External Tests of Scope and Embedding in Stated Preference Choice Experiments: An Application to Endangered Species Valuation

Abstract

A criticism often levied against stated preference (SP) valuation results is that they sometimes do not display sensitivity to differences in the magnitude or scope of the good being valued. In this study, we test the sensitivity of preferences for several proposed expanded protection programs that would protect up to three US Endangered Species Act-listed species: the Puget Sound Chinook salmon, the smalltooth sawfish, and the Hawaiian monk seal. An external scope test is employed via a split-sample SP choice experiment survey to evaluate whether there is a significant difference in willingness to pay (WTP) for protecting more species and/or achieving greater improvements in the status of the species. The majority of 46 scope tests indicate sensitivity to scope, and the pattern of scope test failures is consistent with diminishing marginal utility with respect to the amount of protection to each species. Further tests suggest WTP may be proportional to the number of species valued.