Economic Valuation Vatra Dornei

Description of valuation study conducted – DEMAND

The research has taken into account three public goods provided by the studied area (Vatra Dornei): scenery and recreation, water quality and rural vitality. These public goods were selected as a result of discussions with stakeholders in the first workshop carried out within the project.

Aim of this study was to determine the preferences of the consumers, and their socio-economic profile, for the analyzed public goods and to evaluate the willingness to pay for an improvement in those public goods provided in the case study area.

The universe of the survey regarding the demand for public goods/bads consisted of approximately 70.000 people (inhabitants of the hotspot and yearly tourists visiting the area). The sample consisted of 105 valid responses. The main evaluation tool included in the in the questionnaire based survey consisted of a contingent valuation exercise based on the item presented below.

To perform this study we have used a quantitative methodological approach. In this regard the Random Parameter Logit (RPL) model was used, to identify and highlight the interactions between the attributes of public goods/bads and the constant (c) and the socioeconomic variables. This allowed us to identify significant relationships between these variables and benefits of public goods provided by the area under study. We run one model per variable (i.e. potential determinant) including interactions between it and the three attributes representing public goods (scenery and recreation, water (quality) and rural vitality) provided by the hotspot called Dorna Region (DoR) in the case study region North-East Region of Romania.

PG valuation results – DEMAND

For the analyzed public goods, the respondents showed a major interest in improving them, especially in the case of moderate interventions.

The results show also that benefits derived from the public goods provided by the hotspot under study (Vatra Dornei Area) are very heterogeneous. It was found that many variables significantly influencing benefits of such public goods/bads as a whole (such as age, environmental awareness,  professional status or the individual’s opinion about obliging farmers), and only a few variables specifically influence benefits derived from public goods separately (like education level and the existence of a relative that is a farmer), and this in a negative way.

The willingness to pay for medium improvement of the public goods: 0.7 Euro per 100 ha of additional forested area, 8.8 Euro per mg/l less NO3 content of water and 1.4 Euro per 1% of increase in rural vitality (share of youths in the population and amount of houses).

The willingness to pay for strong improvement of the public goods: 0.5 Euro per 100 ha of additional forested area, 4.3 Euro per mg/l less NO3 content of water and 0.6 Euro per 1% of increase in rural vitality (share of youths in the population and amount of houses).

 

 

Description of valuation study conducted – SUPPLY

The supply side study had the goal to evaluate the public goods from farmers point of view. The farmers working in the Vatra Dornei area have the willingness to pay but in different levels depending on mechanisms or public goods. The socio-economic profile of the farmers influenced also their willingness to accept interventions to improve public goods.

The study conducted analyses the cost of supply of public goods in Vatra Dornei area (approx. 600 medium sized entities) with respect to the main public goods provided by forestry and agricultural systems under the pressure of urbanization and diverse intensive activities in the region, including environmental (Scenery and recreation and Water quality) and sociocultural ones (rural vitality). For this purpose, the availability to accept an improvement in the provision of each public good compared with the current situation has been evaluated on the basis of different payments for using environmental friendly practices (e.g. avoidance of machinery or chemical substances) with increasingly stringent requirements to be involved in an agri-environmental scheme (AES) or to benefit from Ecological Certification (EC)

For determining the willingness to accept (WTA) a scenario based what-if analysis was used which takes into consideration responses provided by the agro-forestry entities included in the survey. Those have been interviewed and the responses were used in the valuation assessment. Assessment was completed through the data collected as part of the survey performed with the agro-forestry representatives.

The survey was conducted mainly for the valuation of education/ information/ consultancy (EIC) preferences and needs of farmers and forest owners using convenience sampling (41 entities from 26 localities in the hotspot) composed of medium sized entities in the area (with consideration for geographical coverage of the entire hotspot area) in the period of 1st Dec 2016 – 29th Jan 2017. The universe size has been reduced to ~600 medium sized agro-forestry entities in the hotspot region based on feedback from local experts (down from ~1500, which represent, in fact, the entire population of entities – incorporated or not – including small/household farms). The survey takes into consideration incorporated entities that have at least 5 bovines – an activity that is typical for the area.

 

PG valuation results – SUPPLY

For every public good, the willingness to accept to improve its status is different depending on the applied mechanisms. Farmers have shown a great interest in agri-environment payments (for scenery / rural landscape and rural vitality) as well as for mechanisms that provide a high level of information / education and consultancy.

Random Parameter Logit Models including interactions with the attributes related to public goods/bads and the socioeconomic variables were used to analyse the heterogeneity of farmers’ preferences towards participation in AES/EIC aimed at improving the provision of of public goods (i.e. heterogeneity in the supply of public goods). We run one model per variable including interaction between it and the three attributes related to  two public goods (scenery and recreation and water quality).

Results show statistically significant interaction at 95% level between the attributes ”scenery/rural landscape” and  “water quality”, showing that the higher the preference for improved ”scenery/rural landscape” the higher the preference for improving “water quality”. This was observed for both for education/ information/consultancy/ and ecologic certification.

Furthermore the rural farmers are willing to accept, for improving the level of public goods, agri-environment payments equal to 2.3 thousand €/ha of additional forest, 0.05 €/thousand litres, each with 1 mg less NO3 content and 90.7 €/1% higher proportion of youths in the population.

Related to mechanisms for education/information and consultancy, the farmers are willing to accept 0.9 thousand €/ha of additional forest, 0.27 €/thousand litres, each with 1 mg less NO3 content and 29.7 €/1% higher proportion of youths in the population.

For ecologic certification, in order to provide more public goods, the farmers can accept 0.5 thousand €/ha of additional forest, 0.30 €/thousand litres, each with 1 mg less NO3 content and 30.9 €/1% higher proportion of youths in the population.