Heterogeneity and emotions in the valuation of non-use damages caused by oil spills

Abstract

Oil spills are capable of causing major environmental insults that raise the emotional loads of individuals across society. In this paper we consider the role of emotions in heterogeneous responses of individuals in the non-market valuation of an oil prevention program in Spain. Heterogeneity is modeled with a smoothly mixing regression (SMR) model that allows researchers to explain the probability that individuals belong to the latent segments of WTP. The results show that heterogeneity in WTP responses is explained by the specific emotional reactions of individuals (upset, sadness, indifference) rather than by their socioeconomic characteristics. Thus, the investigation of the emotional reactions of individuals can provide useful tools for the design of non-market valuation studies, providing more accurate predictions of the potential behavior of individuals in constructed markets for damage assessment. (C) 2013 Elsevier BM. All rights reserved.