Income distribution and willingness to pay for ecosystem services

Research output: Contributions to collected editions/worksArticle in conference proceedingsResearchpeer-review

Authors

We study how global income distribution, and income inequality in particular,
affects the average willingness to pay (WTP) for ecosystem services. We use a
model (extending Ebert 2003) where individual households have identical preferences over consumption goods and ecosystem services, which are represented by a constantelasticity-of-substitution utility function, and income is log-normally distributed over individuals with given mean and standard deviation. We show that (i) average WTP for ecosystem services increases with mean income if ecosystem services and consumption goods are substitutes or weak complements, and (ii) average WTP for ecosystem services decreases (increases) with income inequality if ecosystem services and consumption
goods are substitutes (complements). We illustrate our results with empirical data
on the global income distribution (from World Bank 2011) and on the income elasticity of WTP for ecosystem services (from the meta-study of Jacobsen and Hanley 2009).
Original languageEnglish
Title of host publication13th Annual BIOECON Conference “Resource Economics, Biodiversity Conservation and Development : 11-13 September 2011, programme and papers
Number of pages21
PublisherBioecon
Publication date2011
Publication statusPublished - 2011
Event13th Annual BIOdiversity and Economics for Conservation Conference - BIOECON 2013: Resource Economics, Biodiversity Conservation and Development - Genf, Switzerland
Duration: 11.09.201113.09.2011
Conference number: 13
http://www.bioecon-network.org/pages/13th_2011.html

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