Socioeconomic Factors Affecting WTP

In this section, we will further examine the factors which influence WTP. The logit model is used to estimate the tourists’ WTP on the basis of their socioeconomic characteristics. After testing the logit model by using several sets of variables, we chose one of the variable sets in which the log-likelihood ratio (LR) was the highest.

The final results are presented in Table 5.5.

Table 5.5 WTP Equations

Variable Explanation Coefficient

Gen Gender; male = 1, female = 0 -5.49**

Occ Occupation; public sector employee =1, others=0 0.25*

Re Resident; Taipei metropolitan area residents =1, others=0 1.93*

Income age5: above 60 years

2.82**

* Significance level p<0.05

** Significance level p<0.01

Pr Sc

High S Co Gr

Sc

To

From Table 5.5 we can observe that female respondents, high income individuals, Taipei metropolitan area residents, less educated respondents, public sector employee and those under the age of 60 tend to have higher WTP.

5.3.2 In-depth interview

To conform above results, we sample from the 120 respondents and make in-depth interviews by phone. We interview 17 respondents, their Socio-economic characteristic are showed in the Table 5.6. Two females being primary and high school degrees are not water users.

Table 5.6 Socio-economic characteristic of the respondents (in-depth interviews)

imary hool

chool llege aduate hool

tal

M 1 3 2* 1 7

Fe 3 3 3* 1* 10

ale

male * **

Note: * including 1 public employee, ** including 1 public employee, *** including 1 public employee

In-depth interviews and further analysis led to the following observations:

1. Women displayed higher WTP than men

WTP was found to be higher among female respondents than among male respondents. Further exploration of the reasons for this difference indicates that women generally believe that water quality may affect human health, and are willing to pay more for high-quality drinking water. This result is consistent with the studies of Alberini, et al. (1997), McClelland (1997), Lee and Han (2002), as well as Eckton (2003).

It is worth bearing in mind that male respondents are also aware of the importance of water quality to human health, but in general they are suspicious of the effectiveness of user fee policy. Therefore, they are not willing to pay as much as the women to reduce pollution. This result is consistent with the studies of McClelland (1997) and Ardila, et al. (1998).

2. High income individuals displays higher WTP

The interview results have shown that, while most respondents were in favor of a user fee scheme for tourists, the amount that they were willing to pay depended on their disposable income. The higher the respondent’s income, the more they could afford to spend on travel and leisure, hence they will demonstrate higher WTP. This phenomenon is often reported in the WTP related literature. The result is consistent with the studies of Alberini, et al. (1997), McClelland (1997), Ardila, et al. (1998), Lee and Han (2002), Eckton (2003), Huhtala (2004) and Johnson and Baltodano (2004).

3. Taipei metropolitan area residents have high WTP than other residents

WTP was significantly higher for Taipei metropolitan residents than other inhabitants. The major reason is that people living in other regions would not benefit from the maintenance of water quality, and so are less willing to pay user fees. The similar outcome could be observed in the studies by Kelvin (2000) and Eckton (2003).

4. Less Educated residents tend to have higher WTP

Most of the past literature has found that people with higher levels of education may have higher WTP. (e.g., Alberini, et al., 1997; McClelland, 1997; Ardila, et al., 1998; Lee and Han, 2002; Eckton, 2003; Huhtala, 2004; Johnson and Baltodano, 2004). However, the empirical results in the present study have obtained an opposite result. Following-up interviews have revealed that in general respondents with a higher level of education felt that, on the basis of past experience, it was likely that the government would use environmental protection as an excuse to levy fees on tourists but then fail to use the revenue effectively to assuage pollution. As a result their WTP would be lower. An analogous phenomenon was also observed in the surveys conducted by the Inter-American Development Bank to appraise the performance of its funding projects (Ardila, et al., 1998).

5. WTP was higher among respondents under the age of 60

The empirical results showed higher WTP among those respondents under the age of 60 than among those aged 60 or over. Older people tend to have lower income, making them less willing to spend money on leisure and tourism. The survey results

indicated very low WTP is found among the aged group and the older the respondents, the lower the WTP. Similar results have been found in many other surveys, such as Alberini, et al. (1997), McClelland (1997), Lee and Han (2002), Eckton (2003) and Huhtala (2004). In the follow-up interviews, some of the older respondents mentioned that they did not trust the government to supervise the work of water conservation properly once the user fee scheme was in place.

6. Higher WTP among those who working in the public sector

The results demonstrated that respondents working in the public sector had higher WTP than those working in the private sector. This can be attributed to public sector employee are likely to have more faith in the government’s policy implementation ability, and are therefore more willing to pay to help maintain water quality. This result is consistent with the studies of McClelland (1997) and Ardila, et al. (1998).

To summarize the survey results discussed above, regardless of the socioeconomic characteristics, the main factors affecting WTP were the level of confidence in the government’s ability to implement its policies properly, income levels and the causal relationship between the policy and the respondent’s own interests.

Older respondents and those with a higher level of education tended to display a lack of faith in the government’s ability to implement policy, and, as a result, these groups have a tendency to have lower WTP. If the government wishes to raise WTP in these two groups, it needs to strengthen their confidence in the government’s capability to execute its policies. Other studies, such as McClelland (1997), Ardila, et al. (1998), and Venkatachalam (2004, have mentioned this point as well.

Finally the survey outcome has exhibited that aged and low income groups have low WTP. The introduction of a user fee system in tourist destinations would force members of these groups to reduce their leisure activity, creating a barrier to the enjoyment of such activity. This result is consistent with the studies of Reitveld and Verhoef (1998) and Baeten (2000). Since the range of leisure activities available to elderly and low income groups are already restricted, the government will need to provide suitable ancillary measures (Giuliano, 1992) to prevent the adoption of a user

fee system from exacerbating the existing inequality within society (Banister, 1994;

Eckton, 2003).