Using Contingent Valuation to Estimate Prices for Non-Market Amenities

Provided by Protected Areas

Marcos Adamson-Badilla and Federico Castillo1,2

Abstract
This article uses a Contingent Valuation Method (CVM) in its closed-ended format in order to
estimate willingness-to-pay (WTP) for an entrance fee to the Manuel Antonio National Park
(MANP) in Costa Rica. MANP is one the two most visited protected areas in the country. In
contrast to other articles, which estimate WTP (median) by following a single bounded
approach, and which in most of cases use only one ad-hoc model, this paper shows alternative
measures of WTP (mean and median) following a double bounded approach. The estimations
are made using a sample of 2245 park visitors and four models: three of them consistent with
indirect utility functions, and an ad-hoc model which has been widely used in the contingent
valuation literature. Because the answer to the second bid is endogenous a bivariate probit
model is used in the four models estimated.
The econometric estimation of the compensating surplus derived by both nationals and
foreigners when entering the park shows a low level of sensibility to model specification and to
the estimated WTP (mean or median). WTP is estimated at approximately $12 for foreigners
and $5 for nationals. The estimation of WTP in the four models is not sensitive to specific
nationality of foreigners. The estimated correlation of answers and their significance changes
with the estimated model. Furthermore, the goodness of fit tests (2) are statistically
significant. This paper shows that CVM can be used to design policies that improve pricing
schemes for protected areas, and that such pricing schemes can lead to a more sustainable
management and financial stability resulting in welfare improvement for society.
JEL: Q26

Key words: Contingent valuation, bivariate probit, compensating surplus, double-bounded.

Marcos Adamson: Researcher and Professor Faculty of Economics, University of Costa Rica.
Federico Castillo: Post Doctoral Fellow, Department of Environmental Science, Policy and Management.
University of California, Berkeley.
2
Research was funded by the Costa Rica-Holland Bilateral Agreement for Sustainable Development (CBDS;
project #75-P-96). We would like to thank members of the Faculty of Economics, University of Costa Rica
for their comments. All remaining errors are responsibility of the authors.

I. Introduction
National Parks offer a wide variety of services to society. They are reserves of biodiversity,
perform hydric and climatic regulation functions, protect soil quality, etc. Recently, tropical
countries as Costa Rica are receiving important economic benefits coming from tourism, as
result of an important investment in conservation of natural resources through National
Parks and other kinds of conservation. This country has invested an important amount of
resources in conservation that has permitted to keep more than 25% of its territory under
protection (Adamson, 1994). This tourism is particularly intensive in amenities which these
conservation areas provide.3
In spite of profits those protected areas provide, incapacity to capture profits derived from
goods and services provided by them is threatening their existence and development.4 Two
factors explain this paradox. First, most of services provided are not directly traded in a
market but they appear to be positive external effects, then, administration of those areas is
not able to appropriate directly over those benefits. This case includes local and global
external effects; some of them are pecuniary; for example, as perceived by nearer tourism;
and other no pecuniary. In the second case, in spite of those services could trade in markets,
like direct entrance to parks, most of these areas depends on collected fees given by the
government, independently of supply conditions --costs of each area-- and demand
conditions --visitors willingness to pay.
The entrance fee to National Parks is one of the collect instruments --price-- for one of the
services that is nearer to market. As there are limitations to capture profits, entrance fee
should be administrated in an efficient way, looking to maximize received income.
An alternative to achieve this objective is to design a strategy of collecting that extracts
consumer's surplus. In those cases, is important to determine economic valuation derived
by consumers from enjoying tourism. This paper shows the way to apply Contingent
Valuation Method (CVM) in a close ended format (referendum) of two questions with
discrete response, in order to estimate compensated surplus (Hanemman, 1984 y Freeman,
1993), or willingness to pay (WTP) to get in Costa Rica's Manuel Antonio National Park
(MANP).
This paper is relevant because of scarcity of related articles in Latin America that have used
CVM; in some of them unclear results are found, and/or have applied valuation theory in a
wrong way, or have limited to follow a single bounded method.

Benefits or positive external effects from these areas take place in an internal level and they affect beyond
borders, for example, carbon fixing and with this contribute to avoid global warming.
4
For example, in Costa Rica, government has not already paid to original owners more than 12% of National
Parks territories. In 1991 Constitutional Court of this country pronounced and determined that the government
has to pay for those territories or give them back to their original owners. So, territories located in national
parks, like in Santa Elena, have also generated international judgements. In that situation, theme of economic
valuation of those natural assets has been object of discussion and the results of this research project were
acquired for those targets.

