the probability of WTPmeans that P(yj =1) is as follow:

The parameters will be estimated by using maximum likelihood method Theexpected sign of is negative, because with the higher bid level people are lesswilling to vote for the program The expected signs of coefficients, , arepositive because respondents with higher educational level and positiveattitude are expected to be more willing to pay Meanwhile, the sign of , andcould be negative or positive

3.2 Survey design

As mentioned in chapter 2, a well design of scenario and payment mechanism is really important to elicit precise and reliable responses (Bateman et al., 2002) According to Bateman et al (2002), there are three fundamental elements in a valuation scenario The first is to describe the policy change of interest Single impact policies and multidimensional policy are what researchers may be attracted in valuing policy change If a policy has a single impact, the description of its change which is valued consists of several steps: attributes of the investigated good such as characteristics, benefits related to use or non-use, extent of geography, being rights

of property should be introduced by a way that makes respondents easy to understand or conceive the meanings; it is recommended to describe the available substitutions for interest, and alternative possibility of expenditures that may

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Willingness to Pay for the Conservation of Yew-trees in Vietnam

influence the elicited values; and, of course, it is needed to state the proposedchange of policy and the according change of the attributes of interested good

For a multidimensional policy, when the total value of the policy is required, the scenario should introduce information about each component and all of its congruous elements, and also provide the relative changes to the status quo What if

it is only a specified change needed valuation, and it is just part of including policy which encompasses various simultaneous occurrences? If that is the case, it is needed to present that single change as part of wider package Then respondents get chances to consider all possible effects including substitution, complementary, and income effects between elements of that package In another situation, when the change being valued is part of sequent changes of a policy, the point at which it appears in the sequence will affect its value And this value becomes little by little smaller when its place is deeper and deeper in the sequence of valuation (Hoehn and Randall, 1989 cited in Bateman et al., 2002).

At the beginning, focus group discussions (FGDs) were applied to explore the problem The participants were rangers or who has good knowledge about this field The first FGD was to identify the current situation of yew, and opinion of participants about how to develop the current program of conservation of yew tree In the second FGD, the participants were ordinary people This task provided some suggestion about the bid levels would be used to elicit the respondent’s WTP.

The most important thing in CV method is the scenario that provides information about the good being valued A brief introduction of Yew is presented in the first paragraph which also includes its use and non-use values Then it is the current situation of Yew and its conservation plan conducted by the local government The limitations of the current program are the basics of proposed program used in this

CV survey Respondents then will be asked to vote for this proposed program of Yew conservation with a specified amount of money; and it is a one-time payment.

The questionnaire is constructed in 4 parts The first is the general problemsfacing the country; the second is the attitude toward conservation programand knowledge about selected endangered species; the third part describesthe conservation plan for yews; a scenario will be described in this part toexplain the problem more clearly and to take the answers about thewillingness to pay; the final part consists of a series of questions about thesocio-economic situation of respondents Before conducting the final survey,the questionnaire was pretested several times in order to check theiravailability and validity After revising, survey would be conducted as planned.The single-bounded questions were employed in the questionnaire to identify the amount of voting WTP from interviewees According to Freeman (2003), there are at least three advantages of discrete choice (DC) format relative to the bidding game, and open-ended question: firstly, people feel as in real life when they decide to buy

or not a product in a supermarket given offered price Secondly, because that they just answer yes or no to the proposed question And it is simple to make decision, not like in an open-ended question that they could feel uncomfortable or refusal to give an answer Thirdly, this format could lead respondents to answer truthfully in survey, called the incentive compatibility The reason of choosing single-bounded DC instead of double-bounded DC is that the design of latter is more complicated and could lead to downward bias of estimated WTP due to the low designed range (Freeman, 2003) Follow-up questions would also be included to find out the reasons

of against WTP (including zero WTP) and of supporting program Respondents were asked these questions (DC and follow-questions) two times, the first was right after the scenario part, and the second took place at the end of the third part of the questionnaire.

