An econometric analysis of willingness-to-pay for sustainable development: A case study of the Volčji Potok landscape area

When the market for a certain good is competitive enough, economic activities can be studied by the market pricing mechanism. Because this is usually not feasible in case of environmental goods with embodied natural and cultural heritage, particular methods for economic valuation of such goods have to be applied. The present article represents the economic valuation of the Landscape Development and Protection Area of Volčji Potok, which is an important Slovenian cultural landscape area with internationally recognized qualities. For this purpose we combined classical contingent valuation with a closed-version of discrete choice method, where the protest responses have been removed. By using econometric analysis we obtained the value of willingness-to-pay and established its determinants. We also made an attempt to control for different biases that arise in such analyses. At last, we used the adjusted average individual value of willingness-to-pay to calculate the aggregate willingness-to-pay. The present analysis represents one of the very few applications of the method to Central and Eastern European countries.