Different from those articles, this paper follows CVM of two offers, through the
introduction of a second offered threshold in a "follow-up" dichotomous-choice CV
question that elicits a second discrete response. If the respondent says he/she is willing to
pay the first offered amount (1st bid) to get in MANP, then a second higher amount (2nd bid)
is offered, if not, a second lower bid is offered.5
Besides, estimations presented in this paper come from a sample bigger than used in those
other papers, so it let to compare WTP to get in MANP from national and foreigners
visitors. This model of two offers lets get more efficient estimations (Cameron y Quiggin,
1993), and a big sample lets that maximum likelihood estimators effectively present their
asymptotic properties.
Finally, this work goes forward from others, as it uses four alternative models, three
consistent with indirect utility functions and one ad-hoc, widely used in previous works.
This job offers an example of how can be used CVM in development countries to
strengthen conservation areas sustainability, particularly contributing to define an entrance
fee structure.
II. Description of the experiment location
MANP is located in the province of Puntarenas at the Pacific coast of Costa Rica, 157 km
south from San Jos by road, and 7 km south from Quepos town. It was declared National
Park in 1972. It is 779 terrestrial hectares long and it has 55.000 marine hectares too. It
belongs to Central Pacific Conservation Area.
The park is a little biological island located in an area that receives different use of soil
pressures, like agriculture, raising cattle and an intensive touristic development. MANP is
catalogued as one of the most beautiful schemes and joint to Poas Volcano National Park
are the most visited by tourists.
It is located in the lifezone very humid tropical forest in a region of great rain
precipitation (3.875 mm/year) and of high temperatures. Some parts of the forest are in
regeneration because they were object of selected wood extraction in the past. The place
called Punta Catedral, is the result of a geomorphologic phenomenon, due to its past as an
island and sediment accumulation that joined to continental land, making a sandy belt
denominated tmbolo. In addition, this park includes twelve islands located near of its
beaches. Most of them present vegetation and are natural home for birds.
This park protects zones of primary forest, secondary forest, mangrove trees, vegetation of
beach and marine environments, where live some of flora and fauna species in danger of
extinction.

When says yes to first answer and the second amount is about the double the first one and when says no
to first and the second is reduced to about half the initial amount, this methodology is called a "doublebounded referendum" approach. (Cameron y Quiggin, op cit.).

Some species of flora that characterize forest are: gucimo colorado, piln, cedro
mara, guapinol, sur, guapinol negro (timber yielding tree in danger of
extinction); lechoso, madroo, cenzaro and ceiba. In the secondary forest (old
agricultural and raising cattle areas), are important: balsa, peine de mico, guarumo,
gucimo, capuln blanco and garocho. The mangrove tree zone that covers 18
hectares, approximately, is composed by three species: colorado mangrove, botoncillo
and mariquita. In the vegetation of beach outstand manzanillo (a tree that has a milky
substance and poisonous fruits), almendro, roble sabana and coconut groves.
Talking about terrestrial fauna, 109 species of mammals and 184 of birds have been
distinguished. In the first group outstand mapache, pizote, guatusa, perezosos de
dos y tres dedos, carablanca monkey, congo monkey and tit monkey (this endemic
sub-specie is in danger of extinction, due to destruction of its environment and because it is
captured to use it as a mascot). In the group of birds is common to see tucancillo,
pelcano o buchn, guaco, gaviln pescador, martn pescador verde and gallito de
agua. Besides, iguanas, garrobos, snakes and infinity of insects can be watched too.
In the ocean, dolphins are widely seen and some people have seen whales. It also have 19
species of corals, 24 species of crustaceans, 17 of alga y 78 species of fish have been
identified (Adamson, 1998).
III. Theoretical framework
Following to Hanemann (1984) it is supposed that visitors have indirect utility functions,
U(p, q, y, s), where p, price vector; q variable (vector) of state of nature (for example, q1 >
q0, means a good improvement or in the ambient quality of interested, in this case it is
supposed the visit to MANP is a good that gives utility to individuals); y, income; and s
consumer characteristics vector.
Following the random utility model U can be written as (assuming the vector prices to be
constant)
U(q, y ;s) = V(q, y; s) +

(1)

The utility change due to an increase in q, to q1 > q0 is given by:

U = U(q1,y;s) - U(q0,y;s) = V(q1,y;s) - V(q0,y;s) + 1 - 2

(2)

Variable is assume independent and identically distributed with E() = 0.

On the visitor scheme, a change in q0 to q1 > q0 is ensured. It is supposed that individual
understands he/she will get a welfare improvement, in the way that V(q1,y;s) + 1
V(q0,y;s) + 0. Individuals are informed that change will cost T colones, so the questions is
if he/she is willing to pay that price. Following to Hanemann and Kaninenn (1996), we
have:

Pr ( Si ) = H (T; y; s; )= Pr (V(q1,y - T; s) + 1 V(q0,y; s) + 0)

(3)

Pr ( No ) = 1 - P( Si )

(4)

Con H (T; y; s; ) = 1 - G (L (T; y; s; ))

(5)

" Si"; siL(T; y;s; )0

answer=
" No";otherway

(5.1)

Where T is the offered price (bid), and the joint of estimated parameters associated to
covariance vector (y; s). To define = 1 - 0, where F () as function of accumulative
distribution, so it can lead to define the probability of pay dispersion as::
Pr (Si) = P( Y = 1) = F (V); con V = V(q1, y - T; s) -V (q0, y; s)

(6)

Where Y is the answer: Y=1, if the person says yes and Y=0 if the individual says no.
An equivalent way to express this result is by compensating variation (C) , that satisfies:
V(q1,y - C; s) + 1 = V(q0 ,y; s) + 0

(7)

From where C can be generated, C = C(q0, q1,y; s, ), equal to its Maximum Willingness to
Pay (MWTP) to an increase in q. From the last mention it is concluded, that if the
individual answer yes to the valuation question, the price offered is less than MWTP and
no is greater. An equivalent condition to (5) is:
Pr (Si) = Pr(C(q0, q1, y; s, ) T)

(8)

Although, C(q0, q1, y; s, ) is a random variable. Once supposed a distribution function to

the random variable , and the model, in any way, equation (3) and (8), will not be just an
economic behavioral model, will be a statistic model too. In this case this variable has a
normal standard distribution that results in a probit model (where the distribution function
is given by F . In this case:
Pr( Si ) = P(Y = 1) =

(V )

(9)

The Likelihood Functions to maximize is:

log L =

[y
n

log F (V ) + (1 yi ) log (1 F (V ) )]