The next step is to choose sample This paper employed the two-stage randomlysampling The sample size is 360 respondents with six bid levels5 The survey is

5 VND 5,000; VND 15,000; VND 30,000; VND 60,000; VND 250,000; and VND 500,000

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Willingness to Pay for the Conservation of Yew-trees in Vietnam

conducted in Ho Chi Minh City There were five districts randomly selectedincluding District 4, District 7, District 10, District 12, and Tan Binh District Then,

in each district five streets were randomly chosen6 On each street, interviewerstarted with a random address to implement the survey The rule is that each fivehouseholds, takes one, and in case of building, office, apartment it isautomatically skipped This process would be finished when interviewers havegot enough number of participated respondents on each street

The survey mode was applied is the drop-off mode, including some free conversation with respondents at the initial contact to introduce briefly the purpose of survey, and

at the time of picking questionnaire up to explain what respondents still misunderstand The drop-off method has been proved to increase the response rate relative to mail survey (Douglas et al., 1970; Stover and Stone, 1974; Lovelock et al., 1976; Mangione et al., 1982; Olsen et al., 1998; Melevin et al., 1999; Steele et al., 2001; Riley and Kiger, 2002; Clark and Finley, 2007 in Allred and Ross-Davis, 2011) The questionnaire will be delivered to the respondents and picked up a few days after when respondents completed questionnaire This method combines characteristics of mail survey and personal interviews (Bateman et al., 2002) There are several advantages of drop-off in comparison with mail survey: potential personal contacts, verbal communication, and the ease of returning questionnaire The researcher has the chance to have personal contacts when he/ she deliver the questionnaire to respondents at their home (face-to-face contact) The purpose of study and the important participation of respondents are able to be explained at that time With the verbal communication, researchers have the opportunities to check whether chosen respondent are suitable or not in terms of criteria, for instance, age, owner relationship, etc Another noticed advantage of drop-off mode is the ease to return the completed questionnaire, because it will be picked up by researchers at designed time Even though there are still several disadvantages such as high conducting costs, possible inability to complete the questionnaire of respondents at

home due to respondents’ health, busy time, ability of literacy, this method hasbeen continued to be applied in current researches of natural resources To makeincentive to interviewees’ responses, there will be some gifts in cash7 According

to Dillman et al (2009) in Allred and Ross-Davis (2011), respondents commonlyfinish questionnaire to gain rewards now or in the future Gifts in cash will giveincentives to respondents in answering questionnaire This could reduce the bias

in some cases that respondents have no incentive to complete questions, forexample, they do not like the subject, to participate in the survey, or justrecognize that there is no benefit for them

The payment method if respondents vote for the conservation is the electricity bills This method is suitable because most households in Vietnam use payable electricity Meanwhile, other methods like water bill, tax are not appropriate Because households in country side do not buy water, they use own well for example; or people feel not comfortable in paying tax due to the difference in income which means that higher income people may pay more than lower income people Moreover, at this time people are encouraged to consume more by the government’s policy such as the exemption and reduction of personal income tax, so that it is impossible to get acceptance from people in voting for increasing their own tax.

Beside the questionnaire, this research planned to apply a series of discussion with managers of the two Yew Reservations, and interviewing key informants (rangers).

7 Respondents have two options: receiving 20,000 VND or choosing a gift like pen or candy The latter is what questionnaire-completed respondents suggest.

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Willingness to Pay for the Conservation of Yew-trees in Vietnam

Chapter 4: Results and Discussions

In this section, the results of descriptive statistics and WTP estimation will bepresented respectively The former part describes the descriptive statistics ofthe sample, including the analyze of WTP questions The latter consists ofboth non-parametric and parametric estimation of WTP

4.0 3.0 2.0 1.0 0 19

Figure 1: Distribution of respondents’ age

In total, the groups of age 21-30 and 31-40 are the highest with 26.6% and 33.65%respectively Across the groups of age, the ratio of married respondents is very high incomparison to single and other marital status, except the first two groups under 20and from 20 to 30 years old The married rate is 77% (Figure 2).

Group of age by marital status

Figure 2: Cross - tabulation of marital status and group of age

From the Figure 3, approximately 31% of respondents reported that their major job isdoing own business (self-employment), and about 24% of them are privateemployment The rate of people working as laborer, mechanic, tailor, and skilledworker takes the third place with 15.87% of respondents The rate of people workingfor government is 12.7%

Figure 3 also shows that there is a huge difference between male and female ratio inthis main occupation (32% and 18% respectively) However, the rate of male

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working as their own business is less than that of female (28% and 33% respectively).

Figure 3: Occupation by genderFigure 4 illustrates the levels of education of respondents Almost peoplehave gone to school There is only 1.6% of respondents having no school Sothat, the average schooling years is very high (13.1 years) The high schooland university levels have the highest rate, 35.7% and 33.1% respectively

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Levels of education

40.0

35.0 30.0 25.0 20.0 15.0 10.0

5.0 0

Figure 4: Levels of educationThe results in the Figure 5 show that the difference between male and female isstrongly significant in both these levels There is more female than male in highschool, but it is reversely in university level Across the rest the difference is notmuch significant