Do Respondents’ Perceptions of the Status Quo Matter in Non-Market Valuation with Choice Experiments? An Application to New Zealand Freshwater Streams

Abstract: Many issues relating to the sustainability of environmental resource use are informed by environmental valuation studies with stated preference surveys. Within these, researchers often provide descriptions of status quo conditions which may differ from those perceived by respondents. Ignoring this difference in utility baselines may affect the magnitude of estimated utility changes and hence bias benefit estimates of proposed environmental policies. We investigate this issue using data from a choice experiment on a community’s willingness to pay for water quality improvements in streams. More than 60% of respondents perceived streams’ water quality at the status quo to be better than the description we provided in our scenario. Results show that respondents who could provide details of their perception of the status quo displayed stronger preferences for water quality improvements—and hence higher marginal willingness to pay—than their counterparts. However, respondents who referred to their own status quo description displayed a higher inclination to prefer the status quo, while other respondents tended to prefer the proposed improvements. We argue this might be linked to the amount of knowledge each group displayed about the status quo: a kind of reluctance to leave what one believes he/she knows well.