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האם נוכל לתת ערך כלכלי למגרש האם נוכל לתת ערך כלכלי למגרש משחקים בעיר?משחקים בעיר?

האםהאם CVMCVM, , TCMTCM ? ? יכולים לעזור יכולים לעזור

מירה ברון, אנסטסיה טקץ', אירינה ליבשיץמירה ברון, אנסטסיה טקץ', אירינה ליבשיץ

שטח כלכלה, הפקולטה להנדסת תעשייה וניהולשטח כלכלה, הפקולטה להנדסת תעשייה וניהולהטכניון, חיפההטכניון, חיפה

mbaron@technion.ac.ilmbaron@technion.ac.il , ,IRSA, 10/1/2010IRSA, 10/1/2010תל אביבתל אביב

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OutlineOutline

►Open space as a local public goodOpen space as a local public good►Methods for evaluating environmental Methods for evaluating environmental

goodsgoodsCVM and TCMCVM and TCM

►Designing the questionnaire and Designing the questionnaire and selecting a sample of playgroundsselecting a sample of playgrounds

►Results for CVM and TCMResults for CVM and TCM►ConclusionsConclusions

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Open Spaces: Do We Need Open Spaces: Do We Need Them?Them?

►Open spaces play a crucial role in the life of Open spaces play a crucial role in the life of a city, but are they more important than a city, but are they more important than using the land for residential construction, using the land for residential construction, shopping centers, schools or hospitals?shopping centers, schools or hospitals?

►Comparison can be done by investigating a Comparison can be done by investigating a parcel of land. It requires to assign a parcel of land. It requires to assign a monetary value to the various land uses monetary value to the various land uses

►How do we assign a value to open space?How do we assign a value to open space?

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Children’s PlaygroundsChildren’s Playgrounds►Our interest are parks and gardens Our interest are parks and gardens

within the urban area, and specifically within the urban area, and specifically children’s playgrounds (pocket gardens)children’s playgrounds (pocket gardens)

►They are aimed for children under the They are aimed for children under the age of 6, and aimed to develop age of 6, and aimed to develop children’s physical and social skillschildren’s physical and social skills

►They often include see-saw, ladders, They often include see-saw, ladders, junky board, climbing facilities, swingsjunky board, climbing facilities, swings

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Playgrounds Are Local Public Playgrounds Are Local Public GoodsGoods

Urban open spaces and playgrounds are Urban open spaces and playgrounds are locallocal public goodspublic goods unlike the classical unlike the classical public good, e.g., defense, lighthouses…public good, e.g., defense, lighthouses…

They are:They are:►NonexcludableNonexcludable –– once they are produced, it is once they are produced, it is

impossible or very costly to exclude anyone from useimpossible or very costly to exclude anyone from use ►NonconsumptiveNonconsumptive –– one person’s enjoyment of one person’s enjoyment of

the good does not diminish its availability for othersthe good does not diminish its availability for others►Their benefits are limited in spaceTheir benefits are limited in space

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Economic Valuation MethodsEconomic Valuation MethodsMany methods of valuation of non-Many methods of valuation of non-

market goods are available. market goods are available. In this research we use:In this research we use:►Revealed Preference MethodRevealed Preference Method

o Travel Cost Method (TCM) Travel Cost Method (TCM) ►Stated Preference MethodStated Preference Method

o Contingent Valuation Method (CVM)Contingent Valuation Method (CVM)

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TCMTCM► Travel cost method Travel cost method is a method of measuring the is a method of measuring the

use value (UV) of an environmental amenity by use value (UV) of an environmental amenity by using the costs that individuals pay to travel to using the costs that individuals pay to travel to the site, a proxy for the price of the amenity.the site, a proxy for the price of the amenity.

► In our case no monetary expenses for travel In our case no monetary expenses for travel exist, just time spent in walking and on the siteexist, just time spent in walking and on the site

► Demand curve for the environmental amenity Demand curve for the environmental amenity can be constructedcan be constructed by simulating changes in by simulating changes in entrance fees.entrance fees.

► The area under the demand curve, the consumer The area under the demand curve, the consumer surplus, estimates the benefits of the good.surplus, estimates the benefits of the good.

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Stated Preference Methods-Stated Preference Methods-CVMCVM

► Contingent valuation methodContingent valuation method (CVM) (CVM) elicits elicits preferences about the resource’s value preferences about the resource’s value among the relevant population via a survey among the relevant population via a survey where the participants are asked directly where the participants are asked directly about their valuationabout their valuation

► Willingness-to-PayWillingness-to-Pay (WTP) for a carefully (WTP) for a carefully defined good or service which improves defined good or service which improves utility. utility.