(9.1)

Wide amount of studies that use CVM estimate a function for V, which are not consistent
or inferable from a utility function (McConnell, 1995; Freeman (1993); Hanemann, 1984,
entre otros). Jakobbson y Dragun, (1996) report studies with consistent estimations with an
utility model, that show up econometric results less desirable than the reported en ad hoc
models. In many cases, the estimated coefficients are not significant, signs are not

consistent with theory, or goodness of fit from the estimated models are less with respect to
the ad hoc estimated models.
This paper presents four models of V (equation 11). Models I to III are consistent with
utility function (Hanemann y Kaninenn, 1996), and model IV is ad hoc. The last of them,
will lead to compare with another results coming from estudies developed in Costa Rica
Echeverra et al. 1995), whom have work this ad hoc model.
The V four models are:
Modelo I : bid +
Modelo II : log (bid ) +
Modelo III .: + log(1bid / y ) +
Modelo IV : log(bid ) + log( y ) +

(10)(10)

= 1 2

Con 0
=
1
2

During the estimations of this models additional consumer variables or characteristics can
be introduced, which are summarize in vector s. These variables, characteristics of an
individual like age, sex, environmental interests (belong or not to an environmental group),
etc. can be included aggregating the next term of these equations:
j

x
i =1

; i = 1, 2, .... j.

(11)

Measures of Willingness to Pay

The estimating way of compensating surplus (in this case, associated to MANP), comes
from Hanemann (1984):
C*, which is the median MWTP, it means: F (
V(C*)) = 0.5. (12)
This means that if there is a probability 50:50 to pay less than C*; the mean (expected
value)

E {C} =

(1 G

(T ) dT

(13)

When the marginal utility of income is constant (model I) measures of C+ y C* are the
same. Next, measures of C* y C+ are presented for model.

Modelo

I:

C=

*
C =
Modelo II : +
C =

(e)
(e)

(14)

(e)

1
=
y

e
C

Modelo III : C = y e E e 1

Con = 1 0
= 1 0

()

(e)

Finally, E

(e)

(1 / 2

; si es probit.

(15)

(16)

(17))

Methodology
The used question is of the kind would you be willing to pay $T for an improvement? o
would you pay $T to entry the park? where it is assume they will say yes, when their
maximum willingness to pay for improvement -given by C = C(q0, q1,y; s, )- is greater
than the fee or offered price bid or T--, and remembering that C comes from de V(q1, y C; s) -V (q0, y; s) = 0, where the state 1 pay and get in the park and 0 do not pay but do
not enjoy the park.
In cases when is asked for an improvement, compensating measures are used, it means,
how much the entry from consumers has to be compensated (decrease) to enjoy a
hypothetical improvement, because that amount means the consumers MWTP to enjoy
from that improvement. In this case are used for the four models different measures given
by C* y C, and some of the cases, as example of susceptibility results of C+, given for the
last equation.
Follow-up dichotomous-choice valuation questions
The last explained methodology is called "single-bounded", because only a price or bid is
offered. It has been mentioned that a way to gain precision in estimations, to use better a
given sample and to make CVM estimations more efficient, is to include a follow-up
dichotomous-choice valuation questions after the first question . In practice, it means that
if the surveyed person says he/she would be willing to pay $T, then he/she has to answer
for a higher price or bid. If he/she says no to the first question, in the second a lower price

or bid is offered. This method is called Contingent Valuation Method with follow-up
questions.6 The NOAA panel recommended this double bounded method, because it lets to
obtain information about biases that could be introduced into valuation (mentioned by
Cameron and Quiggin, 1994).
When double bounded format is used, is important to consider that the answer for the
second bid is endogenous to first. In this format of valuation, while it is randomly assigned
the first bid to surveyed person, the follow-up bid to be offered will take one of two
determined values (higher or lower) depending on his/her first answer. Then, the
probability that he/she receives a higher second bid (assigned by a determined rule, not
randomly) is equal to probability to say "yes" in the first answer. Analogously, the
probability that he/she receives a second bid lower than first is equal to the probability to
say no in the first answer. However, the quantity that is offered to the surveyed person as
a second bid depends on the first answer (in other words, it is not random), so, as Cameron
y Quiggins (1994) say, it is technically inadequate to use only the answers to second
question and try to estimate MWTP as in a single-bounded method (forgetting the first
question), due to endogenous condition of the second bid.
Let V(1) = Y1 , y V(2) = Y2

(18)

The difference in the indirect utility function, based on the first answer to first offered bid,
and the second answer to second offered bid, respectively. Y1 could be different from Y2,
either by a strategic behavior or by acquired experience by the surveyed person during the
survey. I2 is an indicator that equals one if T2 is higher than WTP and zero in other case.
Equals to RUM, a systematic and a random components are assumed, so:
Y1 = X1*B + 1 y Y2= X2 * B+ 2

(19)

Notice that X1 does not have to be the same as X2. So, the fact that there is a correlation
between errors must be included in the model.
A model of joint distribution function (Y1 y Y2) is required. Like Cameron y Quiggin
(1994), in this paper the selected model is the Bivariate Standard Normal (BSN), it means
the media of each is equal to zero and the variance is equal to one, where indicates
correlation between the differences of errors, so: corr. (1, 2) = . The last model is
written as NBV(0, 0, 1, 1, ).
The vector of answers to both valuation questions can assume four possible results: "yes" to
first bid and "yes" to second bid; "yes" and "no"; "no" and "yes"; "no"and "no". This is
indicated as: (I1, I2)= (1,1); (1,0), (0,1), (0,0). Let g(Y1,Y2) be the density function BSN,
hence:

In general, the second bid doubles first if the surveyed person says yes to first question and is half of it if
he/she says no. this practice is generalized, but there is no theory to justify this (see Cameron & Quiggins
(1994) and Hanemann & Kaninenn, (1996).


g ( y1 , y 2) = 1
1/ 2

2 (1 )

(e) (( 1 / (2 2 ) ) [y 2 y y
2

2
1

+ y2
2

])

(20)

the likelihood function of the model is:

Log L = i ( I 1 I 2 ) log g ( y1 , y 2 ) d y 2 d y1

y1 y 2

y1

g
d
d
+ (1 I 1) I 2 log ( y1 , y 2 ) y 2 y1

y2

y1 y 2

+ (1 I 1) (1 I 2) log g ( y1 , y 2 ) d y 2 d y1

y2

+ I 1 (1 I 2) log g ( y1 , y 2 ) d y 2 d y1



y1

(21)

Notice that if residual is modeled standard normal, parameters to estimate using maximum
likelihood are in the limits of the integral. The difference in the double bounded model is
because the two questions are correlated, in this case appears a double integral, if a standard
normal is used, only appears one integral instead of F). The format of double bounded was
also used in this project particularly in the section of fee.
IV. Sample
Two thousand two hundred forty five complete surveys were done, that is about 20% of
visitors to MANP during the period of the survey was applied. Survey was applied from
June 1997 to February 1998. Assignation of bids was completely random.
Seventy eight percent of visitors were groped in four categories of nationality: Costaricans,
(34%), Americans (29%), Canadians (8%) and Germans (6%). Other nationalities less
frequent were: Swiss, Dutch, Argentineans, Spanish and Italian. More than eighty per cent
of foreign tourists (84%) visited Costa Rica for the first time, and more than 40% visited
MANP first instead of going to another park.
Thirty seven percent of national visitors completed college. In case of foreigners it was
seventy seven percent. Talking about scholarship, 11.5% of nationals have more than 19
years of formal education. In the case of foreigners, it was 23.6%. other difference between

nationals and foreigners is referred to level of income . Net annual income media for
foreigners was $42.700. For nationals it was about 162.300, it means about $8.000 per
year.7 From the total of foreign visitors, 34% declared to have an annual income between
$30.000-$60.000.
Table 1. Sample (N) Distribution
Question of Availability of Paying to Entries to MANP
Foreigners
Total
Nationals
N total
1442
N total
Not interested
92
Not interested
Not know (NK)/ Not
64
NK/ NA
answer (NA)
Protest
5
Protest
N Final*
1283
N Final
(NK/ NA) / N total
0,04
(NK/ NA) / N total
Protest/N total
0,00
Protest/N total

Total
803
85
27
2
692
0,03
0,00

*/

If deduced from the total of each item in a separated way, the sum of this does not necessary
corresponds to the final sample, because some of surveys could present some of these characteristics.

Source: Elaborated by the author based on the surveys data.

Table 1 shows a not significant amount of zero protests and of "not know or not answer", so
they were excluded from sample; in the same case, those surveys that identified respondent
as not interested.
V. Models Estimation
The valuation question in the strict sense is not a closed-ended with follow up questions,
because in first level is always asked for the same bid, that is the same actual entry fee
(US$6 for foreigners and 200 for residents and nationals). According to the Contingent
Valuation Method in two levels, in case of the estimation of variation in the indirect utility
in the first level (Y1, equation 25 and 26) do not have explicit at the right side as explicative
variable the bid (implicitly is evaluating at US$6 and taking it out the constant parameter).
In the case of Y2 equation, bid does appear as explicative variable.
First Specification
Different specifications were estimated from defined models in equation 11, following
estimation at two levels. The next specifications include (ing), education level (number of
education years), a dichotomous variable that measures environmental preferences, in this
case belonging to an ecological group (ecol), and indicator of the enjoying from the visit
through a qualification variable (calif) of the park enjoying.
With the objective to identify the different specifications will be used a consecutive number
next from the roman number. So, for the first specification of models will be used model
7

Change rate at the beginning of field work was 142.28/$. The comparison of those data has to be done with
care, given existing problems to compare nominal data of income between countries.

10

I.1 to indicate what is the first specification about for model I, Model II.1, to indicate first
specification of model II, etc.
Model I.1
First answer or level (for all models but model IV)

= 0 + 2 educ + 3 ecol + 4 calif

Second answer or level

+ 1 bid + 2 edu + 3 ecol + 4 calif

Model II.1
First answer or level (for all models but model IV)
Second answer or level

+ 1 log (bid

)+

2 edu + 3 ecol + 4 calif

Model III.1
First answer or level (for all models but model IV)
Second answer or level

bid
+ 2 edu + 3 ecol + 4 calif + 2
= 0 + 1 log 1
ing

Model IV.1
First answer or level (for all models but model IV)
Second answer or level

