Kopsidas - ICODECON 2016

Contingent Valuation Method (CVM) as an Index to
Measure the Social Capital for Urban Restoration in

the Centre of Athens
Odysseas N. Kopsidas
Department of Economics, University of Thessaly, Korai 43, 38333 Volos,, Greece, E –

mail: odykopsi@yahoo.gr
The purpose of the paper
• Is to present a modified model of an internalizing external

costs caused by the operation of a manufacturing unit in
conjunction with the new reality created.
• The environment is characterized as a public good.
• Public goods are goods that provide benefits for society as a

whole or part of it, usually regardless of whether the
individual people are willing to pay (WtP) to have these
benefits.
Contingent Valuation Method (CVM)
• (CVM) is frequently applied to:
• (i) economic valuation of environmental projects

or works/activities (planned or in operation) with a
significant environmental impact and
• (ii) damage assessment after environmental

accidents, i.e., after incidents that deteriorate
environmental quality.
This method is heavily relied on survey-based estimation of...
• (i) willingness to pay (WtP), which is the maximum

amount of money a person would be willing to pay,
sacrifice or exchange for a public good, and
• (ii) willingness to accept (WtA), which is the minimum

amount of money a person would be willing to accept in
order to abandon a good.
• WtP is bounded by income while WtA is potentially

unlimited.
The aim of this work...
• Is to present a dynamic methodological framework

for evaluating environmental impact caused by
human activities by means of the CVM,
• referring to alternative routes of investigation and

including successive levels of information granularity
in continuous interaction with a dedicated local
Knowledge Base (KB) created ad hoc.
In case that the CVM is applied for monumental remains,
certain specific problems arise, because...
• (i) the ‘good’ under examination has a subjective

value, dependent on the cultural level of each
reviewee
• (ii) the intangibles associated with this ‘good’ are

related to the present political behaviour of each
individual as regards his/her attitude to the local
authorities or the central government
In case that the CVM is applied for monumental remains,
certain specific problems arise, because...
• (iii) as a result, the answers may be biased, a matter that

becomes evident only after final statistical processing,
thus calling for supplementary information, possibly by
means of an additional post-questionnaire, and
• (iv) the adopted/developed (for elicitation of people’s

WtP) technique itself should be revised (possibly by
means of a meta-questionnaire) by the same group of
experts who processed the answers in order to improve
the questionnaire and store it into a dedicated Knowledge
Base (KB) for future usage, since each monument is
unique and the results coming from examining quasi-
similar cases are of limited value.
The survey
• Members of the public were randomly intercepted in

city and town centres, cafes and markets, and were
interviewed face-to-face.
• The sample size was 240 questionnaires, consisted

of 52. 5% women and 47.5% men and the majority
of people age was between 26 and 35 years old.
• This was put down to the fact that young people were
more willing to participate in the survey.
In addition...
• Survey respondents were educated to a higher level,

36,50% had finished high school and 28,5% had
attended university
• When respondents were asked to assign a level of

importance to the protection of the area on the 3-point
response scale, 93,75% considered it very important to
protect the urban environment,
• 13.2% said protection was enough important and only

5% thought that the preservation of the area was slightly
important.
The WtP question was asked the respondent to select an
option from a range of values, Seven values were presented,
ranging from 0 € to 25 € and the seventh option was opened...
Furthermore…
• The proportion of all respondents who expressed a

willingness to pay some amount was 90% .
• The descriptive statistics provide helpful information

on the percent frequency of the WtP-value:
• 10% of the sample suggested WtP=0 €, 50% agreed

with WtP=1-10 €, 35% accepted WtP=11-25€, 26%
mentioned WtP=26-50 €.
Regression Statistics for Area 1
• WtP = 1.164 – 0.279X9 +0.82X12 – 0.147X14 – 0.173X19

+0.113X28
• More specifically, the amount will be paid by the respondent

(WtP) change significantly when you consider that:
• The protection of the urban environment is very important