► Willingness to AcceptWillingness to Accept (WTA) to avoid (WTA) to avoid reductionreduction in utilityin utility

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Questionnaire DesignQuestionnaire Design► Details of respondents’ visits to the Details of respondents’ visits to the

playground (frequency, duration, playground (frequency, duration, distance walked), provide data for distance walked), provide data for TCMTCM

► Hypothetical questions - WTP Hypothetical questions - WTP ► Socioeconomic backgroundSocioeconomic background

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Playgrounds SelectionPlaygrounds Selection►From 250 playgrounds in the city of Haifa, From 250 playgrounds in the city of Haifa,

Israel, we selected 12 playgrounds where Israel, we selected 12 playgrounds where we interviewed 244 adults (parents or we interviewed 244 adults (parents or relatives), who accompanied children in relatives), who accompanied children in May-June 2007May-June 2007

The criteria for selection of playgrounds The criteria for selection of playgrounds were:were:

►Socio-economic levelSocio-economic level of neighborhoodof neighborhood►Closeness to a road Closeness to a road ►Present repair conditionPresent repair condition

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TCM RESULTSTCM RESULTS

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Frequency of VisitsFrequency of VisitsTotalTotal

%%

Several times a daySeveral times a day 30.330.3

Once a dayOnce a day 27.527.5

Two-three times a Two-three times a weekweek

33.233.2

Once a weekOnce a week 8.28.2

Number interviewedNumber interviewed 244244

TotalTotal %% 100.0100.0

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One Way Walking to One Way Walking to PlaygroundPlayground

TotalTotal

%%

Less than 5 minutesLess than 5 minutes 50.450.4

5-10 minutes5-10 minutes 32.032.0

10-15 minutes10-15 minutes 12.312.3

15-20 minutes15-20 minutes 5.35.3

Number interviewedNumber interviewed 244244

TotalTotal %% 100.0100.0

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Time Spent in PlaygroundTime Spent in PlaygroundTotalTotal

%%

Less than half an hourLess than half an hour 4.94.9

0.5-1.0 hour0.5-1.0 hour 24.224.2

1.0-2.0 hours1.0-2.0 hours 55.755.7

More than 2 hoursMore than 2 hours 15.615.6

Number interviewedNumber interviewed 244244

TotalTotal %% 100.0100.0

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Estimating Relationship Estimating Relationship between Number of Visits and between Number of Visits and

Time spent in RecreationTime spent in Recreation►Time is converted into money using Time is converted into money using

the individual’s alternative value of the individual’s alternative value of time (often a percentage of wage rate)time (often a percentage of wage rate)

►Relationship is analyzed for each Relationship is analyzed for each playground separately between playground separately between number of visits and value of time.number of visits and value of time.

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Number of Visits vs. Price of Number of Visits vs. Price of VisitVisit

Tabenkin 2

0

5

10

15

20

25

30

0 10 20 30 40 50 60

Times per month

Rea

l pric

e of

the

tota

l vis

it, N

IS

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Estimating the Demand Estimating the Demand CurveCurve

►Entrance fee is increased moderately, Entrance fee is increased moderately, in a method suggested by Hotelling in a method suggested by Hotelling (1949)(1949)

►Entrance fee substitutes the cost Entrance fee substitutes the cost (value of time)(value of time)

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Demand Curve and Consumer Demand Curve and Consumer SurplusSurplus

Using Standard Tobit methodUsing Standard Tobit method► Demand curve for playground is:Demand curve for playground is:Visits per month =1062 - 7.2322* Visits per month =1062 - 7.2322*

Entrance feeEntrance fee►Consumer surplus is:Consumer surplus is:► 1/2*146.89*1062= 78,023 NIS per 1/2*146.89*1062= 78,023 NIS per

month (936,272 NIS per year). About month (936,272 NIS per year). About $20,000 per month.$20,000 per month.

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Demand Curve for Demand Curve for Playground TPlayground T

Tabenkin 2

0.0020.0040.0060.0080.00

100.00120.00140.00160.00180.00200.00220.00

0 200 400 600 800 1000 1200

Visits per month

Entra

nce

fee

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CVM RESULTSCVM RESULTS

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WTP QuestionsWTP QuestionsThree questions were asked:Three questions were asked:►How much would you be WTP to improve How much would you be WTP to improve

the facilities in the playground?the facilities in the playground?►How much would you be WTP for a new How much would you be WTP for a new

playground?playground?►Consider the hypothetical scenario Consider the hypothetical scenario

where the municipality dismantles this where the municipality dismantles this playground. How much would you be playground. How much would you be WTP to avoid dismantling?WTP to avoid dismantling?

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Distribution of Dependent Distribution of Dependent VariablesVariables

MONEY_IMPRMONEY_IMPR MONEY_NEWMONEY_NEW

MONEY_PRESMONEY_PRES

0

10

20

30

40

50

60

70

80

0 5 10 15 20 30 40 500

10

20

30

40

50

60

70

80

0 5 10 15 20 30 40 50

0

10

20

30

40

50

60

70

80

0 5 10 15 20 30 40 50

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Refusal to PayRefusal to Pay►The percentage who refuse to pay The percentage who refuse to pay

(WTP=0) varies between 57-72%. (WTP=0) varies between 57-72%. ► It can be interpreted as protest response It can be interpreted as protest response

(‘we pay enough taxes…’) (‘we pay enough taxes…’) ►or real ‘zero’ value. or real ‘zero’ value. ►We have not We have not followedfollowed the WTP questions, the WTP questions,

a procedure which is often used, and we a procedure which is often used, and we cannot separate the responses.cannot separate the responses.