= 0 + 1 log(bid) + 2 edu + 3 ecol + 4 calif + 5 log(ing) + 2

Where correlation between answers is corr(1,2) =

11

The estimation results from the last models presents in table 2 for foreigners and in table 3
for nationals. In case of foreigners is observed that for all models in the first answer, there
is just one significant variable at 5% (the statistics t. are present in the parenthesis under
the estimated parameter) is qualification variable given for the visitors to MANP. This
variable can be considered as a proxy of enjoy quality from the visit, it is positively
associated with the probability to obtain yes in the question if visitants feel that $6 are
worth it to get in the MANP. Only in the ad hoc model IV.1 appears another variable
significant (income).
In the second answer, for foreigners case, in all models the most significant variable was
the bid or supply (significant even at 1%). The first two models, appears as significant
variable the education years, but not in models III, IV for this specifications. The proxy
variable (global qualification from the visit) is significant en model II, and in IV (ad hoc),
in which the new entry is siginificative in that second answer too.
Except for the first model, a significant correlation presence is found between the answers
to the first and second questions. The proof of goodness to fit of the model (Chi square
with seven degrees of freedom (2; 7 d. f.) indicate that rejects the null hypothesis of
slopes equals to zero. Variables together explained pretty good the answers. This could be
checked with the significant value, indicated in the immediately inferior row of the Chisquare value and gives zero values even at fourth digit
Finally, a more refined test of goodness like the pseudo R2 (or Maddalas R2 ) shows levels
between 0.02 to 0.08.8
In the national visitors (table 3), for the first answer the only significant variable in the four
models was the qualification. In the second answer the offer or bid is significant in all the
models, and the income in the ad hoc model. Is important to remember that models I and II,
even though income is present in the indirect utility function, in the variation of the utility
it is not present because it was eliminated. It results in WTP neutral to income. In the
model III the income is present, and the WTP presents a unitary income elasticity. At the
same form that foreigners, in its first specification, we find that the sign of the correlation
is not stable between the models neither significantly different of zero. When evaluating the
models with the 2 test, the null hypothesis is rejected, which means the variables in jointly
are significant. In an interesting form, in all cases, the pseudo R2 in the nationals models is
higher than the foreigners case.

For example, Hanemann, Loomis y Kanninen (1991), in a study that too use dichotomous choice with
follow-up questions, show level of pseudo R2 between 0.01. to 0.28 in the best fit.

12

Table 2. Basic Models Estimation of Availability of Paying to Entries to MANP for

Foreigners.
Model III.1
Model I.1
Model II.1
Model IV.1
bid
Model

Parameter

0 + 1bid+ 2 edu+ 3 ecol+ 4 0 + 1 log (bid ) + 2 edu + 3 ecol + 4 0 +1log1 +2edu+3ecol+4 0 + 1 log(bid) + 2 edu+ 3 ecol+ 4 calif+ 5
ing

EP

EP

EP

EP

(n= 1283)

(n= 1283)

(n= 1283)

(n= 1283)

FIRST ANSWER
0

-0.0495

-0.0625

-0.0105

-1.5307

(T.Stat)

(-0.153)

(-0.194)

(-0.033)

(-2.764)

0.0090

0.0099

0.0069

0.0024

(T.Stat)

(0.538)

(0.597)

(0.414)

(0.139)

0.1250

0.1327

0.1064

0.1052

(T.Stat)

(1.181)

(1.253)

(1.016)

(0.973)

1.1499

1.1449

1.1499

1.1246

(T.Stat)

(5.731)

(5.672)

(5.730)

(5.297)

0.1604

(T.Stat)

(3.586)

SECOND ANSWER
0

0.9401

2.6678

0.1300

1.5634

(T.Stat)

(3.240)

(7.786)

(0.490)

(3.436)

-0.1198

-1.4575

93.8294

-1.4809

(T.Stat)

(-11.269)

(-14.925)

(4.236)

(-15.246)

0.0259

0.0274

0.0128

0.0204

(T.Stat)

(2.277)

(2.401)

(1.140)

(1.754)

0.0797

0.0942

0.0781

0.0713

(T.Stat)

(0.994)

(1.175)

(1.008)

(0.877)

0.1540

0.4355

-0.2371

0.4361

(T.Stat)

(0.734)

(2.064)

(-1.183)

(2.104)

0.1255

(T.Stat)

(3.508)

(1,2)
(T.Stat)
2

(d.f)
Signif.
R2
Maddala

-0.1206

0.3097

-0.6033

0.3118

(-1.272)

(2.338)

(-12.244)

(2.365)

179.583

191.131

60.046

214.569

(7)

(7)

(7)

(9)

0.0000

0.0000

0.0000

0.0000

0.0702

0.0747

0.0235

0.0839

Source: Elaborated by the author based on the surveys data.

13

Table 3. Basic Models Estimation of Availability of Paying to Entries to MANP for

Nationals
Model I.1

Model

Parameter

Model II.1

Model III.1

Model IV.1

bid
0 + 1bid+ 2 edu+ 3 ecol+ 4 c 0 + 1 log (bid ) + 2 edu + 3 ecol + 4 c 0 +1log1 +2edu+3ecol+4 0 + 1 log(bid) + 2 edu+ 3 ecol+ 4 calif+ 5 l
ing

EP

EP

EP

EP

(n= 692)

(n= 692)

(n= 692)

(n= 692)

FIRST ANSWER
0

1.2525

1.3966

1.1432

1.9853

(T-Stat)

(1.466)

(1.528)

(1.295)

(0.608)

-0.0097

-0.0155

-0.0048

-0.0105

(T-Stat)

(-0.189)

(-0.303)

(-0.089)

(-0.123)

-0.0235

-0.0304

-0.0089

-0.0273

(T-Stat)

(-0.058)

(-0.076)

(-0.022)

(-0.060)

1.2569

1.1857

1.3027

1.1803

(T-Stat)

(2.225)

(2.105)

(2.444)

(1.992)

-0.0556

(T-Stat)

(-0.164)

SECOND ANSWER
0

0.7912

6.5305

0.4214

5.0477

(T-Stat)

(1.466)

(9.299)

(1.081)

(4.842)

