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The role of willingness to accept in determining the upper or lower limit of eco-compensation standard |
PAN Mei-chen, SONG Bo |
School of Energy and Environmental Engineering, University of Science and Technology Beijing, Beijing 100083, China |
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Abstract Willingness to accept (WTA) is one of the common methods to calculate eco-compensation standards. Proper use of WTA method is very critical to reaching the reasonable eco-compensation standards. This study reviewed studies published in Chinese domestic journals associated with WTA during the last 12 years, and found that there was no consensus on whether WTA should be regarded as the upper or lower limit of eco-compensation standards. While the majority of the literature acknowledged that assuming WTA as the lower limit of the compensation standard was not logically rigorous, this article argued that the process of establishing eco-compensation standards can be regarded as a bargaining process between the payee and the payer and the WTA is actually the bid value of the payee. Therefore it should be used as the upper limit of the eco-compensation standard. In addition, it was found that the acceptable range of eco-compensation standards on the basis that WTA and WTP not be a precise amount but an imprecision interval. When the WTA was higher than WTP, there was still possibility for negotiation success; otherwise, the actual eco-compensation standards had wider range and the policy maker had more flexibility for decision.
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Received: 01 September 2020
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