International Review of Environmental and Resource Economics > Vol 11 > Issue 4

Spatial Heterogeneity in Stated Preference Valuation: Status, Challenges and Road Ahead

Jeremy De Valck, Central Queensland University, School of Business and Law, Australia, j.devalck@cqu.edu.au John Rolfe, Central Queensland University, School of Business and Law, Australia,
 
Suggested Citation
Jeremy De Valck and John Rolfe (2018), "Spatial Heterogeneity in Stated Preference Valuation: Status, Challenges and Road Ahead", International Review of Environmental and Resource Economics: Vol. 11: No. 4, pp 355-422. http://dx.doi.org/10.1561/101.00000097

Published: 30 Aug 2018
© 2018 J. De Valck and J. Rolfe
 
Subjects
Biased estimation,  Discrete choice modeling,  Econometric models: Identification,  Econometric models: Model choice and specification analysis,  Econometric models: Non-linear regression models,  Econometric theory,  Environmental Economics: Climate Change,  Environmental Economics: Contingent Valuation,  Environmental Economics: Endangered Species,  Environmental Economics: Environmental Health Risks,  Environmental Economics: Market-based Policy Instruments,  Economic Theory: Microeconomic Theory
 
Keywords
JEL Codes: C21C31Q20Q57R10
Environmentalnon-market valuationpreference heterogeneityGISspatial statisticsecosystem services
 

Article Help

Share

Download article
In this article:
1. Introduction
2. The Geospatial Context in Stated Preference Valuation
3. Methodological Issues in Non-market Valuation
4. Assessing and Controlling for Spatial Heterogeneity
5. What Does the Future Hold?
6. Conclusions
Appendices
References

Abstract

This paper reviews the progress made over the past few years in evaluating and controlling for spatial heterogeneity in stated preference valuation, focussing on applications to environmental valuation. Spatial heterogeneity can strongly impact value estimates, so failure to account for it can compromise their validity and reliability. Incorporating spatial factors into valuation studies not only helps to control for some potential biases, but also produces more precise evaluation of amenities that have mixed use and non-use values. For these reasons and considering the ever-growing need for non-market valuation studies, spatial heterogeneity deserves more attention in the stated preference valuation literature.

In this review we discuss the current state-of-knowledge and identify some of the main issues that have been raised in the literature in relation to spatial heterogeneity in stated preference valuation, including distance-decay, substitution, embedding effects and scale factors. We present several techniques that have been used so far, mostly originating from spatial econometrics and spatial statistics, to control for spatial heterogeneity. Some of the ongoing challenges that require further attention are also highlighted. We conclude by suggesting potential directions for future research in light of recent progress made in related disciplines and the evolution of modern technologies.

DOI:10.1561/101.00000097