(X9), increase the amount you will pay if you lived here (X12),
the amount received by the respondent as compensation
reduced (X14), the respondent has property, (X19) and the
income is high compared with the average (X28).
• WtP = 0.182 – 0.228X1A + 0.205X4A + 0.367X6 – 0.183X10 +

0.607X12

(WtP) change significantly when: The frequency of visits is
high (X1A)
• Does a significant problem the appearance of the area (X4A),

Strive to be paid by the competent bodies is not satisfactory
(X6) ,Strengthen energy to improve the lake is organic farming
(X10),increasing the amount of the contribution (WtP) if lived
here (X12).
• WtP = 2.016 – 0.271X3 + 0.774X12 – 0.437X24

(WtP) change significantly when considering that: The
environmental condition of the area is poor (X3).
• Increase the amount of the contribution (WtP) if they lived

here (X12), Marital Status Married states (X24).
• We observe that the improvement of the area, the estimated

average annual contribution for all respondents is 8.22 €
(median 5 €), while the amount of 5 € is the most common
offer (central tendency).
We conclude that...
• According to survey results the willingness to pay

(WtP) is nearly identical for the three study areas.
• The highest WtP is the area of Area 2, 13.16 € while

it has the smallest percentage (10%) denied
contribution from the people surveyed.
• Second comes the region of Area 1 with the amount

of 10.14 € and the third region of Area 3, the amount
of 8.22 €.
In conclusion...
• Our analysis shows that social science research can provide

useful information about the complex issues of
environmental policy, such as restoring urban ecosystem.
• The analysis of policy for such cases is particularly difficult

because these systems provide multiple, interrelated services
vary depending on the type of urban area, location and other
factors.
• The work presented here has proved a useful integrated tool

for determining the realistic cognitive burden on stakeholders
and third parties.
Thank you for your attention!

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Contingent Valuation Method (CVM) as an Index to

Measure the Social Capital for Urban Restoration in

Department of Economics, University of Thessaly, Korai 43, 38333 Volos,, Greece, E –

• Is to present a modified model of an internalizing external

• The environment is characterized as a public good.

• Public goods are goods that provide benefits for society as a

• (CVM) is frequently applied to:

• (i) economic valuation of environmental projects

• (ii) damage assessment after environmental

• (i) willingness to pay (WtP), which is the maximum

• (ii) willingness to accept (WtA), which is the minimum

• WtP is bounded by income while WtA is potentially

• Is to present a dynamic methodological framework

• referring to alternative routes of investigation and

• (i) the ‘good’ under examination has a subjective

• (ii) the intangibles associated with this ‘good’ are

• (iii) as a result, the answers may be biased, a matter that

• (iv) the adopted/developed (for elicitation of people’s

• Members of the public were randomly intercepted in

• The sample size was 240 questionnaires, consisted

• Survey respondents were educated to a higher level,

• When respondents were asked to assign a level of

• 13.2% said protection was enough important and only

• The proportion of all respondents who expressed a

• The descriptive statistics provide helpful information

• 10% of the sample suggested WtP=0 €, 50% agreed

• WtP = 1.164 – 0.279X9 +0.82X12 – 0.147X14 – 0.173X19

• More specifically, the amount will be paid by the respondent

• The protection of the urban environment is very important

• WtP = 0.182 – 0.228X1A + 0.205X4A + 0.367X6 – 0.183X10 +

• More specifically, the amount will be paid by the respondent

• Does a significant problem the appearance of the area (X4A),

• WtP = 2.016 – 0.271X3 + 0.774X12 – 0.437X24

• More specifically, the amount will be paid by the respondent

• Increase the amount of the contribution (WtP) if they lived

• We observe that the improvement of the area, the estimated

• According to survey results the willingness to pay

• The highest WtP is the area of Area 2, 13.16 € while

• Second comes the region of Area 1 with the amount

• Our analysis shows that social science research can provide

• The analysis of policy for such cases is particularly difficult

• The work presented here has proved a useful integrated tool

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