Recycling of agricultural waste: does the compensation approach influence compensation criteria?

QUAN Shiwen1 LIU Yuanyuan2

(1.Rural Development Institute of Chinese Academy of Social Sciences)
(2.Research Center for Rural Economy, Ministry of Agriculture of the People’s Republic of China)

【Abstract】Taking China’s compensation policy on recycling of straw as an example, this paper used the contingent valuation method to conduct an empirical analysis on farmer’s willingness to accept based on two compensation approaches, namely, taking the farmer household as the compensation unit and the area of farmland as the compensation unit. The results revealed a significant difference in WTA between these two approaches. The reasons for the remarkable difference are found to be diminishing marginal costs of recycling straw, diminishing marginal utility of environmental valuation and respondents’ insensitivity to compensation approaches. The farmers who have a high cognition of the compensation policy show a more consistent WTA between the two approaches. Therefore, this paper suggests that the government should improve farmer households’ cognition of compensation policies and pay attention to farmer households with high output of straw before recycling straw.

【Keywords】 agricultural waste; contingent valuation; compensation criteria; willingness to accept; double-bounded dichotomous choice;

【DOI】

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    Footnote

    [1]. ① The government does not need to intervene when agricultural waste can be recycled by market behaviors. For example, for the ecological and recycling agricultural mode of straw returning to field after it is digested by livestock formed by farmers spontaneously, since crop straw can realize its economic value directly, its disposal does not need the intervention of the government. However, due to the limitation of several conditions (technology, capital, and the resource endowment), it is usually difficult to develop this kind of mode spontaneously and support from the government is still necessary. [^Back]

    [2]. ① This paper does not consider the levy policy, namely the willingness to pay. Although the deviation of WTA was higher than that of the willingness to pay, the selection of measurement methods should take initial property rights into consideration first (Carson et al., 2001). In terms of the value assessment of environmental products, in many cases, the willingness to accept was more reasonable than the willingness to pay (Goldar and Misra, 2001). In China, current policies of banning burning straw are different in different regions. However, in general, fine and compensation are adopted simultaneously. Comparatively speaking, the issue of criteria is mainly reflected in the policies of compensation. [^Back]

    [3]. ① External information affects farmers’ cognition of environmental damage caused by the waste disposal, which means that enhancing publicity and education of environmental protection and the popularity of environmental knowledge may reduce WTA. [^Back]

    [4]. ① In the two compensation approaches emphasized in this paper, the inherent meaning of the second compensation approach is to compensate according to the actual output of agricultural waste. Nevertheless, in the process of operation, it is very difficult for the government to completely find out the output of waste of every household. Therefore, the government usually compensates farmers according to the area. Strictly speaking, the area here should be the area of crops, which corresponds to agricultural waste. However, in practice, the government compensates farmers according to the area of farmland or the area of farmland taxed. For this reason, the following design of the experiment uses the area of farmland, instead of the area of crops. [^Back]

    [5]. ① Since incomes also have the diminishing marginal utility, parameter b1 in Equation (2) may be different from that in Equation (3). However, the difference can be ignored because the proportion of the cost of disposing agricultural waste to the total income is quite low. [^Back]

    [6]. ① Since open questions would make it more likely for respondents to take strategic actions, Arrow et al. (1993) suggested that researchers should indirectly calculate WTP or WTA with dichotomous choice questions. Carson and Groves (2007) also deemed dichotomous choice questions as the only forms of questions with incentive compatibility in contingent valuation. [^Back]

    [7]. ① The other method used frequently for the design of the experiment is the between-subject comparison, which needs to randomly group the samples. Its advantage lies in that the sequence effect and the fatigue effect caused by continuously asking the same respondent many questions can be avoided. However, it cannot compare and analyze the respondent one-to-one at the micro level. [^Back]

    [8]. ① The traditional way for estimating Equation (10) is to use the Probit model, in which case onlyandcan be estimated directly, and then β can be calculated. This paper uses the double-bounded dichotomous choice model put forward by Hanemann et al. (1991) as the estimating model, and β can be estimated directly. Details can be seen in studies by Lopez-Feldman (2012). [^Back]

    [9]. ① When the double-bounded dichotomous choice is used to estimate WTA, the dependent variable of Equation (11) is the difference value calculated based on the estimation of WTA, which means that strictly speaking, the significance of the estimation of parameters in Equation (11) needs to be adjusted based on the evaluated error of the dependent variable. For simplicity, the adjustment is not carried out below. [^Back]

    [10]. ① Large scales, medium scales and small scales are not set quantitatively in the questionnaire, but are determined according to the actual conditions of sample villages in the process of operation. [^Back]

    [11]. ① In the estimation model of open questions, when the authors delete all the samples who do not accept compensation or refuse to answer, or mark all WTA of not accepting compensation or refusing to answer with zero, the estimation coefficients of the variable rec are −80.25 and −87.34, respectively, both of which are significant at the statistical level of 10%. Thus it can be believed that at least the variable rec has unstable negative influences on the difference value of WTA. [^Back]

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This Article

ISSN:1002-8870

CN: 11-1262/F

Vol , No. 04, Pages 13-29

April 2017

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Article Outline

Abstract

  • 1 Introduction
  • 2 Theoretical analysis and hypotheses
  • 3 Design of experiment, measurement methods and data
  • 4 Results of empirical analysis and discussion
  • 5 Conclusions and enlightenment
  • Footnote

    References