On the Valuation of the Causes and Consequences of Environmental Damages: Evidence from a Field Experiment (revision of CentER DP 2017-029)

Standard economic theory assumes that agents’ valuation of economic outcomes is independent of the process via which these outcomes are produced. Yet Bulte, Gerking, List, and de Zeeuw (2005) found that causes in addition to outcomes matter in valuation. Using a field experiment I test whether drawing people’s attention to the role they play in the process of environmental degradation affects their willingness to pay for mitigation, and how this compares the activities undertaken by others. I do so by eliciting contributions to a reforestation program in an environmentally valuable area in Ethiopia. I implement three different conditions which allow me to measure the impact on contributions of emphasizing (i) the contributions of others to forest conservation, and (ii) the role of the respondents themselves in the forest degradation process. I find that learning about the efforts of others does not affect contributions while emphasizing the respondents’ negative role in the process actually increases contributions. Extant literature notes that including information on human-caused environmental damage in contingent valuation surveys does indeed increases the WTP values. This was, however, attributed to ‘outrage effect’ – that is, because respondents are upset, they contribute more to environmental goods. In a somewhat different setting this study finds evidence that people’s contributions also increase significantly and substantially if attention is drawn to their own responsibility in the deforestation and desertification process, suggesting, the ‘responsibility effect’ is also important in valuation.