-0.0011

-1.0692

35.3485

-1.0664

(T-Stat)

(-11.499)

(-11.871)

(8.294)

(-11.783)

0.0182

0.0200

-0.0168

0.0097

(T-Stat)

(1.581)

(1.691)

(-1.504)

(0.746)

-0.0727

-0.0633

-0.0554

-0.0639

(T-Stat)

(-0.453)

(-0.393)

(-0.376)

(-0.395)

0.0914

0.4258

0.2373

0.4385

(T-Stat)

(0.218)

(1.052)

(0.678)

(1.063)

0.1363

(T-Stat)

(1.967)

(1,2)
(T-Stat)
2

(d.f)
Signif.
R2
Maddala

-0.0015

0.3731

-0.3952

0.3718

(-0.003)

(1.052)

(-0.912)

(0.727)

146.505

164.255

77.020

168.581

(7)

(7)

(7)

(9)

0.0000

0.0000

0.0000

0.0000

0.1407

0.1577

0.0739

0.1619

Source: Elaborated by the author based on the surveys data.

14

Second specification
This specification of the four models is interested in identify differences statistically
significant in estimators related to nationality of foreign visitors, so WTP to get in MANP
would change depending on the nationality of visitors. In this case, the group of foreigners
is divided in four categories: Americans, Germans, Canadians and one denominated
"others". This separation of nationalities in the group of foreigners is made based in the
relative participation of them in visiting the park. Hypothesis is that variable nationality
reflects social and economics differences between groups, which are not incorporated in
other variables (for example, social differences that affect willingness to pay, costumes,
etc.).
The variable nationality is introduced to model through dummies variables. They are
simultaneously introduced in two ways: a. studying if intercept or estimated constant
changes, and b. affecting bid estimated coefficient. Last mentioned is in order to capture
any effect that nationality can have in both parameters. Immediate to suppose is that
nationality could have an effect on the parameter associated to bid. Nevertheless, in the
willingness to pay there are other factors involved that are different from price, so, even
though is not obvious, is fare to introduce a dichotomous variable that can also affect
intercept..
This specification is similar to last, but in this case dummies variables are aggregated in
equation of Y2, as it follows:
Let:
d1 = {1 nationality = american; 0 other way.
d2 = {1 nationality =german; 0 other way.
d3 = {1 nationality = canadian; 0, other way.
d1 = d2 = d3 = 0 nationality = other nationalities.
Model I.2: is equal to bivariate model I.1. The first answer (Y1) is specified in the same
way and now Y2 is equal to:

+ 1 bid + 2 edu + 3 ecol + 4 calif

2d 2 + 3d 3 +

+ 1d 1 +

(d 1bid ) + 2 (d 2 bid ) + 3 (d 3 bid ) +

Model II.2: is similar to II.1, with dummies by nationality in Y2 (introduced over intercept
and the log(bid)).
Model III.2: is similar III.1, with dummies by nationality in Y2 (over intercept and log (1bid/ing)).
Model IV.2: is similar to IV.1 with dummies by nationality in Y2 (introduced over intercept
and the log(bid)).

15

Results of estimations are shown in table 4. In the first level estimations are fundamentally
the same as in the case without nationalities.
In case of introducing differences by nationality, in the group of foreigners, captured in
estimations of second answer, education is a significant variable only in the same models
before incorporate nationality were, it means in models I.2 y II.2. with the variable
qualification and correlation happens the same, staying the first as significant only in II.2
model, and second in all models except I.2.
None of the dummies introduced is individually significant in all models. By itself, 12 (or
likelihood ratio, associated degrees of freedom are indicated in parentheses below the value
of 12) indicates that all models explain good the answers (this is corroborated by the
probability value of finding a likelihood ratio higher in the rejection area, indicated in the
table as Signif, that shows a probability of zero even in the fourth digit). In fact, this
improves even more related with the presented results in table 2.
Nevertheless, when the second likelihood ratio is done (22, subindex indicates that is a
second ratio) to prove null hypothesis that joined coefficients or parameters associated to
dummies by nationality are equal to zero, this is not rejected at 5% of significance (as
shown by Signif.). This low explicative power of the variables is reflected by R2 of
Maddala, which, for all models, are almost the same as shown in table 2.
In this case, empiric evidence indicates that in WTP to get in MANP, into the group of
foreigners, WTP is not affected by nationals.

16

Table 4. Basic Models Estimation of Availability of Paying to Entries to MANP with

dummies by nationality
Model
Model I.2
Model II.2
Model III.2
Model IV.2
EP
EP
EP
EP
Parameter
(n= 1283)

(n= 1283)

(n= 1283)

FIRST ANSWER
-0.0629
-0.0080

(n= 1283)

-0.0496

(T-Stat)

(-0.153)

(-0.195)

(-0.025)

(-2.742)

0.0089

0.0099

0.0067

0.0024

(T-Stat)

(0.533)

(0.595)

(0.398)

(0.138)

0.1246

0.1330

0.1069

0.1056

(T-Stat)

(1.172)

(1.248)

(1.019)

(0.971)

1.1511

1.1455

1.1514

1.1248

(T-Stat)

(5.694)

(5.630)

(5.718)

(5.249)

-1.5290

0.1603

(T-Stat)

(3.566)

SECOND ANSWER
2.3562
0.2114

0.97771

(T-Stat)

(3.006)

(6.104)

(0.775)

(2.642)

-0.1179

-1.3012

117.3501

-1.3223

(T-Stat)

(-1.320)

(-10.555)

(3.605)

(-10.951)