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Econometric AnalysisEconometric Analysis►Since the answers are only positive, and Since the answers are only positive, and

we cannot assume a normal distribution of we cannot assume a normal distribution of the dependent variable, the dependent variable, we cannot we cannot analyze it using OLSanalyze it using OLS

We used three procedures:We used three procedures:► Standard TobitStandard Tobit►Heckman’s two steps Tobit procedure Heckman’s two steps Tobit procedure

►Ordered ProbitOrdered Probit

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Examining ModelsExamining Models►The models were examined using The models were examined using

Benefit Transfer, making predictions Benefit Transfer, making predictions for various scenarios.for various scenarios.

►The best results are derived using The best results are derived using ordered Probitordered Probit

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►The value of MONEY_PRES, the money The value of MONEY_PRES, the money people are WTP to avoid dismantling of people are WTP to avoid dismantling of the playground, seems as the best the playground, seems as the best value for the playground in its current value for the playground in its current condition. The value varies with the condition. The value varies with the socio-economic level of the socio-economic level of the neighborhood, NIS 20-21 (about $5 per neighborhood, NIS 20-21 (about $5 per respondent per month).respondent per month).

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WTP VALUESWTP VALUESper person per monthper person per month WTP>0 [full sample] WTP>0 [full sample]

Type of Type of neighbor-neighbor-hoodhood

WTP WTP improve-improve-mentment

WTP newWTP newplaygrounplaygroundd

WTP WTP preservatipreservationon

High socio-High socio-econ levelecon level

21.3421.34[9.52][9.52]

21.5721.57[5.08][5.08]

19.6919.69[4.73][4.73]

Medium Medium socio-econ socio-econ levellevel

20.7120.71[8.59][8.59]

21.1121.11[4.13][4.13]

19.7619.76[3.77][3.77]

Low socio-Low socio-econ levelecon level

19.6619.66[8.40][8.40]

20.0020.00[5.00][5.00]

21.3321.33[4.67][4.67]

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Converting to Land ValuesConverting to Land Values

►How can we use the results?How can we use the results? Calculate the sum of WTP per Calculate the sum of WTP per

playground, by multiplying the value playground, by multiplying the value per person by the number of visitors per person by the number of visitors (public good)(public good)

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Comparing Land ValuesComparing Land ValuesOur major question is:Our major question is:►Are open spaces the proper land use Are open spaces the proper land use

or residential construction, or shopping or residential construction, or shopping centers, schools or hospitals?centers, schools or hospitals?

►According to the classical urban According to the classical urban economists, Alonso (1960) Muth economists, Alonso (1960) Muth (1969) a land use is determined by the (1969) a land use is determined by the highest bid per a parcel of land. highest bid per a parcel of land.

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►Using CVM (WTP) we calculate the value of Using CVM (WTP) we calculate the value of the non-market good-playground. the non-market good-playground.

►Using TCM we calculate consumer surplusUsing TCM we calculate consumer surplus►We compare these values with the market We compare these values with the market

prices of land for other land uses.prices of land for other land uses.►The values enable to calculate whether The values enable to calculate whether

investment in upgrading a playground are investment in upgrading a playground are economicaleconomical

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ConclusionsConclusions► Playgrounds have a value that can be Playgrounds have a value that can be

estimated by WTP or TCM (or HPM)estimated by WTP or TCM (or HPM)► We found positive WTP which are not We found positive WTP which are not

negligible. The percentage willing to pay negligible. The percentage willing to pay varies between 21-46%varies between 21-46%

► Using TCM we estimate the consumer Using TCM we estimate the consumer surplus for each playgroundsurplus for each playground

► We disregarded the ecological value and the We disregarded the ecological value and the option value of flexibility in future land uses, option value of flexibility in future land uses, which increase the area’s value.which increase the area’s value.

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Future ResearchFuture Research► Use of open space by teenagers / elderly / Use of open space by teenagers / elderly /

adultsadults► Can different age groups use the same area in Can different age groups use the same area in

different hours or simultaneously.different hours or simultaneously. IfIf yes, we yes, we have to addhave to add the benefits of the various age the benefits of the various age groups in calculating the value of landgroups in calculating the value of land

► Counting the number of users in various hoursCounting the number of users in various hours► A software to locate new playgrounds or close A software to locate new playgrounds or close

playgrounds (Dunayevski and Baron, 2010)playgrounds (Dunayevski and Baron, 2010)

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Thank you for Thank you for attentionattention