0.0246

0.0260

0.0112

0.0199

(T-Stat)

(0.2.146)

(2.263)

(0.995)

(1.697)

0.0626

0.0756

0.0700

0.0583

(T-Stat)

(0.769)

(0.928)

(0.896)

(0.706)

0.1161

0.3803

-0.2574

0.3854

(T-Stat)

(0.545)

(1.767)

(-1.275)

(1.827)

1.2902

0.1218

(T-Stat)

(3.322)

0.1042

0.7437

-0.0212

0.7086

(T-Stat)

(0.374)

(1.432)

(-0.232)

(1.372)

0.3119

1.5357

-0.0624

1.5064

(T-Stat)

(0.587)

(1.247)

(-0.393)

(1.220)

-0.3217

0.0979

-0.1483

0.0722

(T-Stat)

(-0.905)

(0.138)

(-1.132)

(0.103)

-0.0034

-0.2684

-58.3246

-0.2746

(T-Stat)

(-0.168)

(-1.307)

(-1.199)

(-1.345)

-0.0291

-0.6374

61.2376

-0.6354

(T-Stat)

(-0.801)

(-1.360)

(0.605)

(-1.354)

0.0157

-0.0894

-50.2076

-0.0870

(T-Stat)

(0.582)

(-0.312)

(-0.725)

(-0.305)

-0.1376

(1,2)

0.2804

-0.6059

0.2883

(T-Stat)
2 1

(-1.412)

(2.070)

(-12.148)

(2.126)

184.165

198.212

64.346

220.769

(d. f)

(13)

(13)

(13)

(15)

17

Signif.
R2
Maddal
a
2 2
(g. l)
Signif.

0.0000

0.0000

0.0000

0.0000

0.0720

0.0775

0.0251

0.0863

4.582

7.082

4.299

6.651

(6)

(6)

(6)

(6)

0.5984

0.3133

0.6362

0.3543

Source: Elaborated by the author based on the surveys data.

Willingness To Pay to get in MANP
Third specification
Models were estimated using statistically significant variables and WTP to get in MANP
were re-estimated
First answer for models I.3, II.3 y III.3

= 0 + 4 calif

Second answer
Model I.3

+ 1 bid + 2 edu +

Model II.3

= 0 + 1 log (bid

)+

2 edu + 4 calif

Model III.3

bid
+
=

0 + 1 log 1

2
ing

Model IV.3
Thus aggregate 5 * log (ing) to the first
Second answer

= 0 + 1 log(bid ) + 4 calif + 5 log(ing ) + 2

18

Here: Correlation between levels = corr(1,2) =

Results show that variables are highly significant (as shown by t-statistics, in table
5).empirically is found that the second answer is associated to first, as shown by
significance of correlation estimate (except in model. I.3). As hoped, the prove or
likelihood ratio, that measures the goodness of fit, indicates that null hypothesis is rejected,
it means that slopes are equal to zero, so variables explicate answers.
WTP to get in MANP, in case of foreigners, measured by C* (median) is about $12 for all
models, except for III.3 , where WTP is close to $60, been five times higher than other
models.
When using C to measure WTP, in all models estimation is about $11 y $12 again. By the
other side, empiric evidence tells that C has more stability to specification of the model
(even in models with theoretical fundament (I, II y III.) and in ad hoc (IV). In this last case
measuring of WTP is similar to reported by indirect utility functions. This result is like
reported by Browher y Stoll (1988) but they find it in an estimation of a single-bounded.
Now that C gives an excellent measure of consumers surplus, if consider C as measure of
WTP, and knowing that MANP fee is $6, in average is affirmative to say that each foreign
visitor is getting as consumers surplus, of 50% of the benefits derived from enjoying
getting in MANP. In this case, System of National Conservation Areas (SINAC) uses an
entrance fee that just covers 50% of the aggregate value generated by visitation to that park.
Indeed, making a re-distribution of benefits generated by this active through foreign visitors
in approximately 50%.

19

Table 5. Selected Models of Availability of Paying to Entries to MANP for Foreigners

Model I.3
Model II.3
Model III.3
Model IV.3
Model
EP

EP

EP

EP

(n= 1287)

(n= 1287)

(n= 1287)

(n= 1287)

0.1372

FIRST ANSWER
0.1488
0.2359

(T-Stat)

(0.719)

(0.769)

(1.335)

(-3.043)

1.1511

1.1384

1.0494

1.1160

(T-Stat)

(5.843)

(5.697)

(5.747)

(5.286)

Parameter

-1.4924

0.1647

(T-Stat)

(3.702)

SECOND ANSWER
2.6981
0.1484

1.0673

(T-Stat)

(4.668)

(7.926)

(3.682)

(4.044)

-0.1189

-1.4598

103.604

-1.4802

(T-Stat)

(-11.374)

(-15.147)

(4.746)

(-15.250)

0.0283

0.0283

(T-Stat)

(2.523)

(2.531)

1.7611

0.4293

0.4398

(T-Stat)

(2.044)

(2.170)

0.1413

(T-Stat)

(4.039)

(1,2)

-0.1260

0.3122

-0.6013

0.3102

(-1.248)

(2.362)

(-12.119)

(2.350)

88.97

89.51

88.97

90.05

(d.f)

176.882

188.604

54.096

210.429

(3)

(4)

(2)

(5)

Signif.

0.0000

0.0000

0.0000

0.0000

(T-Stat)
% of
prediction
2

R
0.0690
0.0735
0.0211
Madda
la
12.916
11.627
61.304
C*
12.205
12.261
10.988
C1
Source: Elaborated by the author based on the surveys data.

0.0820
12.124
12.600

20

As similar in the case of foreigners, (it means, identification of variables in each of the four
different models used) is the result of identified statistic significance of variables. Given
that those variables are not the same as in case of foreigners, in third specification models
for nationals and foreigners are not equal each other. In the case of nationals, the first
answer is specified as:

= 0 + 4 calif

Second answer is given by

Model I.3

+ 1 bid +

Model II.3.

= 0 + 1 log (bid

)+

Model III.3

bid
+
=

0 + 1 log 1

2
ing

Model IV.3

= 0 + 1 log(bid ) + 5 log(ing ) + 2

Adjustments to selected models for nationals are presented in table 6. For the first question
(in a summarized way: do you consider your visit worth 200 you paid?) that associated
parameter to indicator of quality of enjoyment derived from visits is significant. This means
that there is a positive association between quality of enjoyment of MANP perceived by
tourists and the probability to say yes to mentioned question. In the case of second
question, variables that explain probability of answer are fundamentally bid and income in
the case of the two models where they appear (models III.3 y IV.3).The R2 of Maddala
(higher than foreigners case) are between 0.13 0.16.
Talking about WTP to get in MANP for nationals, models place it in the case of median
WTP (C*), between 847 a 1000 ($5.7 to $6.8), except in model III.3 that is located close
to 2000 ($13) (interestingly the same structure of model used in foreigners case) When
using C as measure of WTP, notice that it has more stability to model specification,
because WTP is between 1000 y 1158 for all models ($6.8 to $7.8.
Making an analogous case for foreigners is possible to say that profits captured by nationals
as consumers surplus are about 800 ($5.4) per visit. In percentage terms, it represents

21

about 400% of the actual fee. The amount is lower than $6 (converted to colones) that are
captured by foreigners in each visit
An indirect comparison of WTP for foreigners and nationals indicates that the first group is
almost the double of second. This is consistent with the higher level of annual income form
that group and with higher levels of education. in the results obtained to Monte Verde
Preserve by Echeverra et al (1995) in order to estimate the value of the reserve reports that
WTP for foreigners is lower than nationals.
This result appears to be a paradox if consider that the foreign group has a higher income
(in that case nationals income is 34% of foreigners income). Trying to explain that result,
those authors argued that nationals give high value to their national resources than
foreigners do. But they do not present empirical evidence that supports their affirmation.
By the other side, there are not reported a focus-groups work, and they use a little sample
(351 observations).The unique model they estimated is ad-hoc, with a specification of the
type IV, and their results present t-statistics low significant, particularly when separate
sample in order to compare WTP for nationals and foreigners. Those paradoxical results
should be due to the reduced size of the sample. Estimation for nationals they used 42
observations and 309 for foreigners.
Estimating both models with theoretical fundament, and the model ad-hoc itself, this
research found that using bigger samples is able to conclude that enjoyment of national
parks behaves as a normal good, and so its consumption and WTP tend to raise with
income. So, rare results those authors obtained are due to necessity of big samples to get the
maximum likelihood estimation. In other way, is not possible to be sure of the asymptotic
properties of estimators.

22

Table 6.Selected Models of Availability of Paying to Entries to MANP for Nationals.

Model
Paramete
r

Model XIII

Model XIV

Model XV

Model XVI

EP
(n= 694)

EP
(n= 694)

EP
(n= 694)

EP
(n= 694)

1.0080
(2.152)
1.3722
(2.584)

1.2356
(2.383)
1.1259
(1.976)

FIRST ANSWER
0
(T-Stat)

(T-Stat)

1.1108
(2.340)
1.2616
(2.206)

1.2309
(2.380)
1.1306
(1.991)
SECOND ANSWER

1.1105
(9.870)
-0.0011
(-11.604)

7.0598
(11.762)
-1.0463
(-11.811)

0.3983
(5.746)
33.3914
(7.987)

0.0029
(-0.007)

0.3294
(0.814)

-0.4124
(-1.074)

5.2774
(5.704)
-1.0532
(-11.829)
0.1566
(2.498)
0.3378
(0.817)

91.35

90.06

81.56

95.96

144.840
(2)

160.605
(2)

74.256
(2)

167.298
(3)

0.0000

0.0000

0.0000

0.0000

R2
Maddala

0.1387

0.1538

0.0711

0.1602

C*

1002.72

851.87

2007.00

898.76

C1

1001.99

1010.72

1157.69

1044.72

(T-Stat)

(T-Stat)

(T-Stat)

(1,2)
(T-Stat)

% of
predictio
n
2
(d.f)
Signif.

Source: Elaborated by the author based on the surveys data.

23

VI. Conclusions
When the foreigner group is divided, we find empirical evidence that WTP inside of it is
not statistically different between nationalities.
The results show that WTP of foreigners visitors is about the double of the nationals
visitors ($12 and $6 respectively) . This results are consistent with the presumption that
enjoyment of the existence and visits to National Parks are normal goods. So, since that
foreigner visitors have a higher income, their WTP is higher than nationals visitors. The
opposite results, reported by Echeverra et al. may come from the very small sample used.
When this WTP are compared with the entrance fee ($6 for foreigner and about $2 for
nationals) we can conclude that this country losses about 50% of the amenity economic
value derived from the visits to MANP.
This situation represent a good opportunity in order to increase the entrances fees closer to
"demand prices" and to capture much more economics resources from this natural areas.
Finally, this paper shows that CVM can be use in developing countries and that this
methodologies can be useful in order to strengthen the use of natural resources in this
countries.

24

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25